So after reading, and watching, and more reading. A deal I think fell in my lap.
The quick and dirty.
6 units, each is a 2-1, street parking in a up and coming area. Rent goes for 750-800 in the heart of Birmingham. And called a few other multi-unit in the area on prices. HUD pays that or close to that so my income amount should be pretty sure.
Taxes are 1200 a year, needs around 80k in rehab which IF i were to do it I could cut it down to 60ish.
Owner wants 20k a unit and is after we hit off to well, is willing to carry a 100k note with 20kish down.
All the units have their own meters and such, so no items on the monthly besides the insurance and vacancy.
Questions, thoughts. I kinda have the "I've been chosen" feelings very excited. And after running the numbers and even after a 50% cut it comes out great. However, would it make a 203k loan. As I said very new and hoping for insight.
Thanks in advance.
I believe 203k loan is only for up to 4 unit multi-family properties.
6 units is considered commercial and might not be eligible under 203K see the link above for more details
Anyone ever worked one of these with only redoing 4 units?
6 units doesn't qualify for any type of FHA financing. Also, 203k is for purchase and renovation, Not just renovation.
Well, I would roll the 120k in with the renovations if I went down that path. Anyone have any other typical financing on this?
You could convert the 6-units to a 4-unit property and it could qualify for FHA 203k Loan.
Could you condo the units and finance each seperately using a 203k loan? Or you could possibly do the same thing for townhouses that are already on separate parcels of land. Just an idea!
Is the issue financing the improvements and down payment or financing long term? With $6,000+ in monthly revenue you should be able to get a long term commercial loan. I've never done this with commercial, but I frequently use hard money during the improvement period and refinance to a long term loan. I would talk to a commercial lender first, but in theory you should be able to improve the units with a bridge loan, generate revenue, and get a commercial loan based on it's new value as an income producing property.
It's all one building. And not zoned to be sold each. But I guess I could change the unit amount. However, if the requirements have it as 4, in the start of the project its very obvious that there are 6
By the way, that is a great deal and you have been chosen (assuming there isn't more to the story). Congrats!
And I like the commercial idea. Anyone have a contact for a commercial loans in the Birmingham AL area?
I like deals. And I was in it again today. My figures were pretty close. Doesn't look like it will be much of a surprise on the end price.
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