Creative Financing For Commercial RE?
Is it possible to structure commercial real estate deals so that they are "no money down"? I'm looking at buying a convenience store that has a 4 bedroom owners quarters that I would live in. The asking price is $595K + inventory and the #'s look good on it. However I don't have the funds to put down what is required by a traditional bank loan. Are there hard $$ lenders that would deal with this? Or if I kept looking what are the chances that a seller of a business would be willing to take back a 2nd and furthermore would a bank even allow that?
I know I've thrown a lot of questions at you but I appreciate any and all feedback.
You can apply all of the same techniques of residential to commercial...owners carry back financing all the time.
In my opinion seller carry backs and other creative techniques are even more common in commercial than in residential Real Estate. Probably 80% of my deals have some twist like that in them.
Many commercial lenders seem to be wanting to see at least 5% of your money in the deal to make sure you are interested but I see some even waiving that.
[ Edited by commercialking on Date 12/16/2004 ]
I am working on a deal right now where I am purchasing 5 tri-plex building at 80% of appraised value. (Very motivated seller whom I know very well). I don't have any money other than closing cost to speak of. All I could find was banks willing to let me bring as little as 10% as a down payment. They wouldn't recognize the 20% equity I was bringing to the table. The mortgage company found a program where if I could get a contract for deed for 30 days, with my name on the title, I could refinance for up to 90% and they would recognize my equity. Now all I have to do is cover closing costs and I am in. I found another property, a strip center, that I am working on doing the same way. I don't know the owner so it might be trickier but he is very motivated also. Good luck.
Quote:
On 2005-03-20 16:50, JDC21 wrote:
You could also try to team up with a broker who is willing to put their commission back into the deals. Say you can get an income producing property with a 90% CLTV, you may be able to get the listing broker to put their commission back into the deal in return for an equity share.
Will the bank treat the foregone commission as a proper down payment?
I would also be concerned about what the ethics board would do if the seller complained about their broker investing in the purchase.
Got a lender that will go 90%. That leaves you with another 25k. If you want to look into it a little further, get a hold of me Tuesday. All I need to do is take a basic application from you, submit it to this lender, and see what they cough out. Thanks for your time,
Joshua Davis
Great American Mortgage Company
[ Edited by NancyChadwick on Date 05/28/2005 ]