How Can I Incorporate Seller Financing in a Multifamily Purchase that has a Loan with Fannie Mae or Freddie Mac Financing?

How Can I Incorporate Seller Financing in a Multifamily Purchase that has a Loan with Fannie Mae or Freddie Mac Financing?

Fannie Mae and Freddie Mac (and many commercial loans) don’t currently allow subordinate debt. You can thank the Great Recession and Dodd-Frank for that. However, you can create two classes of investors: one for your equity investors and one for your seller. The seller class can have essentially the same terms they wanted in a note, i.e., they get paid first after the first-position loan; they get a fixed return; and you can buy them out by paying back the seller-financed amount with a refinance loan after a certain period, etc. The only thing they don’t get is a recorded trust deed or mortgage, and unless they want to be underwritten on the new loan, they may have to forego voting or takeover rights.

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About Syndication Attorneys

We are NOT your stereotypical law firm. We don’t believe in simply taking your money, handing you a stack of technical, often-incomprehensible legal documents and then bidding you good luck and good-bye. At Syndication Attorneys PLLC, we are committed to your success – not just with the project at hand, but your continuing success in business and investing. We are your long-term legal team.

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