9 unit that needs financing

[Devin Peterson]

Hi BP team,

Usually, I am the one on here helping others answer questions but it is now I the one who needs some help. There is someone I know who is under contract for a 9-unit multifamily in Terre Haute, IN. The issue really with every DSCR and commercial lender out there is the loan size and price per door. I don't need to hear from any of the traditional DSCR lenders on BP here because I know all of your underwriting guidelines and it won't work, but I will happily accept your advice. What I need is a creative solution or a private family trust to lend on this property. I may even have to shop locally but I wanted to put this out there to mastermind some ideas. I already sent it out on privatelenderlink as well. Scenario below:

9 unit

278,000 Sales price

buyer can do 30-35% down

800 FICO

DSCR 1.85

Annual insurance - 2400

Annual taxes - 1200

Monthly Gross rent - $6265

Annual NOI - $31,500

Cap Rate - Roughly 16%

Price per door - $31,000

Buyer liquid reserves - $160,000+

The issue seems to be the fact that it's a full-blown commercial property and the price point it's being sold at. At only $31,000 per door, most lenders don't have an appetite for this because their note purchasers are not interested in the possibility of a reno, major property upgrades, essential a rehab budget that could easily triple in size from underestimation.

Please let me know if you have any ideas.

[Nick Belsky]

@Devin Peterson

Have you checked with Velocity? They will do commercial down to $200k loan amounts and have no DSCR requirements under $750k for commercial purchases. Their rate will be higher for sure, but they may be able to do this. They will not help with Reno on this property type though.

If you are looking to roll Reno funds into the loan, that may open a few more doors, but the sponsor will have to have extensive rehab experience of projects this size and type. A bridge for sure. The loan would likely need to be at least $500k to be of any interest to most bridge lenders. What is the estimated reno budget and ARV?

Cheers!