Board Topic: your response to commercial financing
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your response to commercial financing

Posted by: Guest_quinnth1 Nov 16 2004, 04:33 PM
Thank you for your response... I am the guy who wanted to buy a $220k 6 unit but didn't have down payment. Your response was:

With all of the creative financing techniques these days, is there a way to get around a large downpayment for commercial? Yes get the seller to do partial financing. If you can get the seller to carry even a $20,000 note that should be enough to take you over 25% in the eyes of the primary lender, as this note will be subordinated.

I am not sure what you mean here. Can you please elaborate for me? How would a $20k note be enough to get me to 25% in the eyes of the primary lender? I apologize for my lack of understanding.

Posted by: loanuniverse Nov 16 2004, 09:15 PM
Sure no problem….

Your original post said ”….I have decided that an 80/20 INTEREST ONLY loan would be a good way for additional income..”, but then you said that the problem was that the realtor said that you needed 25%.

The way I read it was that you were short only 5%. Therefore $220,000 x 5% = $11,000. I mentioned a $20,000 note so that you could have a better cushion, and you could sell the idea to the seller with a round number.

Seller financing works with the seller keeping a note that is junior to that of the lender. This in effect provides the “first lien” lender with the cushion that it is looking for. Most lenders do not care as long as the property cash flows enough to pay both loans. Some might care if you get 100% because in their mind this will make you more willing to walk away.

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