Chicken or the Egg

Im looking to purchase multi unit rental, 4 or more units per deal. I have little money i would like to hold onto for later use. Have 580 credit score. 100% financing. Do I look for funding first or do i find a property to buy first. If i find property first what should be in contract to get out if i can not get funding, or should i talk to a RE lawyer. Do funding sources go by more of asking value or sales price.
In Buying Property - Asked by Brian C. - Aug 12, 2009
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Answer(s)

Chris G.
Broker/Agent
Lynchburg, VA

You can put language in your contract with the seller that makes the contract contingent upon your ability to obtain financing within a certain period of time. That is not unusual. You would probably be wise to talk to a lender even if it is only to establish a relationship and get your preliminary qualification questions answered. That would speed the process in the event you find a suitable property to buy.

Aug 13, 2009
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Cassie M.
Broker/Agent
Saratoga, CA

Your question doesn't specify your location, but putting contingencies into an offer to purchase Real Estate is very standard. You can have a financing contingency and also make your offer contingent on inspections and disclosures.
When you perform inspections, you have a time period to hire inspectors that will determine the state of the property. If you find anything you don't like, you can cancel the offer within the contingency period or ask for repairs or a reduction in price to cover the unexpected cost to repair or correct the issue.
Hire a professional Realtor to assist you with this transaction to make sure you are protected.

Aug 13, 2009
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Cassie M.
Broker/Agent
Saratoga, CA

I re-read your question and the first one you asked was whether or not you should obtain financing first or find a property first.
Talk to a lender first and find out what loans are available for the type of property you want. Get yourself pre approved so when you write an offer you can submit the letter from the lender showing you can actually get the loan. This makes your offer much stronger and allows you to move forward quickly once your offer is accepted.

Aug 13, 2009
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Davide P.
Broker/Agent
Pinole, CA

Brian, please don’t take this the wrong way, but there is a slim to none chance (highly leaning towards none) of you being able to find what you are looking for with 0% down. Even if your credit was a 780+, it's just not going to happen. In regards to any property with 5+ units, you are going to need 25% down minimum. However, if you are looking to purchase a 4 unit or under property and you are going to OCCUPY the property, you can POSSIBLY do a FHA loan with 3.5% down. There are lenders who do FHA loans with 580+ FICO's instead of the common 620+ FICO. These lenders are very difficult to find and I have only seen them do single family homes. I do not know if they can do 2-4 units or if they require more than 3.5%.

Aug 13, 2009
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Gregory G.
Broker/Agent
San Francisco, CA

You should fix your credit first

Aug 13, 2009
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