Commerical Real Estate

[Christopher Smith]

Hey guys so i have a question. Coming up on buying a 51 Unit apartment Complex. 8.23% Cap Rate bringing in 328K after all expenses. I have 2 lenders that will fund. One will do 80% LTC and the other is a Gap Funder that will do the 20% plus closing. My questions is i know 100% financing is something not alot of people heard of. So i want to know if there are any precautions i should know about? Tips advice etc. im pretty solid on terms and precautions but i dont know everything lol. Anything helps!! Please let me know. Big Dreams for being 19👍🏽👍🏽

[Don Konipol]

@Christopher Smith

I don’t know how anybody can gap fund to 100% LTC when the risk incurred is so high with this type of program. I’ve heard people claim they will provide gap funding, but I’ve never seen one of these type transactions actually completed. I guess you have to protect yourself by

1. Thoroughly research the gap founder. Are they a broker, a direct lender, or some kind of hybrid? Have they completed deals like this before.? Can you verify that they did complete the deals?

2. Verify any upfront fees. Sometimes, a scammer will claim you’ve been approved and now just need to wire a commitment fee to move the process forward. Problem is sometimes these are legit, sometimes not, and it’s sometimes difficult to distinguish.

3. Also, if it seems too good to be true, it usually is. 40 years in this business tells me 100% financing through convention means is just too good to be true, especially with a inexperienced investor. The 100% financing deals I’ve completed and been involved in contain one or more of these components

1. Seller carry back financing

2. Private partner

3. Experienced borrower with an extremely strong balance sheet

4. 3 or more years property ownership on refinance

5. Syndication with sponsor getting a small equity piece as “promote”.

Good luck