Seller adjustments to do cashback or no money down deals

[Darren R.]

Hi,

I'm sure I'm not the first but was wondering if anyone has had any luck and/or problems with the following:

If I find a multi-family that with 100% financing would yield a 15% debt coverage ratio, but believe the bank wants me to have some at risk, what are some options to get this deal done?

I was thinking on a $1,000,000 purchase price, make an offer of $1,350,000 with an addendum (not attached to offer but referenced in document) for the seller to make an adjustment at the time of sale of $350,000 thereby making the purchase price $1,000,000

Meanwhile at the bank, have them finance the offer at 80% of $1,350,000 = $1,080,000 and pocket $80,000 on the deal and acquire 15 doors with a positive cash flow.

Is this a pipe dream?

[Jon Holdman]

I've heard of deals like this being done. Don't know if its still feasible in todays environment, though. You're essentially telling the owner that post closing, they have to kick you back $350K.

Realize that someone has to bring $270K to closing. I've heard there are companies that will do this sort of "down payment assistance", but, again, I've never done it or even heard about anyone who has done this.

If this is a loan covered by RESPA, like most residential loans are, this is loan fraud. Commercial lending is not covered by these regulations.

Do keep in mind you will have costs on a loan like this, and on your example deal, those will be a large portion of the $80K you hope to capture.

I don't think you'll get a commercial loan with only 25% down.