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Commercial Loan - LoanUniverse Community

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Commercial Loan


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#1 Guest_hende_*

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Posted 02 November 2004 - 01:55 PM

Is there any way possible to get a commercial loan for a rental property with out a large down payment? I have heard 20% is the industry standard but I just dont have that. Is there help for me? Thanks everyone!
Gregg

#2 loanuniverse

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Posted 02 November 2004 - 02:19 PM

I think that the best way to do this would be to get the seller to finance a portion of the purchase with a second mortgage, as long as you get an agreeable lender, you should be fine.


For example:


The purchase price is $500,000

You only have 10% of the purchase price for down payment.

The lender will only finance 80% of the deal or $400,000

You secure an additional $50,000 in financing from the seller.

At closing, the seller gets $450,000 and a promissory note for the remaining $50,000



Please note:

-Net operating income should be sufficient to repay both loans.
-The offer on the property should be subject to this financing.
-The above percentages are just an indication, they can vary.
-Just like buying a car, the break that you get in financing can come back to haunt you in price so beware.

There are also other lenders {non-bank} that might be able to get you a higher loan-to-value.

Good luck.

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#3 avatarfi

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Posted 02 November 2004 - 06:33 PM

loanuniverse hit the nail on the head - When my firm does loans, we only fund 65% LTV, the remainder usually has some portion of the buyers own equity and the seller will "carry the balance", meaning they will take on a portion of the loan themselves.

Alternatately, you could find a second lender - we have done deals like this as well, although they are sometimes difficult unless the project is very large.

Best of luck!

#4 CMBanker

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Posted 12 December 2004 - 02:59 PM

Subordinate debt (held by the seller or by a 3rd party lender) is achievable. 2nd mortgage and mezzanine structures are all ways we accomplish maximum leverage (up to 90%) up the capital stack.

There are a number of parameters (e.g. loan size, asset quality, sponsorship financial strength/experience) that must be met to successfully structure this type of financing.

Most recently, I financed an apartment building with the following debt:

1st Mortgage Note: $8,750,000
Mezzanine Piece: 500,000
Total Financing $9,250,000

The appraised value was $11,000,000. The combined loan-to-value of the 1st mortgage and mezzanine was 84%.





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