Is 100% Financing a Trend Worth Pursuing?

[Deborah Wodell]

I've noticed an increasing trend among investors looking for 100% financing or securing 90% financing and then seeking gap funding for down payments and closing costs. This approach can work for those with strong deal potential but raises questions about leverage, risk management, and lender flexibility.

What are your experiences with 100% financing or gap funding strategies? Have you found lenders willing to provide this, or are you using alternative sources to bridge the funding gap? Would like to know more insights on how this trend is shaping your deals and what’s been effective!

[Chris Seveney]

Quote from @Deborah Wodell:

I've noticed an increasing trend among investors looking for 100% financing or securing 90% financing and then seeking gap funding for down payments and closing costs. This approach can work for those with strong deal potential but raises questions about leverage, risk management, and lender flexibility.

What are your experiences with 100% financing or gap funding strategies? Have you found lenders willing to provide this, or are you using alternative sources to bridge the funding gap? Would like to know more insights on how this trend is shaping your deals and what’s been effective!

 The first line you mention the increasing friend of investor looking for. I am looking for the pot of gold at the end of the rainbow. The only chance someone has of getting 100% financing is if they can cross collateralize against other assets OR an unsuspecting seller financed deal. Both situations could mean the borrower is over levered and in this economy being over levered is not a wise move. Over the past week along we received over $400M in defaulted fix and flip loans from flippers who were getting 90% acquisition and 100% renovation and the properties are 20% underwater. 

While its nice to borrow as much as possible, the risk involved can sink someone as in most instances their is personal guarantees involved and lenders will bankrupt sometime to try and get every penny they are owed.