This is my first post so my apologies in advance if I break forum protocol. So here goes:
We are in talks to purchase 2 mixed use properties.
#1) Cash flows well and has a LTV of about 1.42
Commercial unit has long term lease in place
(8) 1 br apartments rented about 10% below market.
#2) Doesn't cash flow with a LTV of about 1.18
3 commercial units with lease terms of 3 yrs, 1 yr and Month to Month, respectively
(2) 3 br units, one of which will be delivered vacant and one which is 50% below market
The market is very hot in this area (Hudson County, NJ) and vacancy stands at 2-3%.
Would a blanket loan be ideal in order to minimize the amount of down payment? I'm trying to do both properties separately but the bank is asking 37% down for the second property (probably not helped because of the short term commercial leases).
Forgot to add that the 2 properties are literally 1 block apart, if that makes any difference...
@Christopher Oh this post might be better suited for the commercial forum. You might get better, and more, responses there on this subject.
Here's my two cents on the situation. I also happen to live in the area!
- I would definitely advise financing the two separately, and the second property doesn't sound like you should be going with a bank right now. If you can add value to that second property by securing quality tenants for the apartments on one year leases, lock commercial tenants into longer term leases, and show that the property can cash flow well, you'll be able to refinance and cash out. If you lock into a longer bank loan now, that refinance would be more painful, as there would probably be a prepayment penalty. The best bet here might be going with an Interest Only bridge loan. There's a class of private lenders in between banks and hard money which provide these.
- I'm not sure what you're citing as LTV, which is usually displayed as a percentage, and calculated as Loan Amount / Property Value. Maybe you mean DSCR?
Would one commercial loan be able to cover both properties here? Sure. But I don't think that's ideal because they are in two very different financial states.
Thanks for the insight! Yes, it was DCSR. My brain thought one thing but my fingers typed another... Lol...
What are the purchase prices of each property?
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