Can someone explain this to me. I know it is somthing simple, just trying to get the basics down. How do you go about getting a seller to carry the 20%?
Treat them like you would a bank. They will finance the 20% to you and take a second on the property behind the bank’s first. The schedule will differ, I’ve done them for as little as 1 year to 20 years.
As far as getting them to do it. You just have to ask. Make the offer with that included and you’ll know right away if the interest is there. I typically offer to pay them prime for their participation. They’ll reply is that the rate isn’t high enough to which I ask, “Aren’t you worth the prime rate.” :bobble
Your biggest problem is getting a seller to provide a 2nd, it with a lender allowing a 20% stake behind their 1st…
95 CLTV is the highest I’m aware of using a seller 2nd (75% 1st + 20% Seller 2nd).
Good luck (and let me know if you have a bank that will allow you to structure this deal).
Regards,
Scott Miller
JBaldwin have you done your deals and got 100 percent financing using this method or have you had to put up the 5 percent like described in the last post?
I do 100% all the time. Local banks only, secondary market won’t allow it. Just got a call from the bank today saying, “If that seller will hold 20% we’ll go ahead and do that deal.” So that product is definately available. Now of course that’s going to vary from bank to bank and market to market. My local bank understands and is extremely confident in the student rental market, which is where I operate.
I made a post about this recently on Commercial, Mobile Homes. My bank did change things up a little bit to elevate their level of comfort but it didn’t change the 100% deal, just the way it was/is underwritten.