Developers w/ own financing?

I think the Toll Brothers have a captive lender, if any of their developments appeal to you. Not sure they offer better terms than a third-party lender but I guess you could ask.

why would you want to purchase with less than 20% down?

While we haven't seen this yet, my guess is that at least SOME smart construction lender are going to realize that if they are willing to roll over their construction loans... NOT to the developers, but to end users, that they will get a good deal of risk diversification plus some cash out.... or certainly not as much of a hit as if they had to take the whole building and sell it as a rental or whatever property. And since a LOT of deals were done with no financing contingency, I think if there are buyer suits where they try to make some sort of "court of equity" type claims because they wanted to close in good faith, got a commitment letter, etc. but then couldn't close..... it will be a lot easier to force people to close if you have the financing for them.

For many years, when Rockrose sold their Sponsor units, they had a standard clause that they had the right to "push" their financing on a buyer at their sole discretion if a buyer wnated to opt out of a contract on the financing contingency. I think the reasoning was that people wouldn't "blow financing" on purpose to try to back out of deals if Rockroise could push above market financing on them.

Thanks!
As for why...because I may not have 20% down plus 1-2years mat. plus closing costs in cash after the sale of my current home in this market.

I bet any developer that offers direct financing will totally soak you on the sale price, and the interest rate.

Think car dealership sales games.

mary54: so perhaps you shouldn't purchase?

columbiacounty, obviously, that is an option, as is pulling money out of other investments to use for a down payment - always think it best though to explore all options and then make the choice that best fits the situation.

"I bet any developer that offers direct financing will totally soak you on the sale price, and the interest rate. "

As opposed to what? What the units would be worth if you couldn't get ANY financing in the building and every deal HAD to be all cash? Sure, but that's setting up a straw man to knock down because as soon as they close all the units with Sponsor financing, the building becomes financeable, and then they get priced very differently (i.e. higher).

http://www.streeteasy.com/nyc/building/257-west-117-street-new_york

The Fitzgerald is offering developer financing. The prices are too high though IMO. Not sure how they work out the sq/ft but the rooms are not what they say they are. Maybe they measure from the outside of the wall and include a common area factor.

The rates are decent, 95% at 5% but the prices suck so "I bet any developer that offers direct financing will totally soak you on the sale price, and the interest rate. " fits in this case.

Risk of low/no down payment is the lenders not the buyers. If the net cost is more attractive than rent, then it sounds like a good idea for the buyer. I'd be curious mary54, if you they did sell you the apt and provided 90 % financing, and the market continued declining by say 20 % would you walk?

talk about a straw man!

Samson revived their conversion at 905 West End by offering 90+% financing. I'm not sure a 7-year, high-LTV balloon in a building that's overwhelmingly rental is a great idea for the borrower (especially assuming it's a recourse loan); but the offer served its purpose from the sponsor's POV.

as 30 yrs has noted on an adjacent string: today's "deal" will often look painfully different when it comes time to sell. given everything that has happened in the last 12 months, it is difficult to understand stretching in any way to get an apartment. oh well.

Riversider, no. This is somewhere to live for the next 10 years. Wouldn't jump ship just because the market went down. I could, just as easily, buy a property with 20% down and the market can tank more and I've already lost equity so, to me, no difference really. I guess only difference to some is that they haven't moved in yet? The risk of needing to bring cash to closing? (but what is the difference, bringing cash tot he table to buy or cash to the table to sell) Anyway, I don't get it. It certainly can go down more and it very well might, but that's just a risk involved with buying real estate in this market and not limited to a down payment amount.
Thank you for the opinions and suggestions.

mary54....a wise rich man once said about getting a mortgage from a bank..."get them for as much as you can for as long as you can for as little as you can". Keep extra cash for emergencies and you are golden.