20 bedroom Multi unit house funding
Hello, I am looking at the property that was used as a rooming house for students in Philadelphia. How can I get funding and what type of loan would that be? The price is around 400k plus rehab cost.
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#3 All Forums Contributor
- Attorney
- Philadelphia
Understood, but is there a use permit that allows the building to operate as a rooming house? If not, you will have a difficult time finding a lender to finance the acquisition. Just because a property operates a certain way doesn't mean it's a legal use. Philadelphia happens to be a city where established case law has required landlords to return rent payments collected from tenants who do not have correct permitting and licensing. This is why lenders are very hesitant with non-conforming uses not recognized by the city. I doubt an appraiser will be able to value the building based on the rent without a legal use as well. There very well may be a use permit but it's the first thing you should be verifying. In instances where there is no use permit, you are looking at a change of use. Change of use typically triggers a sprinkler system installation. Even if you are saying it's merely a kitchen and bathroom renovation.