Seller Finance/ Mortgage Hybrid ???? Deal or No Deal

[Amani Clarke]

Hey guys,

So I have this 9 sfr portfolio that I'm interested in buying. 8/9 of the properties are occupied with section 8 tenants and it's currently bringing in about $8,843 in rental income. Once the vacant unit is done being rehabbed the rental income should be about $10,093. The seller is asking $475k. The cashflow and Cocroi on this portfolio is amazing. I'm a new investor starting out and I don't have any experience or money so I knew I'd have to get either hard money or private money to help me acquire the property but here's how I structured my offer. The seller really wants to sell because they want to liquidate and reinvest in California so I figured I could give them a high down payment and just get opm to fund me the downpayment needed. 

Purchase Price $475,000

Down Payment $340,000

Remaining Balance $135,000

Monthly payment to seller $535

2.5% intrest to seller

7 year Balloon

The seller accepted my offer so I then started reaching out to lenders. I knew that I had a killer deal because the DSCR was close to 2 and I have a 730+ credit score I got a few DSCR quotes and basically ran into a lot of hiccups along the way in regards to meeting minimum purchase price per house, needing to show reserves, needing to show proof of down payment and worst of all I didn't know that most lenders won't lend on a deal with the seller carrying a note even though the seller would be in second position. That being said I reached out on Facebook and found a few hard money and private money lenders that said they would allow the seller to carry a note in second position however I would need 10% down of my own funds with one lender and another lender said I'd need 5% down of my own funds. I was able to ask my mom if she'd partner with me but she only has about $40k in liquid funds in savings and 401k accounts. I figured if I could get 75% LTC I'd be borrowing $356,250 and my down payment to the seller is only $340,000 so I'd have some funds left over which could be applied to the closing cost which the seller also agreed to paying 50% of. Here's the breakdown using the quote I got from a lender.

At a 9.99% (10 year interest only 20 year P&I) rate I'll cash flow about $3,539

I'm thinking that's pretty good considering I could always refinance when rates drop. With that being said my entry fee would be less than 100k when it's all said and done including the downpayment + 50% of closing cost + other fees. 

I don't have enough funds for the down payment, 6 months reserves and closing cost to make this work but I think it's a great deal it's just getting in that's looking virtually impossible.