How to Refinance, Repair Vacant Multi-Family

4 Replies

I have a client right now who I am helping to get financing to re-finance a six unit property that needs extensive work at 0% occupancy.

Step #1 We calculated the pay off amount.

Step #3 We estimated the rehab costs based on a contractor inspection and analysis

Step #4 Based upon Realtor comps on existing units in the immediate area we estimated how much the property would get from total revenue on an annual basis

Step #5 We calculated the NOI by backing out the annual taxes and insurance from step #4.

Step #6 We found Cap rate by going on commercial sites looking at assumptions others were making for that zip code.

The biggest challenge we had was finding one of my existing lenders that would loan on a commercial property that needed a refinance PLUS significant repair AND was also at 0% occupancy!!

It was very tough but I was able to find a private money lender that was willing to do the deal at a bit higher but not totally unreasonable rate.

So our goal would be to refinance after 1-2 years of rent stablization for a lower interest rate.

Let me know if you have any questions!!

Updated almost 2 years ago

I was able to place my client with a Private Money Lender with a higher interest rate and on a 30 year fixed term. After 1-2 years of rent stabilization we are going to refinance.

@Herndon Davis try asking local Credit Unions (Shell/TDECU etc) for construction loan. They would ask you put down 25% of total cost (acquisition + repair) with 6-8% and 20 years AMM and may be 1 yr interest only to get things off the ground. Once completed, then it will become permanent loan . If your buyer credit doesn't quality and/or meet 25% threshold then try hard many lenders .. Hope this helps. 

Originally posted by @Shahriar Khan :

@Herndon Davis try asking local Credit Unions (Shell/TDECU etc) for construction loan. They would ask you put down 25% of total cost (acquisition + repair) with 6-8% and 20 years AMM and may be 1 yr interest only to get things off the ground. Once completed, then it will become permanent loan . If your buyer credit doesn't quality and/or meet 25% threshold then try hard many lenders .. Hope this helps. 

 Thanks I was able to place my client with a Private Money Lender with a higher interest rate and on a 30 year fixed term. After 1-2 years of rent stabilization we are going to refinance.

Originally posted by @Tarik Turner :

Best bet in this scenario is a short term bridge product rates will be in that 9%-12 range 


Thanks I was able to place my client with a Private Money Lender with a higher interest rate and on a 30 year fixed term. After 1-2 years of rent stabilization we are going to refinance.