Can I obtain 100% Financing??

I came acrossed a 24 plex for sale in my town here for $750,000.
I am assuming i can get it for $500,000. But Here is the info on it

Princ. & Interest @ 8.5% = $3900
Taxes @ $13,500 per year or $1125 per month
Insurance @ $300 per month ( I have no clue on this, maybe high, or lower)
Total = $5325 per month out

18 - 2Br units @ $365 ea. or $6,570 per month
6 - 1Br units @ $345 ea. or $2070 per month
Total = $8640 per month in
Profit of $3,315

With this said, the realtor told me there is a 10-20% vacancy rate.

So $8,640 * 20% = $1,728 loss
for a total of $6,912 in
for a profit of $1587 per month

I would also raise rent by $20per month since this is under market

what i am needing to know is if i am missing anything. I am going to do my own management. I can do most repair work myself, as i do rehab houses also. My biggest problem is trying to get into this with nothing down. Can it be done? I have good credit about 670-700 score. a decent paying job. 1 other rental house, a house that iam rehabbing to be sold hopefully in the next month or two for a $20,000 profit. Can anybody give me any advice? am i heading for too deep of water here? Is the $1,600 profit @ 20% vacancy too little for this complex? if anybody can help me on financing and other issues, please let me know as i would like to possibly go through with this.


You should have posted this on the Commercial message board. This is not a conforming scenario. From what i have gathered commercial lender’s are not going to do 100%. They may allow seller carrybacks to 100%CLTV.

I will leave this one to Cmacone and the Commercial folks.

I have spoken to lenders that will do 75% and accept seller seconds to 90% on commercial. Anything is possible.
Good luck

so by doing it this way, do you obtain 100% financing then?

Hello, A commercial loan is different from a residential loan. More factors are taken into consideration. Also, the lenders want you to have something to lose to secure the loan other than the project itself.

Most Commerical Loans are at 60 to 65 %. If the Realtor told you that the vacancy rate is around 20% and you increasde the rents by 20.00 the rate on vacancy will be closer to 30% It may be a option to Buy on the Deed. Give the sell something and note on another property to have and to hold even if you cant ge the new loan, say for $30K. Next you then pay him $1200 a month for 18 months with Credit toward the purchase price on the $500k Now you have a lower balance to finance. Then increase the rents asap to make your money on the lease. Have the property put into your name and quit claim in back to the seller if all fall down. Now at the end on 13 month go Refi Your property at 70% of the paid down balance

The highest I LTV Ive seen is 80%. I dont even know it there is 100% financing on commercial properties. I know of a bank that will go case by case and up to 90% but I have yet to see anyone actually be approved for 90%. And of course you will need reserves, etc…

90% is easy for class A/1 properties. I’ve seen 95% CLTV with seller financing in a very few cases. 100% is just insane!


Hello. Welcome to The Bank of Patrick. I understand that you would like a commercial loan.

Ahhh. 750 FICO score, that’s very impressive, I don’t see many of those these days.

Well now look at the numbers on that property! That’s a little cash cow, huh?

Now Mr. X, how much do you have to put down on this property?

You say the seller is willing to do some financing? How much? Whatever amount we will not finance!?

You mean you don’t have any of your own funds to put into this deal?!?

Yes. I know the properties numbers are great.
Yes. You’ve got excelent credit.
No. That’s not enough. Where is your PERSONAL investment in this property?

I should risk my money and my depositers money while all you risk is your credit score!?

I’m sorry Mr. X, but it seems that you are not ready to make a purchase of this kind.

Perhaps one of your friends or family memebers would be willing to lend you the funds.

You’ve already tried that? They are not interested? Hmmm. I wonder why?

When you can invest atleast 5% of your own funds come back and we’ll see what we can do.




i dont understand…whats the difference if you loan 100% on a single family home that makes no money, or if you loan on a commercial property that brings in $5,000 profit per month? why is somebody going to guarentee that they pay you back on the 100% home loan that you gave them? Please elaborate here Patrick

Different markets.
There is more market demand for residential properties than there is for commercial. At any given time there are thousands of individuals in a mid-size to large market that will bid up a residential foreclosure. Why? Because they have the funds and the shared desire to own a residential property.

How many people have the funds and desire to purchase a commercial property at any given moment in your locality? The bank is not into holding properties. The bank could be left holding the property for years before they have a buyer for the property.

There are also insurance guarantees on residential properties that do not exist for commercial properties. Banks are not in business to lose money.

REMEMBER: If you NEED the money the bank is not going to lend you the money.

If you’ve got $2,000,000 in your Bank One account and ask them for 100% financing on a $1,000,000 property then you’ll get the loan 9 times out of 10. If you’ve got $3542.00 in your Bank One account and you ask them for 100% financing on a $1,000,000 property then you will definatly NOT get the loan, but you will be ridiculed 9 times out of 10.

It’s just common sense. Would you lend your money? And if your answer is “yes”, take my advice and don’t ever get into lending.

thats the thing that i dont understand…Yeah i realize that if i only have $5,000 the bank isnt going to loan me $1,000,000 and i dont expect them to. I also understand the different type of markets and the fact that somebody is trying to sell a property that is set up for a Muffler shop, that it is going to be sitting there for quite awhile. But here is the scenario that i am in. I have about $5,000 in my bank. I had the loan and everthing approved on a $250,000 4-plex that would generate me $300-$400 per month. I backed out of that because of a couple things about the property, but thats besides the point. Now im at the point where i have a 24-plex, (actually 3 - 8 plexes) that i can get for $500,000 and make about $2,000 per month. But i cant get the loan because it says its a commercial property…now take out the Commercial part of it, and i can geta loan for it…well…80/20 anyways…the same thing happened witha little rehab house i wanted to buy…i needed $25,000 for this house, plus another $5,000 for the rehab. it woulda appraised at around 60-65k. My local credit union which i have been with for years wouldnt loan me the non-owner occupied property loan without 20% down(which i coulda on this project). I absolutley did not understand this, still dont. But every year when i goto them for $45,000 loan on a brand new pickup, i have the check that day. That particular incident makes no sense in the fact that the loan was less than half of what the house was worth and they woulda made a nice profit if i woulda been forclosed on, but instead a month later they gave me a loan for my pickup which depreciated 10k the day i drove it off lot…just cant figure that one out

black95gt, have you forgotten the maintanence expences? snow removal? management fees? water biil? common area electric bill? etc.
Don’t take your REALTOR’s word, check his numbers with other REALTORS.
The rent seems too low… is it a bad area?
How is the overall apperwance of the property?
hope this helps.

I do the management, maintanece myself. I have a plow that i push snow with. The utilities are all seperate. The common elec, i dont know about. The outsides of the units have new siding and new roofs. They seem like nice buildings. They are not in a bad area, but im not sure what the insides look like. I am thinking that they need to be very updated as i was in a unit a few years back. The rent is low because rent in our entire area is not very high. I live in a 4-plex that is about 5 years old. We have a 2 br 1 bath about 1000sf and then a full finished basement with an attatched garage. Very nice interior work with nice cabinets appliences, ect. and we only pay $650 per month. But for now i am scratching the apt. idea

He who has the gold makes the rules.


There is a secondary market for:
Auto Loans
Commercial Loans
Residential Loans

“…a month later they gave me a loan for my pickup which depreciated 10k the day i drove it off lot…just cant figure that one out”

  1. Auto Loans are smaller than home loans (in most cases)
  2. The lender can have the full value of the vehical insured (in most cases)
  3. They could have a “buyer” for thier auto loans, but would have to “portfolio” the particular home loan you requested.

Whatever the banks reasoning, it always boils down to the GOLDEN RULE.

i guess it doesnt matter. i am just going to stick with keeping my credit good getting alot of available credit so i can purchase with my CC’s or get some kind of Business plan together so that i can establish a good line of credit at a local bank so that i dont have to worry about mortgages. I will just have to start small and work my way up

I like the idea of getting a line of credit and building it up, but is it possible to get a good sized line of credit with a decent interest rate? It would be nice to have a $1,000,000 credit line but at 12% interest that’s not gonna be good for buying and holding properties in my opinion.

Hello CaliforniaJeff, How about 6%-9% interest?

Are you offering me an unsecured line of credit? ;D

Hello CaliforniaJeff, No, I am not. There are private money investors that loan with 6%-9% interest.

Thanks for the info. I will have to remember that down the road. I think have such a credit line could come in handy.