Good morning all.
I enjoy reading all of the posts on here, and have been looking for information related to a sale/leaseback. I know that they generally work for an office or retail space, but can they be used for a multifamily? After all, isn’t that really the same strategy as a master lease?
For all of you seasoned commercial veterans out there, can you give your thoughts on this? And taking it one step further, what are your thoughts on using transactional funding to get control of the property and then doing a sale/leaseback?
I’m sure somebody is going to ask “why?”. Answer: I’m asking mainly because I’m just curious by nature and wonder how many ways there are to get certain things done. In this scenario my thoughts are these - for a commercial investor(s) who is looking for what is essentially 100% financing, this sounds like it could work. Reasons for wanting to do 100% are irrelevant really… the bigger question is - could this work? And, yes, the sources are there to do the financing just about any way possible but I want to know about this way.
Thanks in advance for your input. I’m anxious to hear everyone’s thoughts.
Sorry there are no 100% financing. You need skin in the game. Who told you there are 100% financing?
You are exactly right. Generally 100% is not do-able. But 100% is out there and I have used it more than once to help some clients. I am in commercial finance and through networking have found the people and groups that will do 100%. My question goes beyond that point to the equation as a whole. I know that each portion of that financing structure can and does work… can the two parts be put together and work as a whole?
Again, there are no 100% financing cause of the unrealistic values pertaining to it. I never heard anyone who successfully does it yet.
envisionary said there are still 100% financing out there. envisionary please please show everyone where the 100% financing is because we have tons of deals.
I closed a 100% financing deal yesterday. Credit union funded 70%, allowed the seller to carry a 30% second (down payment)… I walked out of the building with my $1,000 earnest money returned, security deposits of $2,025, and pro-rated rents and taxes. I had built $2,500 into the sales price to cover the closing costs of the mortgage.
They exist, you just have to be creative… find the right combination of lender and seller. I am currently negotiating 2 other deals exactly the same way, hope to have them under contract by the end of the week and should close in early May. We’ll see how much rope the lender gives me.
Congrats! Many banks won’t let the seller carry the second because they want you to have money in the deal. We’ve been able to get out 100% financing deals by getting houses for well under market value. One one of our larger deals, we pledged a couple of our paid off houses as collateral to make the deal happen.
Nice job nemmert! It surely pays to create those contacts and develop relationships. I am guessing that you did not set this relationship/arrangement up overnight.