Where r 0% down Commercial Lenders

I have searched 22 Commercial Lenders, I thought they’re were some who could give a nothing down loan. Was I mistaken in thinking this? We have good credit and want to buy 10 units but didn’t want to put up our cash for these. Any creative ideas to get these at lowest possible down or financing/ Thanks :help

97% commercial financing is available for owner occupied commercial transactions—100% is possible using cross collaterization in some cases…


Scott Miller

its been my experience most banks want something - even if the seller is taking back a second mortgage

I have met with a bank that I use and spoke with a local mortgage lender and both said %0 chance of getting anything lower than %20 down mortgages…But thats only 2 people I spoke with…But the current times I can’t imagine any bank/lender would want to %100 leverage to anyone…Think about it ,would you want to lend anyone %100 on a home?..I wouldn’t at any % rate…When a person has nothing to lose it’s very easy to walk away and stick the property with the bank…

I also think it’s a huge mistake for any new investor to start off with the premise they are able to not use any of their own money or should I say no money to buy properties…I think the real estate business and the banking industry is in disarray because of these type of loans…The real estate busines takes capital to get started,it’s another thing if you make some flip money to use…Then you are realistically using the houses money…So you are now not using your own technically…


Such might be the case with the one particular bank you spoke with, but such is not the case with everyone in the space (although 75-80 LTV is a popular cutoff for alot of commercial lenders).

Cross collaterization is considered by some lenders as “skin in the game”.

Aside from the 97% O/O scenario I mentioned in my original post, here are some other high LTV/CLTV commercial financing options:

  • 80% Lender 1st + 10% Seller 2nd
  • 75% Lender 1st + 20% Seller 2nd


Scott Miller

Local banks will do 80/20 cross collateralized loans using seller seconds. They’ve done financing for me where they will request a wrap around my personal residence until I’ve made a certain number of consecutive payments.

Gonna have to totally disagree with RookieNYC when it comes to closing deals with “none of your own money”. The business is not in disarray because people made deals leveraging other people’s money. It’s because they were giving loans to people with 500 FICOs with zero documentation for income and most of these people were counting on constant appreciation, therefore allowing them to take cash out of their properties when need be.

Also, it doesn’t take capital to get started in real estate. It only takes money if you can’t put a deal together to put you in an initial favorable position. My first deal ever I got 80% from the bank, 20% from the seller + $20,000 back at closing. Not a single penny out of my pocket to begin my portfolio. From there my holdings have grown to about $2 million and 30+ units. All started from a “no money down” deal. Are they harder now, you bet, but I always invest as little of my own money as possible. You’ve got to think even if you are investing your own money there is an opportunity cost to those invested monies.

When I posted I should have added those points as well…But overall what I meant was what you posted…You can’t put leverage into the hands of inexperienced,underfunded new investors…In any game…

As for the deal that got you started…Now those deals are very rare because every home study course has exposed it to the world…And to make matters worse any nickel and dime investor can compete with you…With what I’m doing (buying cash at very low bids) there is very little competition now and in my opinion there will be very little competition for years to come, and I can always cashout refinance if I choose to…best of both worlds in my opinion…Cash is king and always will be…Being liquid couldn’t be more priceless at this moment in time…And I should also add for any newbies here that owner financed properties are good and bad…Good because you get funding with lower costs and less out of pocket…Bad because you can’t simply sell them to anyone because the person holding paper (mortgage) isn’t necessarily going to lend to just anyone…Like I said both sides of investing are not correctly exposed all the time…

Now to get on this ridiculous subject of using your own money and lost oppurtunity cost etc etc…When you are talking about a person with few dollars then yes I agree…Take every chance you can to avoid using that nest egg…I am not that person…Buying the homes I purchase with my own funds does near zero to my reserves…You have to realize that not every person is the same here but all the same I value your opinion…I am simply chasing returns and avoiding creating more debt…Let’s not forget how much closing costs and bank fees cost and how it effects your profit when you sell,because all of those extra fees have to be recouped when you sell or that counts as a loss…Much like margin costs for a leveraged trader…People that want to over leverage are often trying to capture multiple capital appreciation oppurtunities by owning multiple leveraged properties…It’s simple math to me…Why do I want to leverage 2 properties if by owning one free and clear I’m making more INCOME (having lower maintenance costs,less issues overall etc…I have made the capital appreciation in other areas and continue to do so…I’m in this game to create income,not to make banks rich…Time after time I hear people talk leverage ,no one talks about how much it costs to borrow that money over time…I’m curious as to how many here have looked at a ammortization table to really see what that so needed mortgage is costing them over time…After the runup in RE over the last 5-7 years capital appreciation should be a dream for anyone in this game…Funny thing I don’t hear one single investor saying how much they are losing as home prices continue their slide…Both sides of the coin are not correctly exposed on this forum…This zero money game is wrong for new investors with no back up funds or overleveraged veteran investors with no back up funds…Many new investors who have no money firmly believe they can do well in this business with no money…That couldn’t be further from the truth…

Many new investors who have no money firmly believe they can do well in this business with no money...That couldn't be further from the truth..

Truer words were never spoken. While it is possible to buy a property with no money and bad credit, it is not possible to run a business with no money and bad credit! You are also correct that hundreds of thousands of “investors” have lost and will lose their butts since the bubble burst. Those that purchased retail and were counting on appreciation are in BIG TROUBLE!


My first deal ever I got 80% from the bank, 20% from the seller + $20,000 back at closing. Not a single penny out of my pocket to begin my portfolio. From there my holdings have grown to about $2 million and 30+ units

Could someone give me an example how this money back at closing happens as I don’t get how you buy properties and receive money back from who and why. I do better with number examples. Please someone explain :bobble

I’ll speak from my own experience so take from it what you want. My local bank actually encourages me to add money on top of the purchase price that the seller will then credit back to me for repairs which in theory is supposed to be used to upgrade the properties and in turn raise rents. Keep in mind though that these monies have to be built into the purchase price so you have to make a good enough deal to allow for it. For simplicity sake let’s assume you’re buying a property for $100,000 and we don’t care about cash flow, appreciation, etc.

Contract Price: $100,000 ($80,000 purchase price + $20,000 for repairs)
Seller Proceeds: $80,000
Cash Left that goes to buyer: $20,000

You will also have credits for deposits, prepaid rents, etc which will come to your side of the HUD. Here’s another example, I’m buying 4 properties for:

Purchase Price: $470,000
Seller Proceeds: $450,000
Credit to Purchaser: $20,000
Deposits: approx. $7,000
Prepaid Rents: approx. $5,000

Total Credits to Purchaser: $32,000 (20,000+7,000+5,000)
Closing Costs: approx. $10,000

Net Credits to Purchaser: $22,000…These are real general numbers but hopefully it will give you a better idea of how these deals work. Good luck.

Hello jbaldwin,

Thank you for sharing your success story. Just curious… I’m assuming you bought that property under market, otherwise the appraisal wouldn’t have supported the $100k value? And if so, did the sellers know they could’ve gotten more or is that part of the business? Finding motiviated sellers who don’t know the “retail” value of their property?

Also, most banks I know of usually have a limit of 3% to 6% non recurring closing costs. Is this a special aspect of your bank or specifically for you due to your relationship?

Last, but not least, did you have money set aside in the very beginning just in case there were any vacancies for your property?

Sorry for all the questions, just trying to see what I need to do in order to replicate your success…

Thanks in advance!

Buying a rental with a loan that is close to the market value is a certain recipe for disaster. Properties with mortgages at or near market value do NOT cash flow and therefore even if you have some cash back, it’s only a matter of time before you’re out of business. Never borrow more than you need and always do a cash flow analysis with REAL WORLD EXPENSE NUMBERS before you buy anything.

If you can buy at a HUGE discount, then getting cash back is fine, provided the property cash flows properly.


I have to agree with propertymanager,but everyone has their own methods…Best of luck jbaldwin…

is “Best of luck jbaldwin” some sort of backhanded compliment or am I being a cynic?

Guitar Loan Guy - You’re assumption that I would buy the property under market is right on. My starting offer is usually about 70% of the asking price for a property. Whether the sellers know if they could get more or not I really could care less about. I would say that now the general public is more aware of the value of their holdings but you never know the situation the seller may be in. So happens this deal I explained earlier I was buying from a guy getting divorced so he had to unload the properties quickly. I’m aware of the 3-6% non reacurring closing costs deal, but it has been my experience that that pertains to secondary market lenders. There was a lot of cash back things going on in the secondary market so to curtail that they put a cap on seller credits. That’s why I say my local bank encourages this type of transaction. They know me, they know the market and the properties so they feel comfortable with larger seller credit. Rule of thumb is if you use a mortgage broker you have to stick with the max 6% seller credit and if you use a local bank they’ll probably allow more. Finally with regards to your last question. If you don’t have money set aside in case of vacancies you’re dead in the water. In this business it’s called vacancy allowance(s). You have to build into your cash flow projections and ultimately your offer to purchase a vacancy allowance in case that happens. For example you should know that if you own a 4-plex and 2 of those units are vacant you can still cover your mortgage. That’s not any sort of rule, just a vague example. When I am analyzing a potential acquisition I use a vacancy allowance of 5%. That number can be a little different depending on your market, student housing is actually something like 2.8% according to the National Apartment Association but I use 5% to be safe, you’ll have to develop a number you’re comfortable with.

Also, the properties I have under contract for $470,000 appraised for $650,000 so I felt comfortable adding $20,000 to the purchase price to be credited back to me. If they would have appraised for say $480,000 I wouldn’t have done that because I would have been carrying a $470,000 loan on property worth $480,000. That’s what is referred to as being over-leveraged!!!

Just because you wish to carry heavy amounts of leverage and I don’t doesn’t mean what I say is a backhanded compliment…You have your methods and I have mine…Not to say any one is better or worse…It’s what fits the individual better…You are very successful at what you do from what it sounds like,so your confidence level should match that…Why would you even be concerned what a newbie RE investor like myself thinks of your methods anyway?..I’m here to learn not to criticize…I value all opinions/methods here,even if they do not fit my style of investing…

I am here for the same reason as well. When I read best of luck to me, I couldn’t tell if that was a sincere statement or more of a ‘smirk on the face’ comment, that’s all I was asking, no big deal. Good luck in '08.

jbaldwin - is this cash back for “repairs” basically the seller writing you a check after the loan closes?

[[[[…Could someone give me an example how this money back at closing happens…]]]]]

RUReady, you want to think long and hard about whether you want cash back at closing or not. It is NOT free money. You pay for it in a higher loan balance, more closing fees, and probably a higher interest rate.

If you have a really good reason to borrow the money is the only time you want money back. For example:

You need fix up money for the one you just bought, and you are considering the purchase price plus the fix-up to be your total purchase price.

You are going to use the extra money to make a down payment on another property.

You are going to use the cash back to pay off a mortgage on another property, perhaps to end up with a lower interest rate on the total of what you owe.

Money back is NOT money that you have “made” on the deal. It is money that you have “borrowed” (in spite of what those TV gurus want you to think)

Many investors get money at closing (or AFTER closing) and simply see it as income. If they still have a low LTV then why not pull out ten or twenty grand? Maybe buy a new boat or get the wife a nice necklace, I dunno. Yes, it is borrowed money, but if your LTV is still 70% - 80%, are you really doing alot of damage?

Tatertot - all of the reasons you mentioned are pretty much the only reason you would want to pull out money IF one is wanting to maximize their real estate holdings. That isn’t everyone’s goal. I’m not saying it isn’t jbaldwin’s goal either. I’m just saying…

However, if the seller is simply turning around after closing and writing the buyer a check for twenty grand, then that is loan fraud. I’m not trying to be anyone’s conscience. I’ve played the game where the seller turns around and gives me the down payment back after closing. Again, loan fraud. I won’t do it again. It’s very easy to comprise on your ethics and call it “creative financing”. I encourage all new investors to establish what they will and won’t do ethically before investing in real estate. There are alot of dishonest people in real estate. Alot.

Jbaldwin has not responded to my post yet so I’m not accusing him of anything. How he finances real estate is his business.

If they still have a low LTV then why not pull out ten or twenty grand? Maybe buy a new boat or get the wife a nice necklace, I dunno.

Would you go the the jewelry store or the boat shop and take out a 30 year loan on a boat or a necklace? I KNOW I WOULDN’T!