Folks,
I’m looking at a 8-plex that is listed for 267K. Is there any possible way to get into a commercial deal with nothing out of pocket? I think I know the answer but I still wanted to ask. The seller is not willing to carry any financing so that’s an option I don’t have. Any thoughts out there?
Nate-WI
It is not possible to do a commercial deal with no out of pocket expenses. Even with 100% financing, you still have to pay closing costs, appraisals etc.
Usually with 100% financing, the property will operate at a negative cash flow.
Patti Porter
its definately possible. you just have to borrow the money.
I have found one lender who will do 100% financing for commercial financing. The lender will not allow me to have the seller pay for the closing costs. However, what I do is close in the beginning of the month. I have the Title company subtract the pro-rated rent and the security deposits from the closing costs.
If you close on an an eight unit apartment in the beginning of the month you probably would get about $5,000 in pro-rated rent and $3-5,000 in Security Deposits. If you have $8,000 in closing costs, you can have the Title company subtract the pro-rated rent and sec. dep. from the closing costs owed. 0 Down and no closing costs paid out of your pocket.
I need to add something to my comment. I think in order to get 100% you would need to have the seller finance some of the loan. I’m not sure, I’ve never tried to get a 100% commercial loan with no seller financing. Where I’m from seller financing for commercial loans in not uncommon, so just the realtor or seller with every deal you like.
how about sharing the bank that does these loans…i like to know more about them…any contact info??
Based on the appraised value of the property, 100% financing is available with hard money.
Of course, you have to be able you are able to breakeven, at least, with rates around 12%. You can use your primary income and the rental income to debt service. Most of these loans are for 1yr with No prepay.
Based on the purchase price, the appraisal would have to come in around $395K. The only thing you would need would be a part of your closing costs. I hope this helps.
This company does 100% commercial loans. They are really creative. They can do short term loans, or whatever odd deal you have. As long as it makes sense and has an exit strategy. If you have an odd deal, tell them what it is and they might be able to help.
One problem with them is their interest rates are 11-17% (around 14% for 100% commercial apartments), and they have additional charges if you are looking for a 1 or 2 month loan.
I have found it very difficult to get into commercial apartments with no money down. They usually just don’t cash flow, especially with interest rates around 14%. I think your probably better off trying to find the 10% down pmt some where else, and then doing an apartment loan with 10% down.
I know of a hard money program that will lend 100%, but you really don’t want to pay 18% + 14 points, do you?
You probably can’t find an apartment that cash flows with 100% financing through banks, the interest rate is too high. You will likely need to put 10% down in order to get an interest rate that is reasonable.
If you want to go 100% financing for Commercial Properties, then you probably want to try and find a seller that will do 100% seller financing. You could get a 7-10% interest rates if you do seller financing. Look for older investors that have been investing for a long time.