100% Commercial Loans

[OHIOREInvestor]

I have a small storage facility I am interested in purchasing.  Seller has indicated he is willing to carry 20%.  Are there still loans available that will allow sellers to hold a second?? 

Thanks in adance.

[lassitermortgage]

Not on the subject property. If you have something else in your portfolio the seller can collateralize you can get it done.

[kurtlacson]

I agree with Lassi, show him what you got and you guys can start from there!

[jbaldwin]

not true, you can get it done all day long.  check with your local banks.  i am assuming you have some assets, liquidity, and general experience w/ RE investments.

[lassitermortgage]

LOL - OK, I'll bite. Exactly how can you get 100% commercial purchase loans "all day long?"

Not possible unless you do what I suggested above OR use private financing.

[jbaldwin]

the original poster stated the seller is willing to hold 20%.  if you cant go to a bank and get the other 80% you need to take a look at the deal, your lenders, or yourself.  even in the current lending environment those deals are getting done.

so yes it is possible, most mortgage brokers unfortunately have no clue that there is more than one way to finance a deal.  the good ones do, but most don't.

[The Master Key]

jbaldwin, could you please go into a bit more detail of how you've been able to do this?

I'm just getting started in RE. I spoke to my local bank manager and she said that a 20% downpayment is needed for the loan (for purchase of an apartment building) and that there was NO CHANCE the bank would allow that 20% being in the form of a seller holding a second mortgage.

[justin0419]

That's because the bank wants to see the buyer is going to have some of their money in the deal.  If you're well established and have a relationship with a bank, you may be able to do the 20% seller carry.  There are so many people that think they're going to just break into the business with no money down (been watching many late night commercials).  There are people who set up accts here all the time and post how they have no money, job, assets, etc., but want to start buying multiple properties.  Considering the current market conditions, it's no surprise the bank isn't willing to deal with someone who is putting no money of their own into the deal.

[jbaldwin]

I guess the first thing I would say is that remember most everything you see on here is relative.  My gut feeling would be it's a lot easier to get a commercial loan in WV where I am as opposed to say Las Vegas, Miami, and some of the other major bust cities.  With that being said...

Me personally I can call up my commercial guys, I use all local/regional banks i.e. BB&T, Huntington, etc, and tell them I have an 80% LTV deal with a debt coverage of 1.2 and they want in.  Now I will say that they have started to ask more questions about the deal recently but still have not turned down any. 

Here's the secret to it all.  Present them with a deal they simply cannot pass on.  My last deal I bought for $320k and it appraised for $477k.  Show me a commercial lender who won't lend 256k (80% of 320k) on property valued at 477k. 

I do agree w/ justin0419, the current lending environment has made it much harder for joe schmoe to do this, especially as their first deal.  That will be tough.  I've definitely heard bankers say 'what are you putting in the deal'.  I always fire back and tell them to not punish me for putting together a great deal and besides I pay for closing costs w/ my own cash and give personal guarantees.  So what skin in the game do I have??  My credit, my personal assets, my closing cost cash, etc.  Don't let them get away with the 'what are you bringing to the table' argument, it's lame. 

If you want to know how to buy a property in this market, especially if it's your first one, send me a message and I will teach you how to work the system of banking and appraisals to achieve a 100% financed deal.  Good luck.

[JR429]

Agreed here in socali we can still get away with 85% TLV, 1.25 debt coverage.  Unfortunately here in So Cali that can also mean 40% down

GH

[Mamon003]

Present them with a deal they simply cannot pass on.  My last deal I bought for $320k and it appraised for $477k.  Show me a commercial lender who won't lend 256k (80% of 320k) on property valued at 477k.

I do agree w/ justin0419, the current lending environment has made it much harder for joe schmoe to do this, especially as their first deal.  That will be tough.  I've definitely heard bankers say 'what are you putting in the deal'.  I always fire back and tell them to not punish me for putting together a great deal and besides I pay for closing costs w/ my own cash and give personal guarantees.  So what skin in the game do I have??  My credit, my personal assets, my closing cost cash, etc.  Don't let them get away with the 'what are you bringing to the table' argument, it's lame.

[Jaffman]

Jbaldwin
I would be interested to know how to approach banks to do these 80% deals. 

[Brian06]

I just did one with PNC for 80% LTV.  Got a private investor to put the 20% down.  Appraised - $1.25 mil.  Purchase price - $1.025 mil

[Morgana]

so, if I get a hard money lender from the rei list to cover 65%, you think I could get a bank to do the rest, even if I don't have $$ in?

[Donovan]

Reviving an old thread...

My first commercial deal I got 100% seller financing (it was a fairy tale example straight out of a RE course and the numbers worked out even better! 70,000sq ft, yes they do exist) and I'm now starting to look for another so I found this interesting.  I am unexperienced with lenders and commercial property.    I don't see why the bank would differentiate Private money and seller financing.  They would know if you put up private money and it wasn't yours to lose anyway right

But if it is an issue, Would it make it easier/possible if you "partnered" with the seller in an llc where he put up the same 20% and you paid him said interest on that money in your partnership agreement(question mark; My key is stuck!)

Seems to me if it's a DEAL for you, it would be equally be a deal for the bank. As long as you know how to define deal..