Has anyone used an SBA loan to buy and reno a commercial property? I am looking at buying a 11,000 sq ft warehouse space in KC for around $190k that needs about 250k work to white box it. I already have a potential lease in play for $5 sq ft NNN which would make my Cap Rate around 9 -10% in the end. The numbers are working but I need a loan and don't have a lot to put down. The SBA option looks like it would let me put down 10% but I have never done one. Anyone have any advice here?
My other option is a personal loan against the significant equity (~125k) in my first rental - I can't find a HELOC on a rental yet, this would be my first best option. Any advice welcome!
I have done several SBA products for clients as well as submitting the proposals to the banks. Mainly the SBA 7a and SBA 504 real estate and business working capital loans. I suspect you are referring to the SBA 504 since most business owners do 10% down on this product type. From my knowledge, understanding, and experience, these are only availible for owner occupied real estate if the owners business occupies at least 51% of the asset. The SBA also has specific business types that qualify. That being said, I could be wrong, but I do not believe you can buy and renovated a real estate investment with an SBA loan that you are not occupying as a business.
SBA loans can be used for working capital, equipment and for renovations of an owner-occupied commercial property. An SBA loan cannot be used for investment properties. There is an option available for the purchase and rehab of residential investment properties. These are typically provided through private money lenders or hard money lenders. These lenders will provide the capital for the cost of the purchase (typically 80%) and up to 100% of the renovation cost. These are short-term interest-only loans.