55% Owner Financed 45% borrowed = 100% Leverage?

Question

This may be more of a "in theory" question but if borrow all of the downpayment and the owners carry the rest, is that considered a 100% leveraged deal? TONS OF RISK? Or do you guys see it has a 45% leveraged deal?

Thanks

J

Thanks

J

Jonathan Napper · Answer

well, I'm still trying to work it out. I have 55k carried by the owner for 5%. But I'm trying to get the 30k down to make it happen. If I use a bank they will want first position - deal breaker for the seller. How can I get that 30k? I want more of a partner than a loan.

Elizabeth Colegrove · Answer

your 100% leveraged so the key is beig able to a age that portfolio. We personally love 100% leverage and strive to put as little down as possible . On the other hand we don't refinance money out and strive to have as much forced appreciation possible through buying distressed property!

Kyle H. · Answer

@Jonathan Napper - if I could finance every deal at 100%, I would leverage as many as I could.  Sure there is some risk, but you are not risking a dime of your own money.  Think how big of a portfolio you could have if you never had to bring money to the table?  However, what does your cash flow look like on this property since you are 100% leveraged? I am interested to hear how your numbers came out...

Bill Gulley · Answer

The lender in the senior position looks at it as to the LTV, no skin in the game and the CLTV based on the collateral value, I'd be fine in a first position if the second had 45% and the sale price was actually at market value. That means that cash purchase money lender in the second will be paying me off if stuff hits the fan or he stands to lose his collateral, assuming the first goes to foreclosure. There are other feathers on this bird, but that's basically where you are. :)

Michael Henry · Answer

100% leverage. You have no skin in the game !!