Financing Question - Lenders Welcome
Hello board,
I am trying to find ways to finance a multi family property.
Here's the skinny:
I spoke with a bank on commercial loans & they told me that 25% down was the norm when going through a bank.
Where can I find lenders that will require 10% or less? Any recomendations?
Also, the bank told me that I could not use the appraised and sales price difference for equity - to use as part of the down.
Are there lenders who will add this to the equity so it can be used against the down? Any recomendations?
Lastly, I own a few properties that I bought subject to existing mortgages. The deed is in my name and the mortgage is in the previous owners names. Will the lenders allow me to use the entire home value as part of my net worth?
I am also looking for assistance in setting up a tenants in common agreement. Are there any experts out there on this as well?
Thanks for taking the time to read and respond,
Wes Laney
Most of the local/regional banks in our areas would only loan 80% LTV. Value being the lower of their estimate, selling price, or a professional estimate. The 20% percent part is usually negotiable... and does not always have to be cash down. Other real estate or equities would do. Some of our regions (we probably have similar ones NC/SC) have done 100+% for me on small deals with nothing down. A month ago you could have gotten the money from a Durham, NC based bank doing 89%s all over the place trying to get loan balances up for their IPO (they gave me this on a LLC with large tax loss last year and little equity). I'm not sure if forum rules allow discussion using bank names.
Is the seller willing to hold a second? That's how I'm buying through a small local bank at 75% LTV. After a year you can refinance and pay the seller a significant portion of their note at 90% LTV because refi's are more lenient.
An anyone elaborate on what tmpringle301 said above? It might be relevant to my situation right now but I don't think I understand exactly what it says....Thanks in advance!
To ask a seller to take back a second, means asking the seller to hold a 2nd note on the property as part of the sales aggreement. On a $100k property, if your bank will only do 80%, you may ask the seller to take back a loan for $20k, you would have a 2nd deed of trust prepaired for them. The 2nd is usually a 2-5yr ballon, 2-15yr AMT in most cases. Sometimes its easier to get a greater level of financing if you refinance your property later (to pay off the ballon from refinance money), because the refinance uses an appraisal value, not sales price (hopefully you would be buying for below appraisal), you also have some debt paydown during the holding period.
You may be able to find a local bank willing to do 85%, above this they have report amount of loans in financial fillings (b/c they are a greater risk), and also hold more in loss reserve for loans over this 85%. [ Edited by c5hardtop on Date 07/23/2004 ]