We are in the midst of stabilizing our first real estate investment. its an 11 unit apartment complex that was severely distressed and empty when we bought it. located in western PA in a college town for 300k. We used conventional financing with 20% down and are going to be at 100k in rehab. 9/11 units completed, remaining 2 will be done in the next 3 weeks. 7/11 rented for upcoming year.
Using the BP calculators we anticipate having minimum190k in equity built up when completely stabilized.
I don't know if there is typically a seasoning period for most lenders. The current lender has a 2% early pay off penalty, with 6% mortgage for 5 years with 20 year amortization schedule.
what are my options?
I refinanced a similar property a couple months back and terms can vary widely from one lender to the next. First I would speak to your current lender and see when it could re-appraise and refinance it; possibly avoiding the 2% prepayment fee. Secondly, I would contact all of your local banks and credit unions and see what is currently being offered. I would imagine it will be 6-12 months to season and then you could refinance; hopefully with some long term debt, 10-25 years.
@John Bucknum - I'd try to refinance with your current lender and keep it in house. They should waive any prepayment penalty
On commercial properties most Lenders are going to fall between 6 to 12 months before allowing you to refi at the appraised value.
Some may allow you to refi sooner based on the purchase price plus documented improvements
6% on a commercial property is also a great rate.. Need to get the term up to 30 however
thanks for the responses. I agree with all off you, I would like to keep it in house and hopefully avoid the @ prepay penalty. The banker had mentioned they may be able to rework it and include the documented improvements we made in a refinance.
Like I mentioned we are sitting down next week and discuss futures plans and how we can make a refinance work for both parties.
have a good holiday!
We lend 30 days after ownership. However, we only lend to a max of 4 units per property.