No Money Down Deals
What types of no money down deals are you seeing these days?
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Oh man... all kinds, lemme tell ya!
I know hard money construction lenders that will fund based on stabilized value after construction so feasibly if you tie up a property at the right price - you can do a project 100% with debt. But with high interest rates so it's almost as expensive as having a partner. I don't know any banks that will do this, I think the regulators are up their ass on this sort of thing these days
Great idea on the hard money construction lenders... Thanks!
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Hahaha... Oh boy
The most aggressive funding from an LTV basis is coming from the credit tenant lease groups.. You can get up to 100% LTV for acquisition or construction as long as its above 1.0 DSCR
Huh? Well of course the lender is going to be more aggressive on an AAA+ Tenant. What I don't understand is your second sentence- who in the hell is lending 100% LTV on ANY acquisition with a DSCR of only 1.0 or even a stabilized post construction DCSR of 1.0? What are you talking about? You have to give me an example of this. I can't think of a single example where I worked on a deal with lower than a 1.20 (ish) DSCR and the sponsor got a nonrecourse loan.
CTL financing is typically up to 100%. Stuffingham is right. It's not very common. He also forgot to mention that the the lease would be fully amortizing meaning that the underwriters lend 100%, but the principal and interest are fully paid off at the time of lease expiration. So a 20 year lease would fully amortize the principal. This is why they are lending 100%.
Are you describing 100% single tenant build to suits? What if the construction price is more than the PV of the lease?
This is commonly referred to as a zero cash flow NNN deal. It's max leverage not for the purpose of simply buying with max leverage. You meet your exchange requirement on the debt side. Now you still have all your equity. Then you buy a second property under normal loan U/W terms.
Some folks performing 1033's like zero cash flow NNN deals because there is no requirement by the IRS to utilized 100% of your equity. Debt doesn't matter either. You just have to have a proper upleg in price only.
We've done a couple billion in CTL deals over the last 5 years and while we will do 100% LTV, DSCRs are definitely above 1.10x stabilized, but most are above 1.15x. They have all been 2 year constructions loans that convert to 20/20 fully amortizing loans. Construction period is either full or partial recourse, includes completion guarantys. Leases have all been single tenant, build-to-suits for AA+ credit.
I've not seen a 1.0x deal yet. We certainly wouldn't do it just because of the capital reserves that we would be required to keep wouldn't make it worth it.
20/20 amortizing loans? 20 years? When you ink the construction loan with the CTL, is the converted perm loan built in or do they just have to find their own (through you or someone else whoever)?
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