Investor · Woodland Hills, UT · Member since 2016 · 84 posts · 31 votes
Hey guys. Would love to have you rate the potential commercial property I'm looking at getting under contract tomorrow. Here are the details
Purchase price 1.6M, 30% down, 3.5% interest rate
NOI is $101,000
The rents care $500 under market rent. There are nine units. I'm hoping to raise rents within the next six months. That will be an additional $3,500 per month.
What do you think of this deal?
My next question is how soon can I refinance the property after I've raised rents to get cash out?
@Nik Krohn the answer to that is fairly complex. If you take this deal down with a local bank and try to do a refinance through the same or a different local bank then you probably need to wait 2 years or so from the repositioning of the property. If you use a local lender on the acquisition and then use agency debt on the cash out refinance then you could probably get this done in about a year.
This is one of the biggest issues for aspiring value add or BRRRR investors in the commercial real estate space. I ran into this personally last year with a six unit I re-positioned in Cicero, IL. I ended up having to leave 20% of my equity in the deal because I had used a hard money/bridge loan on the acquisition and then the local banks wanted me to hold it for a whole year longer in order to give me better terms that allowed for me to extract my money. I ended up just moving forward with a standard bank lone at 80% LTC.