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! 

[Lawrence Adair]

Thank you so much for the response! 

[Chris Seveney]

Quote from @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!

 no. you would need to bring on an equity partner to the deal. In that case expect to give up around 90% of the ownership interets as well

[Luz Allinger]

Quote from @Lawrence Adair:

Thank you so much for the response! 

 Perhaps finding a partner. Is the property a house or multi units?

[Tanner Lewis]

I think this may be better with a PML or an equity partner, it will be difficult to get a lender to be in a second lien position on a property. 

[Chris Seveney]

Quote from @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!

 have you had any luck moving forward on this?

[Bryan Maddex]

There are NO institutional investors that will jump on this kind of deal, but you can maybe find a private lender or do a Joint Venture (equity split?). Owning 75% of a home with no money out of picket is much better than owning 0% of a property :)