How to Buy Your First Commercial Property With Little Money Down
How to Buy Your First Commercial Property With Little Money Down
Two real term sheets on the same $400,000 building, read line by line. The local bank quotes 7.00 percent and the credit union quotes 7.75, and the cheaper rate costs $19,022 more cash at closing for 19 basis points of return. The reveal is that neither lender honors its stated loan to value: both fail their own coverage test and resize the loan down, which is the thing that surprises first-time buyers two weeks before closing. Closes with the exact package to send a lender before they ask for it.
Key Takeaways
You may not need 25–30% down: Deal structure can matter more than having a large amount of cash. But “little to no money down” doesn’t mean no costs—earnest money, surveys, environmental reviews, legal fees, and other expenses may still come up.
Four ways to fund a deal: Tyler covered seller financing, SBA loans, private money, and partners. The right option depends on the property, your business plans, and what the seller or funders need.
Seller financing is negotiable: Find out the seller’s motivation and whether they own the property free and clear. Terms can vary; Tyler described common ranges of 10–30% down, 5–10% interest, 20–30-year amortization, and a balloon in 5–10 years. He recommended fixed rather than floating rates.
SBA financing requires owner occupancy: The discussion described SBA options for buyers who occupy at least 51% of the property. These loans can reduce the down payment, but involve substantial paperwork and may take time.
Treat private money carefully: It can be structured as debt, equity, or a mix, but higher interest, short repayment terms, and deferred payments can create risk. Tyler advised having multiple exit strategies and making sure the repayment plan is realistic.
Define partnership terms up front: Agree on roles, ownership and profit splits, fees, voting rights, and the plan for refinancing or selling. Finding and operating a deal can bring value alongside the cash.
Be transparent with lenders: Disclose seller financing or other funding arrangements to the primary lender, and check the loan’s requirements and restrictions.
About Your Host:
Tyler Cauble, Founder & President of The Cauble Group, is a commercial real estate broker and investor based in East Nashville. He’s the best selling author of Open for Business: The Insider’s Guide to Leasing Commercial Real Estate and has focused his career on serving commercial real estate investors.
Tyler Cauble
This episode of the Commercial Real Estate Investor Podcast is brought to you by my CRE Accelerator Mastermind, where you'll get access to my step-by-step investment blueprint, essentially a library of resources on how to invest in commercial real estate. You'll get connected to a supportive community of other commercial real estate investors that are doing projects just like you, you'll get personalized coaching and feedback from me every step of the way. Go to www.crecentral.com to learn more. Welcome back to the Commercial Real Estin Investor Podcast. If you are joining us live, thank you for being patient with me. We had some technical difficulties this morning, which is always fun. So, my computer had to update, and for whatever reason, with the software that I have and the computer that I have, if the computer is not updated, the camera will not work anymore. So, it would be a a silent or a I guess a a non visual podcast for you all if we had taken that route. All right, today we're going to be diving into buying commercial real estate with little to no money down. We've talked about this a little bit before. We had a great weekend this past weekend. You know, I had a bunch of 60 members in town from the Accelerator Mastermind in person for a business systems mastermind, and I started thinking. You know what? We haven't done anything on like buying commercial real estate with little money down, and we have some members that have done some really really cool deals. So let's talk about it. Let's see what we could do if you want to buy commercial real estate, but you have little money. So if you're looking at getting us started in commercial real estate, you don't have to have a ton of money. That's a that is definitely a myth that a lot of people have heard when they're first getting into this industry. Oh, you got to have 25 to 30% down. And yes, that is true if you're going the traditional route when it comes to financing commercial real estate. But the truth is that structure beats the cash. There are so many different ways for you to structure these deals so that you don't have to bring that much money to the table. You just have to know how to actually utilize those structures. All right. A couple of our accelerator members have done some pretty amazing projects. So Matt here, this is podcast episode 370. He bought a 7500 square foot warehouse with $0 out of pocket. He did. He did. It says right there, seller note. He did 100% financing on this project from three private investors. Really, really cool. We've got Bob. He bought a $200,000 flex building. I was actually hanging out with Bob this weekend. This is what got me thinking about this because he's he's under construction, he's about finished, and he's already got two tenants that are looking at leasing this building from him. But $200,000 off of Facebook Marketplace, he brought in a couple of partners that paid for everything. We've got Tony Jones, who stacked a bunch of government grants and incentives, and I think he was out of pocket like 52 or $55,000 on a multi-story ground-up development project. Not to mention the litany of investors that are in the accelerator that have done all sorts of different seller financing terms. There's so many opportunities for you to get into commercial real estate if you don't have the money. Now, you do need to have some money. Like you literally can't have $50 in your bank account and think that you're going to be able to pull this off. Maybe you can, but you're probably going to have to go out then and find an investor that's willing to fund whatever your pursuit costs are for the project because you're still going to have money out of pocket. Now you might be able to get that back at closing so that technically you have $0 out of pocket or very little out of pocket, but you're still going to have to spend something. I mean, even if you go under contract, think about what you've got to put down the earnest money. You've got to pay for a survey, phase one environmental. Maybe your attorney's willing to save their fees until closing.
Tyler Cauble
You're still going to have some fees as you're going through the process. But here's four different ways that you can get into a commercial real estate deal with little money in. One is seller financing. I love seller financing in a market like today. It is really easy; it should be to negotiate for seller financing because otherwise, a lot of these sellers cannot sell their properties, and it gives them an opportunity to get out of it. It's a really easy pitch, and we'll dive into that here in a second. The SBA, you can put down 10% on a commercial property if you are going to owner occupy it yourself. That means your business is moving in and you are occupying the property. We'll talk about those details here in a minute as well. Private money, just like what Matt did. Maybe you're, you know, bringing in some private investors that are that are willing to just give you loans instead of structuring it as equity, that can cover a lot of different aspects of the project, and then of course partners. Partners are the the biggest hack. There are people out there with money that want to invest in commercial real estate that don't have the time to go find these deals, or they don't have the knowledge to pull these deals together. And that's where you come in, right? They bring the cash, you bring the deal. All right. So seller financing. One of the first questions that I get asked when it comes to seller financing is, who says yes to seller financing? How do you get somebody to say yes? Well, these are owners that really don't have plans for the money after they sell the project. I tell the accelerator members like go into it like you're an FBI agent. Figure out what their motivation is. Why do they want to sell? What are they doing with this money? If it's just oh I'm going to buy Treasury bills and you know live off of the interest or whatever, well cool. Well, why don't we talk about seller financing because you can make just as much money. You're not going to have to pay as much in taxes. It'll be secured by the real estate asset. There's a lot of really interesting things. All right, so first off, like the first thing to do is to figure out if the owner owns the property free and clear, because if they have debt on it, they're going to have to pay that debt off before they can actually sell or finance it to you, or you're going to have to get a winner to agree to it, which is almost never going to happen. So you want to make sure that the seller has it free and clear. Best way to give yourself a good chance of finding those sellers is to go for people that have owned the property for quite some time. All right, and then if they want income, then just ask for terms. See what they're willing to accept. Put terms in front of them. Most people have never financed something before. It doesn't have to be super complicated. You be, hey, I'll pay you 7% interest, interest only for 10 years, and then the note balloons. We pay you off, and we all walk on. All right. So many different ways for you to do it, the best thing for you to do is to know what the normal terms are. So let's run through typically what you will see on a seller note. Typically, you'll see 10 to 30% down. I have seen 0% down before. All right, I've also seen like 50% down on a seller note. It completely depends on all of the terms. So what I like to tell everybody is that it's you know there's all these different levers, right? I mean, if you're if you're watching me on YouTube right now, you can see you've got the equity, the down payment, you've got the rate, you've got the amortization, the balloon. All of those are different levers that you can pull. Okay, so typically you're in the 10 to 30% down payment range. All right. Now, rate. I generally see that in the five to 10% range. Now, that can vary drastically. I've also seen it at 3%.
Tyler Cauble
You rarely will see it higher than 10%, just because that starts to get into well. You know, we'd have to make other terms in this deal so strong that we can justify having higher than 10% interest. Okay, so I would say five to 10%, pretty normal. So, like in a market like today, when when like the the whole reason you want to do seller financing is if you can get better terms than you could at a bank, right? Less of a headache. So, if interest rates today are 7%, I'm going to go to a seller and I'm going to be asking for like five to 6% interest. All right. Then on the amortization, you know, we typically see 20 to 30 years. 20 is very typical if you're going for a traditional bank loan. 30 years is pushing it more towards like the residential side. I wouldn't go any higher than 30 years on a mortgage, there's just no point, in my opinion, because you're really not paying anything off. I mean, it's it's insane how much more in interest that you will pay. Now, to be fair, we're going to have a balloon in five to 10 years, so it's not like they're going to be holding that note for 35 years or 40 years, whatever that ends up being, but you real like it really doesn't change your payment that much, and you're not building up equity as quickly. So I would say 30 years is typically the max that I like to see. Generally, balloons in that five to 10 year range, which means the the the loan comes due in full. All right, so you would refinance, or you would just pay them off, or you would sell the property and pay them off. However, you want to do it. I've also seen balloons in the three-year range. Those are typically a little less common. That's more of an owner that just wants to get something, you know, really. I don't know. They, they, they want their money back, and they they don't want to be tied up in this for too long, and then rate floor. I mean, you could also look at this as well. You know, I've got the IRS AFR on there, but I would also say like you could look at SOFR, you could look at Wall Street Journal Prime, you could figure out what the like if you wanted to have a floating rate. I typically recommend against that. All right, I would not do a floating rate ever, ever. It doesn't matter. Like there's never been a good time in the United States ever to do a floating rate loan. It's a dumb idea. I would just look at the the interest rates that you are paying. Whatever the delta is between a floating rate today and what a fixed rate is, that's insurance. All right. So anyway. Matt got 100 financing on his deal. He went out to three private investors. I have seen investors get 100 seller financing on the deals, or they bring 5 down. I've even seen you know 5 interest only for 10 years because you know the seller really wanted to get their purchase price. They didn't really care about you know financing it for 10 years for whatever reason. Just the number looked really good to them. So find out again. Act like you're an FBI agent. Find out what is important to that seller, and then go deliver that to them. See what you can negotiate there. So the big thing with that is is asking about the terms, not necessarily the price. All right. Like, would a steady monthly income beat one big check? Are you prepared to pay for all of the taxes that you will have to pay if you sell this property? Right, and then you start to get into okay, you know, would a 5%, 4% interest rate and and a you know five year term work for you? There's so many different ways for you to start to structure that. It's a lot of fun, and I just look at it as a big puzzle. Like, how do we put this thing together? All right, SBA loans.
Tyler Cauble
If you are going to owner occupy, if you have a business, whether that's a you know retail or manufacturing business or something like that, even if you are a professional real estate investor, you can go use an owner occupied commercial real estate loan to buy an office building, all right, and you as long as you are occupying 51% or more of the building, you will qualify for owner-occupied terms. So if you think about that, you could go buy a four-1000-square-foot building, occupy 2000, you know, 100 square feet of it. Rent out the other 1900 square feet, and you're basically house hacking commercial real estate. All right. Now, whether you're doing the SBA 504 or the SB seven A, most things are going to be pretty close together. The biggest differences between the 504, the 504 is generally 10% down. The SBA seven A is is set by the lender, so it could actually be 5%. It could also be 20%. It depends on the specific lender that you are working with. The 504 is generally used for buildings and equipment. The seven A also includes some working capital in there, which you know, unless you're buying like a hot or building a hotel, you're probably going to go the 504 route in this case. And then generally, the 504 is a bank and a CDC that come together to fund everything for you. It is a total pain. We have a client that's going through this right now. He's had to extend his his purchase and sale agreement like five or six times to try and get the 504 everything lined up properly. Seven A is a lot simpler because you go to one SBA lender, right? So obviously you have to have a business. This cannot be a passive side gig for you. But if you're interested in doing essentially a commercial house hack, that is one way for you to go about doing it. Now, the biggest thing is that if you are going to go this route and you are going to owner occupy and you're going to use an SBA loan, now there are other owner occupied options that are not through the SBA. You can talk to your local winners about it. But if you're going to go the SBA route, you have to make sure that you are doing everything by the book, and that you are taking it seriously, and you are putting everything together and working on this as much as possible, it is going to be miserable going through. Like I promise you, these these loan programs are are very much worth it, but it's a government loan, so you can imagine how much red tape is involved in dealing with this kind of stuff. So when you got to find a lender, you know you can go through a lender match, or you can go through a CDC, you can find a mortgage broker, you can just call your local banks and see if they are an SBA lender. All right, then you're going to pick a program depending on exactly what your goal is and what's going to best fit that either either the 504 or the seven a, and then you are going to build out the file. And this file is what often takes the most time. It's a ton of paperwork. It's a ton of forms. All of your you know two or three years of taxes. If you're doing any construction, they want to see like full construction bids. They might even want to see permits in hand before they're willing to fund. It can get really, really, really messy. And of course, for you know, bring equity, typically in that 10% down range. All right, private money. This is where things can get fun. All right, because you. I mean, here's the thing. Like, there's no rules. You can kind of. I mean, there are some rules, obviously, but you can kind of structure these deals however you want. You know, if you're bringing in some private money, like that private money could be, you know, partially lending, partial equity. You know, you could have a group that comes in and funds 100 of the deal, but they they want you know half of that cash as equity and half of it as a loan. There's so many different.
Tyler Cauble
Ways to do it, and then you could even stack a seller note with some private money. All right, so maybe the seller, like in this example here, maybe the seller is giving you 100% seller financing. You might be thinking, well, why would a seller do that? It's because they're probably going to charge you a nice interest rate, or you know, there's some, there's going to be something in it for them, right? Maybe they just want to get out of it, but there's going to be something in it for them. Maybe you're bringing some money to the table to, you know, maintain, repair, do some construction updates. You're actually building equity into the property, and that would be my argument for 100% seller financing. Is like, hey, finance me the property 100%. I'm bringing $200,000 of my own cash to upgrade the building. If you ever have to foreclose, you get my $200,000 in upgrades. It's a huge, huge win for you, right? So anyway, you could structure it as like a seller's giving you 100% financing. You have a private money lender that's coming in to give you that $200,000 if you wanted to to structure it that way to make those upgrades. Now, I don't like getting into deals where I'm just stacking debt on debt. It's it's irresponsible. It's a you can very quickly get hurt. You guys have heard me say before that debt is like an ax. If you know how to use it, man, you could chop up a tree pretty quickly. But if you don't, you're cutting off your foot. All right. So make sure that you really, really, really understand what you are getting into when it comes to private money, because you know I would say more often than not, out of the four different strategies, private money lenders tend to be more loan sharky than some of your other options. Okay, so when you're putting these together, just make sure that you're structuring the loan properly, okay? And some of this will apply to seller financing as well. So, you know, Matt, when he came on the show, he told us he was paying 10% interest on the money. I would say eight and a half percent to 11% interest is pretty common, especially these days with traditional bank loans being as high as they are. You will see rates in the 12 and 13% range. All right. Term. Make sure the loan term is longer than you need. You don't want to just try and time it up so that you're you're really really cutting it close. I mean, if you know, I generally see this in the six to 24 month range, but airing towards the 24 month side of things, because in six months, like unless you're just already bringing a tenant in that you have a lease executed with, and you're going to be able to refinance it pretty quickly, like that can get very risky. The thing to me with private money is that I like to have two or three exit strategies very very quickly, because while this can be a great use of capital, like hey, I don't have to put any of my own money in. I'm getting a lot of money from these other guys. To do this, that interest and those fees can very quickly add up to a point to where you're drowning on the deal, and it can very quickly cause a problem. Generally, what you will see for security with private money is kind of whatever you negotiate, maybe there's a personal guarantee, maybe there's not, maybe there's a note with a recorded mortgage. I mean, you're probably definitely going to have that. Probably going to have some sort of lien or something on the property. Maybe you're going to have other assets that are going to be encumbered because of this. Maybe they're just willing to, you know, take your interests in the property. You know, there's there's many different ways that you can look at structuring these deals. The nice thing is, again, like you know, banks to me are very rigid. Like there's, I mean, nine times out of 10, you know, they're following this straight line.
Tyler Cauble
No matter which bank you talk to, but private money or seller financing, you can really start to pull all of these different levers and negotiate it in a way that works for you. And I know you're probably sitting there thinking, like, okay, well, like, what should I be doing? Like, how can I make this work for me? Go into your underwriting. Go into the deal analyzer. Start changing up the financing terms and seeing what works for you. Maybe it is pushing it to a 25 year amortization. Maybe it is doing 5% interest only for five years. Right? There's so many different ways for you to do it. That's what gets really really fun with this. And then payments are they interest only or are they deferred? Matt actually ended up deferring his payments, which is really cool, for 24 months. So he has he's paying 10% interest on this money. He's got payments deferred for 24 months. What a great deal! Now, it's all going to accrue up until that 24 month point, at which point he he's got his balloon. He's going to have to deal with paying the interest and paying the principal back. But he has 24 months to figure that out. He's already brought tenants into the property. He's already cash flowing the property because he doesn't have any payments. That the the interest is just accruing on the side, and he can refinance and pay that off relatively easily. So, are you going to be paying interest only? Are you going to be paying full term, like you know, principal and interest, or are you going to be deferring? Those payments again. So many different ways for you to structure that. And then, of course, when you're bringing in partners, cash meets deal. Deal meets cash, right? The cash goes for the down payment and those reserves. The deal is whoever finds it and whoever runs it. You can split this up in any way that you want. If you're bringing partners in, what you are doing is equally as valuable as the money. Like that's one thing that I want to make sure that you are taking away from this conversation right now. If you are finding a deal, there is value to that. If you know how to execute and operate a deal, there is value to that. And my argument would be: if you know how to find and execute really good deals that is equally as valuable as the cash. All right. So if you're going out and doing this, then you should be able to find partners that are willing to give you the money because you know what you're doing and you can go out and probably double their funds. All right. So what you want to do is make sure that you set up the partnership the correct way. Now, when you are first starting to approach partners about bringing cash to your deals, you will want to have a conversation with them about one, what are they looking for, and then you guys want to go ahead and have kind of these partnership terms on the table, not necessarily agreed to, not necessarily in an operating agreement, but it's like, hey, if I bring a deal, we're doing 50-50. I will do all of the work. You sip your, you know, Coronas on the beach, and I will double your money because I'm the one executing the deal, and you're the one bringing the money. All right. So make sure you at least have that kind of figured out. You don't have to do an operating agreement. You don't have to have an LLC until you actually have a deal, but make sure that you agree to the split. How is it going to be split? If I bring 100% of the cash, am I getting 50% of the deal? Am I getting 80% of the deal? What about the profit? How about any fees? Is there a developer fee? Is there an asset management fee? Is there a refinance fee? There's all sorts of different fees that you can bake into these deals, and we've done tons and tons of videos on that, and and I train a lot on syndication inside the accelerator, or I've got a course out there, the Beginner's Guide to Commercial Real Estate Investing, that covers this in depth.
Tyler Cauble
If you guys really wanted to figure out how to like keep the lights on, so to speak, while you're doing your first deal, then make sure you're assigning the roles, right? Who's responsible for finding the deals? Who's funding them? Who's running them? They don't all have to be the same people. You could split up the the tasks in many different ways, as long as you're comfortable with who you're bringing in as a partner. Okay, then set the voting right. What are the major items that the person that's running the day to day needs everybody else's permission for, because you don't want the person that's running the day to day to have to come back to the partners to negotiate a lease. Like that's just going to take way too long. You know that like they should probably have the latitude to make the best decisions for the property in that lease, but they shouldn't be able to sell the property without the without the partners being involved, or refi it, or do any sort of capital calls, anything like that, you want to make sure that there are certain decisions that a a the operating partner cannot make without the rest of the partners. All right, so make sure that you are clearing out how the voting goes, and then of course plan the exit. You have to be on the same page. If your partner is is expecting to have their money back in three years, and you're planning on holding this asset for 20, you guys are going to have a fight at some point, and it's not going to go well because they're going to want their money back, and the only way to do that is to sell this asset that you thought you were going to keep for 20 years. All right, so make sure that you have those terms figured out. Now there are lender limits when you're getting into these deals, so just make sure that you understand what lenders will and won't do. Right, the SBA will not fund a rental-only building; you have to owner-occupy it. All right, I know it sounds pretty nice, like oh, let's go get a 10% down loan from the SBA, and we'll just you know buy rental only buildings that we will not occupy. You will get in trouble for that. They will also not waive your personal guarantee, like the SBA specifically. That you you are personal guaranteeing no matter what, and they're probably also going to put some prepayment penalties on you. That's a lot of fun. I think that they do a 321 or a 54321, which means that every year, you know, if it's a 321, if you refinance in year one, it's a 3% fee. If it's if you refinance in year two, it's a 2% fee. If you refinance in year three, it's a 1% fee. So it's a 321 step down. All right, banks typically will not lend 100% of the price, like a traditional bank. You will find some lenders out there that are willing to do that, but more often than not, they just generally don't do that. It doesn't even matter if the property appraises for 30 million dollars more than whatever you're buying it for. They want to make sure that you actually have skin in the game, and there's also a lot of regular. Around that, and then banks will not count a seller note as down payment without approval. So make sure that if you are doing anything with the seller, whether you know, like if the seller is doing some sort of carryback, all right, bank is bringing 75% in, and the seller is carrying 10%. Make sure the bank knows. Disclose everything to the bank because the last thing that you want to do is do something that puts your loan at risk, and they immediately call your loan. All right. The next thing is know your dates, like when you're getting into all of this. So, if you're negotiating with partners or you're negotiating with lenders, make sure that you know when closing is, when the lease up is supposed to be done, when you guys are planning on refinancing when the balloon or the payoff is coming up. When you guys are planning on exiting and selling the property, make sure that everybody is on the same page.
Tyler Cauble
Communicate, communicate, communicate, over communicate through everything. And then I'm going to open it up for questions. If you guys have any questions in the chat, but your next move, one, pick your way in. Pick one of those four and just become the expert on it. I have tons of videos on seller financing. We have tons of videos on private money. We have tons of videos. I actually don't have any videos. I don't think on SBA SBA lending. It's not a lot for a reason. It's a it's a really really big pain in the ass. It can be worth it, but it is a total pain. And then of course when it comes to you know equity and investors, like we've got a ton of stuff on that. I teach you guys how to raise money and syndicate on this channel all the time. Then find an owner, right? Go find them. Hopefully they they own it free and clear because that gives you the the biggest blank slate for you to actually go out there and negotiate a wide range of terms that could possibly work for you. Ask them for your terms or or present your terms, whatever you think is going to work best. I like to present my terms first because that kind of anchors the deal, right? If if if I offer them 5%, we're anchoring at 5% interest. Whereas if they start at 10%, now we're kind of anchored at 10%. It's going to be very hard for me to work my way down to six from 10 than it would from five to six. All right, and then join the accelerator. If you have any questions about going through the process, about finding these deals, funding them, executing them, doubling your money throughout the process, that's what I'm there for in the accelerator. We're working with got over 154 members across the country at this point that I'm helping buy their first deals. Some of them are on their third, fourth, and fifth deals. It's a lot of fun. This is the kind of stuff that we cover in there every single day. All right, guys, let's get your questions. We had a couple. Jason saying, "I'm one of Tyler's students. Please send me your commercial or residential deals that you need help with." Let's JV some deals, Jason. He is religious about jumping in there on on these deals. Let's see. Saying I try to pitch seller finance with the tax advantages. Any other recommendations to get a seller to sign? That's a great question. So for seller financing, like the tax advantages are pretty great, right? Because they're not going to be paying a big chunk of taxes right then and there. Okay. The other thing is that I mean, one they've got the security of the property. I always love that, right? That's what I always tell the sellers: like, hey, I'm bringing you $100,000 down, but it's also secured by the property. So, if I ever default, you get to take the property back. You get to keep my $100,000. You get to keep every payment that I've made. You get to keep every release that I've signed. You get to keep every improvement that I've made. It's like the smartest move ever. Are you kidding me? Like you, as as the seller, they were kind of like, I hope you default because I get a really good deal if that's the case. You know, the other thing is too is just like what what other what other investments do you know like trust and understand as much as your own building, and you know, do you really want to go into treasury bills or anything like that? It's you know, so there's like a ton of ton of benefits to seller financing. I think the the biggest thing there that people get caught up on is like, how do we structure this? Like I'm not a bank. How do we do that, dude? Your attorney can put some relatively simple loan documents together, right? It's it's relatively simple. It doesn't have to be overly complicated. Jason is saying I'm in the accelerator. Best money I've spent. Cheers, Jason. I appreciate that, man. Let's see. Saying would you give the seller equity? I mean, I'm not opposed to it. If so, like that's you could kind of call that a seller carry.
Tyler Cauble
I mean, there's a lot of interesting ways that you can look at doing that, right? So at that point, the seller could kind of contribute, you know, whatever equity they have into a joint venture with you, you know, that you could basically buy in by bringing the loan to the table. I wouldn't necessarily buy into their existing LLC because then you're going to be assuming all of the previous liabilities of that LLC. But yeah, you could say, "Hey, look, you want a million dollars for this property? I'll give you $750,000 and a 250.". $1,000 equity stake in my venture, so that you know which equals you know what I think is going to be 25% of what this property is worth or 30% whatever right, and then you can also structure it to where when you sell the property they get paid back that $250,000 first and then everything else is split, right? So there's so many different ways to structure it. Yeah, he's saying, can you can you balloon the equity? Absolutely. Yeah, you could have a trigger in your operating agreement that says, hey, you know, in year five, you know, Jason has to get bought out for two times his investment. If you guys sign that and you agree to it, I mean, hey, that's in your operating agreement. That's how things are going to work, right? Which is pretty great. So, like, that's, you know, I hope you guys take away from this conversation that you are unlimited to the different structures and types of deals that you can do if you start to get creative in this way, and you start thinking outside of the box, you can structure these deals however you want. I've seen deals where the guy this is back when I was a broker. The guy, the buyer liked the the it was I think the seller pulled up in a Bentley. He liked the seller's Bentley, so he was like, "I want that Bentley as part of this deal, and they worked out. They traded that Bentley went with the building. Like you can do kind of whatever you want. I mean, that's the fun thing about this. So, you guys know my favorite quote is by Miles Davis: "You have to know the rules to break them. The more that you study how this stuff works, the more you can realize, like, okay, I can actually shift this and change it up as much as I need to. All right, guys, appreciate you all for joining me live every Tuesday, 8:30am. Central Standard Time. We're going live. We're giving you guys advice on commercial real estate. I'm answering your questions. You guys feel free to jump in. And also, quick favor: if you are listening on YouTube or you're listening on Apple Podcasts, Spotify, you're enjoying the show. Please rate and review. It's super helpful to me. Super helpful to people that are wanting to get more into commercial real estate because then they can find the show and they can learn more about getting started. Appreciate you guys, and I will see you all next week. This episode of the Commercial Real estate investor podcast is brought to you by my CRE Accelerator Mastermind, where you'll get access to my step-by-step investment blueprint, essentially a library of resources on how to invest in commercial real estate. You'll get connected to a supportive community of other commercial real estate investors that are doing projects just like you. You'll get personalized coaching and feedback from me every step of the way. Go to www.crecentral.com to learn more.
Two real term sheets on the same $400,000 building, read line by line. The local bank quotes 7.00 percent and the credit union quotes 7.75, and the cheaper rate costs $19,022 more cash at closing for 19 basis points of return. The reveal is that neither lender honors its stated loan to value: both fail their own coverage test and resize the loan down, which is the thing that surprises first-time buyers two weeks before closing. Closes with the exact package to send a lender before they ask for it.