Is it possible to get 5% down on a apartment building?

In Buying Property - Asked by Ronnye L. - Aug 17, 2011
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Leah H.
Hopkins, SC

I think the best way for you to pursue a lower then average down payment for a mult-family is to make offers on properties that advertise owner financing.

Aug 17, 2011
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Adebo F.
New Castle, PA

You may want to find lenders that will allow owners who will assist you with some the down payment. You also may want to find "silent" partners who has the money to joint venture with you. Since the deal is your idea, you may be able to find a private joint venture where your partner puts down the required 20-25% down payment for 30-40% return at sale or at refinance. And if you were to find the right property, you may be able to refinance out, pay the partner off and own the entire project outright thereafter.
Please be careful of "fly-by-night" folks that advertise on here and other sites that they will do 90 to 100% financing. They are just out there to take advantage of your eagerness to get into 100% financed deals. Stay away from them since they will take your money and be gone.

Aug 17, 2011
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Rob M.
Seymour, IN

Hello Ronnye,
Great question and easy answer NO at least not with a traditional lender. You may be able to purchase on contract in a distressed situation, however still not likely. But listen, there is the HUD 223-F program which is 85% LTV and allows the seller to contribute up to 7.5% making your down payment only 7.5%. The kicker is your minimum purchase price needs to be around $4 Million.

Aug 22, 2011
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Alan C.
Suwanee, GA

No. Plus, most banks will not allow 2nd mortgages on a commercial property purchase. You will require what is known as a mezzanine lender or equity partner. There are many ways to structure this, and the firm you bring in will most likely have done it before, so the tend to be very sophisticated players. In short, be careful of who you invite to your party. If the property is under $1M, I would simply request 95% owner financing. Owner financing is fairly prevalent these days. Finally, you could always Master Lease the property from the owner, but that is a long conversation. I wish you luck.

Aug 25, 2011
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