When you guys say a bank will loan 80% ltv, that means obviously on a $100,000 property they would give me $80,000 towards the purchase and I would have to put down $20,000 myself right? Now say if I found a property that is worth $100,000 and I can get the seller to sell it to me for $75,000. If that is the case would the bank loan me the whole $75,000 to buy the property or would they only loan me 80% of $75,000? Since I can get it under 80% ltv I guess I am asking would they finance the whole property for me and myself wouldnt have to come up with a downpayment? I think it sounds kind of like what you are saying you do property manager. Also can you explain how a seller can carry a 2nd on a property to me.
Rory.
Propertymanager has a proven track record and has built a reputation with a local bank. It is unrealistic to think that a newbie or a novice investor can get 100% LTC(Loan to cost), no matter what the property appraises for. Stop focusing on 100% “loan” when you first start out but it will only lead to a dead end. I know how tempting it is, I wasted alot of time and energy on it when I began and that is when the capital markets were pretty solid.
Like I said, move on from it, look at different ways/techniques to get your hands on a property. If you do this by yourself, look at a SFH or a duplex that will offer some outstanding LTV’s…build from there. Eventually you may reach your goal of obtaining 100% financing. Or maybe by that time your goal will change. 100% financing doesn’t work in all scenarios.
Seller seconds have to be allowable by the lender in the first position. The seller will carry back a note in the second postion. For example, 100k property, bank finances 80k, seller finances 5k, buyer puts down 15k plus closing costs.
You would then be obligated to pay the bank first, then the seller second. The seller is essentially, another bank giving you a loan on the property, which will be recorded. This technique is used to reduce the buyer’s out of pocket cost and to make the CLTV(Combined loan to value) higher. In my numbers above the CLTV is 85%.
Just so you guys know even though my credit score is not great (576) it is on the rise, I have a really good relationship with my bank. I have my business account up there as well as personal so I thought maybe they would understand I do construction and have money with them. So maybe they would trust me to give me a 100 percent loan. I am in really good with the assistant manager of the bank (she wants to date me, her coworkers told me on her day off) and I have put alot of money through my bank over the last year. Does any of this help me you think with being able to get financing a typical newbie wouldnt be able to accomplish?
Sorry to be blunt…but …no
Its ok Lightbeing just taking a shot. Like I said they know my construction background and seen me do $250,000 in business just in the last 6 months plus I have secured loans through them and a cd so I thought maybe it would help me.
It’s nice that you have a relationship with them already, just keep building off of it. I’m sure you would have no problem getting a business loan with them for some type of contruction project, however, since you have no experience in RE investing, they would never assume all the risk.
Think of the bank as a parter. Why would a partner invest 100% of the money with an inexperienced player?
I recently purchased a property %40 below assessed and appraised value (no mortgage)…When I recently decided to do a cashout refinance I was given %75 of appraised value which gave me all money back + a few k extra than what I paid for the home…So there are many ways to create your own version of %100 financing if you have that type of deal…Banks are giving out money,don’t believe that they are simply shutting their doors…Banks need to lend…But the difference is they can’t do marginal lending anymore…
Rory,
No one on the internet can tell you with certainty what your bank will do. Why don’t you just ask them???
Mike
ok, I admit, I’m only 99.99999% sure
I’d love to hear their answer…
Lightbeing,
With a credit score of 576, I agree. In fact, I’m 99.9999999999999999999999999999999999% sure that you’re right. My point, however, is that typing on the internet isn’t getting the job done. If a person wants to check on financing, why not talk to the bank and actually KNOW the answer instead of just guessing! If I asked the bank about 100% financing and they said no, I would ask them what it would take to get 100% financing. Will they do that for their best customers? Would they do it if he had a track record? Will they do it for ANYONE?
Mike
agreed
My first time to post. Not even sure i’m doing it right
100% financing can be done. I have only done it one time as most of my purchases are tax liens. Found property that I was interested in. A junker, bad shape,etc etc. Went to local bank ( ok may 6 or 7 banks) checking on loans. One offered me full purchase price loan plus $2000 for rehab work. Me - happy? Never even realized what I had. I just knew I had the money to purchase the property and a little left over to do some work. Long story short. House had 5 acres of land that come with it. I knew this from checking records at court house. Real estate guy who sold me the house and i guess the property owners (finance company from out west somewhere) didn’t know about the 5 acres. Guy wanted to rent house with option to buy, he would do work on house. He was there about 5 months and house burned down. No, I didn’t do it. I had it insured for $26,000. summary: Bank loaned full purchase price $14,000 , plus $2000 for rehab work (total $16,000) insurance paid me $26,00 so in end I got $10,000 plus 5 acres of land in town. Gee, this house buying busness must be easy. :biggrin
Good score for you, just remember that we are talking about commercial properties in the current market condition.