Please Help: Residential to Commercial Rezoning + Hard Money
As a new investor, I don't want to believe a deal I've conjured will work without properly consulting the BP community first. Please consider the following timeline/information and let me know what I'm missing or if the idea is too far-fetched please:
1. With a hard money loan, I will purchase a somewhat large infill lot in Mesa, AZ for a GREAT price. I just put the offer in yesterday and received a confirmation of acceptance from the seller's agent today. Zoned as a residential multifamily.
2. After closing on this lot, I plan to get the lot rezoned as a commercial multifamily - I want to build 14 units.
3. After rezoning is complete I will begin to build, from the ground up, the 14 unit complex with another hard money loan. My estimate for construction is approximately $550k.
4. A couple of doors down from the property I'm purchasing, there is a 16 unit complex that is on the market for 1.1 million. I understand that commercial property value is based on cash flow/income rather than comp's - but this information is necessary I believe. I feel that once I complete construction and move in tenants paying the same, if not more, as the other property mentioned, that I could have a similar listing value/instant equity and the other property. Does that make sense?
5. After construction if finished, I'd either like to sell or refinance the property and pull out the equity.
Numbers:
Lot Price + Construction ($550k) = $600k
Similar property listing price = $1.1 million
My finished property with tenants value = $1 million
Equity to be distributed = $400k
My questions to you:
Besides selling my personal residence in 2013, I have no real estate experience. Will I get a hard money loan for the construction without any real track record? Approximately $550k.
If I do get financing for construction, will a traditional bank grant me a commercial loan once I have tenants? This is required in the event I want to hold onto the property. Selling is an option as well
As a plan B, in the event I am not even given an opportunity to build, what could I do with the lot? Go ahead with the rezoning and try to sell?
Oh by the way, I also have a 640 credit score.
Please help.