Finance Commercial Properties
Most real estate investors know the the requirements to finance commercial real estate and income producing properties include the down payment, a borrowers credit, the type of property and the income that the property generates to pay for the loan. There are other requirements but these are the most important and are generally universal from one lender to another. Based on these underwriting guidelines the the greatest barrier to most investors is having the substantial finances necessary to meet the required financial investment, net worth and reserves necessary to purchase income producing commercial real estate. The little known and even less used down payment assistance program for commercial income producing real estate is just what is needed to bridge this gap.
Down Payment Assistance
In residential real estate sales there are many down payment assistance (DPA) programs. Most are for first time home buyers and or low to moderate income home buyers. The funds are given by non profit organizations, banks and federal state and local government entities. There are no programs for investors or borrowers who were not going to live in these properties as their primary residences. But there was a program that allowed the buyer of a home who was getting an FHA loan to get DPA from a non profit agency. Based on that criteria there were non profit organizations like Nehemiah, AmeriDream, Genesis or Partners in Charity that would give assistance but would get their money back plus a fee from the seller. Though they sent their money to the closing, the seller would have funds sent to them from closing and the settlement agent would represent all parties to ensure all funds are given to them in escrow and then release simultaneously. This means the seller gave the money. FHA outlawed the use of this program in 2008. Today the Commercial Investor DPA program works in a similar fashion, allowing investors to purchase income producing property with little or no financial investment.
Creative Financing for Commercial Income Producing Property
The residential seller assistance programs offered through the aforementioned non profit organizations was in fact creative financing. My definition of creative financing entails two necessary key components. First the seller is willing to work with the buyer. Secondly, there is equity in the property. If you are a buyer or seller and you want to make a transaction happen based on the value of the property contact us. We can employ the DPA program or other programs to ensure this is a win – win situation for both buyer and seller.
Many investors have misunderstood this program. The Down Payment Assistance is Seller Funded. The Seller Must have Equity in the property they are willing to give you. When the purchase transaction is structured properly that equity can serve as down payment. funds must be sent to the table and the seller (through the escrow agent) will send funds back to the investor that sent funds on behalf of the buyer.