I am a new investor. I am trying to get involved in commercial properties. I have found some properties that have good cash flow and priced right. All I need is down payment. I found out about “Down Payment Assistance”, then I was told by my mortgage broker that commercial lenders do not deal with DPAs. :banghead
The DPA rep did not tell me this. When I emailed to ask him his take on this, he has not anwered me. :eyecrazy
Can anyone weigh in on DPAs? Are they real or a scam?? :huh
I heard Larry Goins briefly talk about that. Not sure what he said the exact reasons were. I remember him saying its against the law to raise or lower the sales price, so that the buyer can qualify, so a way around that is for the seller to send the money to the assistants program, and in return the program cuts a check, its non-profit, so the lender accepts the check. It’s away around the system, that is legal. Although not sure how all of them work. I am getting ready to find out=) I will keep you posted.
DPAs are typically for first-time or low-income residential home buyers who are getting an owner-occupied home through an FHA or VA mortgage. Just contact a local lender, who can explain how they work in your area. If you aren’t getting a home through FHA that you will occupy, it would just be for your info.
There are DPA grant programs for commercial property investors but here is the rub:
Regards,
Scott Miller
What do you mean by seller’s concession?
If I’m not mistaken, what Scott means is that the seller must agree essentially to pay back the DPA company the money they granted to the buyer. This is how DPAs work on residential transactions.
Yes that is correct. I’m actually new to REI but I used to be a Realtor before moving out of state. About 80% of my deals were DPA. The property must appraise for the amount of the DP needed. The seller agrees ahead of time to participate and pays the down payment to the “Charity” and then the “charity program” would pay for the down payment. The seller of course was never out any money since he recieves asking price plus the amount paid for DPA. We also asked for a 3% concession for closing costs as well, everyone was happy :biggrin
Carla
So, how does one keep the lender out of the loop? My DPA said that his packet contains forms for the seller, the buyer, and the escrow manager. It sounds like everyone in the deal knows except the lender. :huh
Yep. Everythining is done outside of closing. All money from seller is obtained prior to closing. Some lenders required showing the funds on the HUD, but otherwise it’s really simple.
It does not sound “simple”. How do I arrange the steps? I know that the first thing to do is get a lender and then order the appraisal in the lender’s name, but then what??
How do for profit companies do DPA? I’ve come across a few from this board that are NOT non profit who do DPA…