Kim Lisa TaylorSecurities Attorney, Founder, Syndication Attorneys, PLLC · Corporate Securities Attorney, 2x Best-Selling Author, Nationwide Speaker | Private Placement

Why 100% Financing Rarely Works in Real Estate Deals 🏘️❌ #InvestmentTips

5 Dec 2024 · 1 min

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In this segment, the speaker advises real‑estate investors to prioritize institutional loans rather than relying on seller financing, especially in the first lien position, unless the seller can offer a better rate than a bank. He explains that the required down‑payment percentage (e.g., 30% vs. 40%) directly determines the purchase price and that investors should plan to add value by making property improvements and assuming management responsibilities, rather than simply raising rents, to avoid tenant displacement concerns. The speaker emphasizes that fully‑financed (100% financing) deals almost never succeed, except in niche fix‑and‑flip scenarios where hard‑money loans may be more appropriate.

Chapters

They shouldn't really even be able to dictate how much you put down because you should be getting an institutional loan anyway. And then they're behind that. You don't necessarily want them in first position unless they're gonna be giving you a better deal than what you can get from a bank. If you want 40% down, then, you know, then this would be the price. If you want 30% down, here would be your price. Because, you know, we're gonna go in, we're gonna make our improvements, we're gonna take over management, we're gonna do, You know, what we do, and then, you know, when we're going to be able to increase the value of the property. You may not want to say we're going to increase rents because then they'll be like, oh, all of our tenants are going to get kicked out. You might just say, you know, we're going to increase the value of the property through improvements. But 100% financed deals hardly ever work. They really only work for fix and flippers, you know, and even them, typically they even typically work better if they have a hard money loan.