| Posted by: kensan Mar 15 2003, 02:00 PM |
where can i get financing with 10 % down on a 8 plex apartment complex? are there banks or private mortgage lenders that will loan on 10% down on 5 units or more apartment? any other options or solutions when you don't have 25 to 30 percent downpayment?
need your advice...
kensan |
| Posted by: loanuniverse Mar 15 2003, 03:47 PM |
Dear Kensan:
It will be very difficult to find financing from a Commercial Bank with a loan-to-value over 80%. Lending at those levels is against the credit policy of most banks and lending at the levels you are proposing is against guidelines established by bank regulators. In order to get something like that approved, senior management would have to get involved.
Your best bet would be to convince the seller to carry a 2nd mortgage. This would mean that at closing the seller gets your downpayment, the money from the bank and keeps a mortgage on the property. in order for this to work the mortgage of the seller is subordinated to the one of the lending bank.
Example:
You purchase a $500,000 Apartment building.
You give $50,000 of your own money.
The seller keeps a $100,000 2nd Mortgage paying 7.5% If the seller is a person interested in regular income such as a retiree, the idea of getting 7.5% return while certificates of deposit are paying 3.5% for 5 years is very attractive
The Bank gives you a first mortgage in the amount of $350,000 This represents a 70% effective loan to value
Good luck on your project and I hope to have helped.
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