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. 

[Antoine Martel]

Please do not pay an 18% interest rate. That is ridiculous.

Go and talk to a local bank or a hard money lender.

Many people can lend you money for way less.

[Lucas Atencio]

18%?????   I imagine you are joking...

[Jason Cory]

Have you spoken to RevBirmingham about the tax credit? They can help you with it. 

Lima One Capital in Atlanta finances in Birmingham. They loan up to what you paid for the property within the first 12 months if memory serves me correctly. After 12 months of seasoning I believe they lend above the purchase price. 

https://limaonecapital.com/multifamily/

[Brooke Boyd]

I didn't know that! I will contact RevBirmingham. 

I'll contact Lima One as well. Thanks for the referrals :)

[James W.]

Is the 18% loan secured by the property?  If so, that is ridiculous.  I would look at getting a mortgage on the property if possible.  

[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.

[Stephanie P.]

Originally posted by @Jason Cory:

Have you spoken to RevBirmingham about the tax credit? They can help you with it. 

Lima One Capital in Atlanta finances in Birmingham. They loan up to what you paid for the property within the first 12 months if memory serves me correctly. After 12 months of seasoning I believe they lend above the purchase price. 

https://limaonecapital.com/multifamily/

 Jason,

Does Lima One do commercial now?  This is a 5 unit.

Stephanie

[Stephanie P.]

Originally posted by @Brooke Boyd:

I didn't know that! I will contact RevBirmingham. 

I'll contact Lima One as well. Thanks for the referrals :)

 Hey Brooke,

I think Lima One does exclusively residential properties; not commercial.

Stephanie

[Jason Cory]

@Stephanie P. They do. Their multi family starts at 5-unit. Residential is 1-4 unit with commercial starting at 5 units. The last time I spoke with them a couple of months ago they required $15,000 in a bank account for 2 months for approval.

[Stephanie P.]

Originally posted by @Jason Cory:

@Stephanie P. They do. Their multi family starts at 5-unit. Residential is 1-4 unit with commercial starting at 5 units. The last time I spoke with them a couple of months ago they required $15,000 in a bank account for 2 months for approval.

 Great to know.  I just contacted them and I stand corrected.  Thanks Jason.

[Jason Cory]

@Stephanie P. No problem.