Real Estate Agent · Atlanta, GA · Member since 2012 · 134 posts · 22 votes
Hi all,
Not sure if this is the correct forum but I'd though I would start here. I have an accepted offer for 3 duplexes which are all sitting next to each other, same complex. I later found out from the county maps that each duplex has it's own plot of land. This bit of information seems to make it more difficult to take out a commercial loan, not because of the buildings but because it's on 3 different plots of land and I don't qualify for 3 conventional loans.
It's a good deal so I may consider purchasing with cash, anyone able to chime in with their 2 cents?
My question now is if I do end up paying cash, does anyone know how difficult it would be to rezone the 3 plots to turn it into 1 single plot of land? If that can be done, I believe that should make it much easier for me to cash out/refi with a commercial lender.... Any advice or tips are greatly appreciated!
Real Estate Professional · West Palm Beach, FL · Member since 2012 · 23k+ posts · 13k+ votes
12y
That can only be answered by your local planning and zoning dept, after looking at the exact parcels and current/future zoning, land uses, etc. do you think eventual resale would be higher as one property, or three separate duplexes?
Real Estate Agent · Atlanta, GA · Member since 2012 · 134 posts · 22 votes
12y
Well, the last owner kept it over 10 years and I plan to keep it at least that long. I don't qualify for conventional loans so I can only go with commercial loans, again I'm hoping to reposition and refi each time...
Investor · Avilla, IN · Member since 2013 · 796 posts · 769 votes
12y
A smaller local bank should be able to do this as a commercial blanket loan. Im getting ready to refi 5 duplexes now on 5 different parcels spread across town in 3 different locations. I also have 4 other properties on one note with the same bank. Its not an uncommon thing youll just have to shop direct portfolio lenders vs brokers.
Real Estate Agent · Atlanta, GA · Member since 2012 · 134 posts · 22 votes
12y
@Brandon, yes I found a couple local banks that have told me 'maybe' instead of a flat out 'no'! If you don't mind, please share the rates and terms that you're getting. Thanks!
Investor · Avilla, IN · Member since 2013 · 796 posts · 769 votes
12y
I did a refi on 3 properties that I already had on a blanket with them and rolled a triplex into the new loan. LTV was right at 80% and the rate was 5.375% on a 20yr AMM 5/1 ARM.
I am hoping you can shed some light on your financing. How was your value determined on your properties with the blanket loan? Did they just do comps or base the value on cash flow?
I have 3 duplexes that have a hard time getting appraised the traditional route because there are literally no comps in the area of my units. My properties cash flow great, DCSR of about 2.0+ but the banks just keep giving me a Fannie Mae loan.
What was your pitch to the portfolio lender? I've contacted a few and they keep referring me to the "home loan specialist" Any suggestions?
It sounds like you're still taking to the wrong banks. You need one that does commercial loans for their own portfolio. The appraiser will still work off of comps more than likely but the final say will lay with the bank.
Lender · Chicago, IL · Member since 2013 · 82 posts · 27 votes
10y
@Austin Hajjar , If you are still unable to find a lender who will do this for you, reach out to me and I can have my contact in our Seattle office help you.
My firm does blanket loans like this all the time... Mostly when the properties are contiguous but occasionally when they are in the same neighborhood, very close together and the total is 5 units or greater between the individual units (i.e. a duplex and a triplex right next to each other or one house apart from each other etc.)
How long have you owned them?
Is there at least 18 months of rental history?
Let me know if you have any questions or need specifics with regards to commercial lending.
Rental Property Investor · Rochester, MI · Member since 2016 · 27 posts · 1 vote
10y
@Brandon Hicks@Austin Hajjar - hey guys! Im somewhat new to BP but am trying to quickly ramp up on my understanding across a very diverse set of topics so when I purchase my first small multi units I don't embarrass myself too horribly haha. I feel as if I am missing something within the back and forth of this thread. Its relevant to me because there are 3 duplexes I will be visiting and if all goes well (numbers work, inspection passes etc.) I will be making offers on all 3. Two are right next door to each other the other is across the street and 3 houses down. I realize that traditional loans have a bit more flexibility and usually (?) better interest rates. Outside of one closing cost vs. 3 sets of closing costs what advantage (if any) is there to pushing for a commercial blanket for 6 units vs. 3 residential loans?
Investor · Avilla, IN · Member since 2013 · 796 posts · 769 votes
10y
I can't really speak to the advantages...I'm not in your spot...I can't get "traditional" loans at this point.
If they're all the same owner I'd attempt seller financing. If that doesn't work then look into commercial loans. One nice thing about commercial loans is that they force you to do better deals. This is due to the shorter 15 or 20 year amortization which forces you to find better deals to make them cash flow.
Real Estate Agent · Atlanta, GA · Member since 2012 · 134 posts · 22 votes
10y
Wow, this is an old post but am glad people are still reading it! So to quickly recap, I found a local bank who offered me a blanket loan for the 3 duplexes. 70% LTV, 20 year am, 5.25% and 5 year arm. At the end of last year the code enforcer was on me for the old worn out cedar siding so I went ahead and replaced it with fiber cement siding along with some new windows.
I'm currently in the process of cash out refinancing since the market has appreciated in my area plus I've made some capex improvements.
Investor · Atlanta, GA · Member since 2013 · 3k+ posts · 3k+ votes
10y
@Jay , just wondering, were the appraisals based on comps or were you able to lump everything together as 6 units and had the appraisal based on cashflow?
Real Estate Agent · Atlanta, GA · Member since 2012 · 134 posts · 22 votes
10y
@Michaela G. Appraisals were based upon comps since they are 1-4 units. The appraiser cheated and used my other two duplexes for getting rental comps but all 3 duplexes were appraised at the same amount.