Bank financing for apartment building repairs

[Brooke Boyd]

I purchased a historic 5 unit apartment building in Birmingham, AL and I am getting ready to start the work. I think my regular loan guy quoted me 20% down and 18% interest rate to get funds for rehab a while back. I am wanting to borrow $100k. There is no mortgage on the property. I hope to receive the historic Federal and State tax credits. I could sell my house to get the funds but the value on my house continues to grow (located in the up and coming Avondale hotspot) so I would hate to cut off that asset at this time. I want my home value to continue to increase. Does anyone have referrals or solutions on how to get money for an apartment rehab. The 18% interest seems ridiculous. 

[John Acheson]

Here are two quick and dirty ways: for the lowest interest rate get a HELOC on your home.

Since it's a 5 unit you're facing commercial rates and are playing in the big leagues of financing which means you need a seasoned entity combined with personal guarantee for the lowest possible interest rate.

You can buy a seasoned entity online (make sure it's in the same state) that has a 80 or higher credit score, move the entity to the property address, change all the credit lines to the new address, transfer the property into it, and get your credit score to 720+.

Apply for a commercial loan if you don't want to go the HELOC route.