I have a client right now who I am helping to get financing to re-finance a six unit property that needs extensive work at 0% occupancy.
Step #1 We calculated the pay off amount.
Step #3 We estimated the rehab costs based on a contractor inspection and analysis
Step #4 Based upon Realtor comps on existing units in the immediate area we estimated how much the property would get from total revenue on an annual basis
Step #5 We calculated the NOI by backing out the annual taxes and insurance from step #4.
Step #6 We found Cap rate by going on commercial sites looking at assumptions others were making for that zip code.
The biggest challenge we had was finding one of my existing lenders that would loan on a commercial property that needed a refinance PLUS significant repair AND was also at 0% occupancy!!
It was very tough but I was able to find a private money lender that was willing to do the deal at a bit higher but not totally unreasonable rate.
So our goal would be to refinance after 1-2 years of rent stablization for a lower interest rate.
Let me know if you have any questions!!