A lender in Chicago actually told me to walk away from a deal

Last Tuesday I was pitching a 12 unit building in Logan Square and the banker straight up said 'I wouldnt touch this at 5.8% fixed unless you got seller financing for 40% of the purchase price.' He then showed me his internal cap rate model with a 4.2% exit assumption that killed the whole underwriting. Have any of you had a lender talk you out of a loan that ended up being the right call?

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riley8602mo ago

4.2% exit sounds aggressive for Logan Square, most comps I've seen lately are underwriting closer to 4.75% even on stabilized stuff. The seller financing part is the real tell, if a bank wants you to put up 40% equity they're basically saying the deal doesn't work on its own numbers. I've had lenders talk me out of two deals that way, and both times they were right, just not always for the reasons they gave.

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