20% Down Is Mandatory!?!
Hello, I have been told that in states of NY and NJ, that any property that is 6 units or more is considered commercial. And that for any commercial property, a 20% down payments is required by law. Is this true? I couldn't believe my ears when I heard it. It just doesn't seem right to me. That kills the purpose of owner financing, and using the most leverage possible. :wow:
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Hi ddhamilt
I don't think it is a law although lenders may require 20% on commercial properties.
A way around the 20% down payment is have the owner carry a 2nd.
Good luck!
Mike
[addsig]
Thanks. But does anyone from NY or NJ area or familiar with the law know if this is true?
You'd have to look into local (state law) banking regulations.
That doesn't mean you have to use NY or NJ banks ... there's always the COALT states (Colorado, Oklahoma, Arkansas, Louisana, Texas)![ Edited by flacorps on Date 10/20/2003 ]
Generally it's 5+ units that are considered commercial.
I have a VERY hard time believing this. Examine your source. Who told you that and how much do you trust them. Call a few realtors, investors, bankers, loan officers, title companies and ask for their opionions.
Even if you do need 20% down, it doesn't have to be your 20%. Get a loan from the seller or find a partner. build up credit, use a HELOC or someone elses.
Even if this is the case (which I doubt) find a way to do it rather than let it stop you. It may be a step back, but keep moving forward.
I haven't heard of this, sounds strange for a state to dictate loan requirements, especially when they are not the ones lending the money.
MT
[addsig]
Flacorps,
What's so significant about the COALT banks?