No Money Down?
Hi there,
I believe in no money down, but does this work in an investment property? I got my first rental and put some downpayment. I like acquire some more but i'm not sure how to do this. There are hard money lenders out there, but they only lend 80% LTV. I still need 20%.
I appreciate your input.
Find yourself a tired landlord that will take back a loan on the property or a motivate seller that will sell at a discount. You can also find property in need of work and put sweat equity into it. Your options are pretty much limitless, you just need to find the deal(s).
I have a question, I know to achieve a no money down the easiest way is to have 2 mortgages, 1st from the bank or hard money lenders and 2nd from seller financing.
But wouldn't the seller be afraid of giving you the seller financing when he/she knows that you already have a first mortgage in place, and that you did not put any money into this deal, except for maybe some closing costs and other expenses, or maybe we can also find a way to cover that also??
I was thinking, is it ethical or legal to tell the seller that
"we will be paying cash for 80% of the purchase price (in actuality we got it from the bank), and we just need 20% of seller financing from you."
Or the seller will know sooner or later no matter what??
ruizhen, I am not sure an 80/20 is the easiest way to obtain 100% financing, but it is one of the most popular.
You probably need to find out the motivation of your seller and what they are going to do with their money. If they are going to invest it you just have to "sell" them on the returns their investment will make with you. They know the building, they know how it cashflows, and if you don't pay, they can get their building back.
Most people in the business know that you are going to finance the building, usually when you say cash closing you are referencing a faster closing than going through the process of getting a loan. But many if not all of these "cash" closing are a loan anyway with just already arranged access to the cash, instead of starting the process after identifying the property.
I wouldn't try to decive a seller and would try to be upfront with them. What are you going to do at the closing table if the seller shows up and you are signing off on two loans?
You can also put a balloon payment in the 2nd note say after 5 years with a right to renew if no defaults or something along that line if it makes the seller more comfortable to carry some of the money back.
Thank you dnvrkid!