Owner finance question for a first time investor.

[Lawrence Adair]

Hello everyone!

I am currently trying to get into my first multi-family deal. The seller is willing to owner finance 75% of the loan but wants the other 25% upfront. Of course, he wants me to cover any closing costs. Is it possible to get a traditional loan on the 25% and owner finance the rest? 

All insight is greatly appreciated!

[Justin R.]

That would be hard, but not impossible. First of all both positions would most likely want to be first position lien (which means if you got foreclosed upon who gets paid first.) 

Second issue is that it would be really difficult to cash flow, while paying both notes, especially with one lender in second position (which would most likely have a higher rate, plus points to offset their risk.)

Now if you got the property under contract for 75% of the market value, which means you would have built in equity, and willing to personally guarantee (full recourse) then yea it may work out.

If it's a good enough deal then you could even bring in an equity partner. 50 percent of a great deal is better than 100% of no deal.

Cheers!