First commercial rehab/rental - Good idea?

2 Replies

We fell into a great opportunity to buy a commercial deeded building with a commercial rental downstairs, and a potential residential 2nd and 3rd floor (1 or 2 units depending).  New roof, A/C and HWH in 2019, very little rehab besides cosmetic things Ill do my self.  its on a main street, great store front, very aesthetically pleasing frontage.  Com unit rented for $1500 and the Res unit $1200 before the building was foreclosed on.  We are under contract for $180k.  The numbers make great sense.  

BUT...

This will be our FIRST project, rehab, rental, ever.  We are approaching lenders, hard money and banks, who have said numerous times that "commercial would be a tough first project for you.  Its a different animal".  What are we missing?  Any lenders out there that you've used that can help us finance this?

All info welcome and appreciated!

The rates might be slightly higher but maybe not if you find the right asset based commercial lender. Have you secured funding yet?  If not Please PM details.  I can't say much more than that on this forum without it being flagged spam/sale pitch. 

Originally posted by @Phillip Ricci :

We fell into a great opportunity to buy a commercial deeded building with a commercial rental downstairs, and a potential residential 2nd and 3rd floor (1 or 2 units depending).  New roof, A/C and HWH in 2019, very little rehab besides cosmetic things Ill do my self.  its on a main street, great store front, very aesthetically pleasing frontage.  Com unit rented for $1500 and the Res unit $1200 before the building was foreclosed on.  We are under contract for $180k.  The numbers make great sense.  

BUT...

This will be our FIRST project, rehab, rental, ever.  We are approaching lenders, hard money and banks, who have said numerous times that "commercial would be a tough first project for you.  Its a different animal".  What are we missing?  Any lenders out there that you've used that can help us finance this?

All info welcome and appreciated!

 A single commercial unit is hard to rent, few brokers want to take it on as a listing, therefore you rely on signage and your own efforts to locate a tenant. This entire project could easily be vacant for 12-24 months. Lots of risk for the lender--thats what you're missing IMO. Costs will be much higher than you budget, delays, etc.