Hard Money for the Down Payment?

June 2, 2009 3 Comments

This is another topic that seems to generate a lot of confusion for real estate investors – getting a hard money loan for the down payment on a commercial investment property.

The problem is that many investors think a 100% loan to cost (LTC) loan is readily available from commercial hard money lenders. Unfortunately, this is NOT the case. Most will require that you or your investment syndicate have a minimum of 30% cash into the deal.

There is no 100% loan to cost commercial loan. And no hard money lender that I am aware of that will lend the money for the down payment anymore. There are some commercial lenders that will advertise a 100% LTC loan but they will either 1) take your upfront fee money and decline the loan for some stupid reason or 2) require participation (major equity + 6-10 points) in your deal.

The way that commercial investors get the money they need to fund the down payment on a commercial investment is typically by syndication. That’s putting together a group of individual investors as equity partners to invest as a group.

So, if you are looking to make the move to commercial investing I think it’s a great decision. But if your plan is to borrow the down payment from a hard money lender, you’re wasting your time. Your time is better spent developing your network of private lenders and investment partners.

Commercial, Financing
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3 Responses to “Hard Money for the Down Payment?”

  1. Andrew Richards Reply February 27, 2011 at 1:02 pm

    Looking for down payment assistant

  2. Maire Reply March 28, 2011 at 11:04 am

    Great info 2 known as new investor!

  3. Matt Reply January 8, 2012 at 10:32 am

    Looking for down payment assistant, for commercial.