Commercial loan with equity as down payment?

[Benjamin E.]

Hi all. A friend wants to sell their property to me (they don't know how to manage and want out) and I want to know if you know any lenders who will do a commercial loan (it is a multi use property) and use existing equity in the building as the down payment for a loan? For example, she wants to sell it to me for 100k and it is worth 150k. The lender requires 25% down. Looking to take the down payment from the equity and pay any remaining difference, etc. This assumes a lender appraisal comes back with sufficient equity, etc. 

I plan on self managing (I have experience) and living in one of the residential units in the building. 

Thoughts? Ideas?

[Christopher Boyle]

@Benjamin E. I actually just spoke with two Chicagoland commercial lenders about this, and @Tom S. is correct.  The commercial lenders are much different than residential, and don't seem to put much stock into the "market" price of the property.  They mostly care about the stability of the loan they are issuing.  In fact, if you're getting a property cheap because it was mismanaged or vacant, the commercial banks see that as less stable, and will often require a larger down payment and more cash reserves.

However, along similar lines to your question, some commercial banks will allow you to use equity in another building, as collateral down payment for the new commercial property.  There are some restrictions to this, including that the bank issuing needs to be 1st position on both loans.  Not sure if that might be an option for you as an alternative.