Bridge Loan for On-Time Close, i.e. where are all the appraisers?

Question

I am scheduled to close on a mixed-use property in Wichita Falls, Texas on April 26th and I've been pre-approved for a conventional loan but they have not been able to find an appraiser to pick up their appraisal order and I'm at risk of missing my closing date.

PP is $94K. Property has two structures: a 2/1 single-family residence that is ready to rent right away and meets a 1.25 DSCR for the entire property by itself. Second structure is a commercial building that was most recently used as a church. It will eventually be converted to a duplex or possibly a climate-controlled storage unit. I need a bridge loan to help me close on schedule and then I'll utilize my lender's delayed purchase program and refinance into a 30-year conventional loan.

Anyone have any recommendations for a bridge loan program that can close in 10 days? Or am I better off to throw myself at the mercy of the seller and ask for an open-ended extension?

Guy Gimenez · Answer

If you're working direct to seller, ask him/her to provide you short-term financing (24 - 36 months) with a reasonable down payment. This gets you ownership so you can get the property reconfigured and improved so appraising and refinancing will be easier. This is unique property and I too am surprised a lender wants to deal with it as it's configured. And your chances of finding a bridge loan are slimmer than winning the lottery.

Stephanie P. · Answer

This is not a conventional loan.  Crazy that they even took it.

The church is the problem.  No appraisers are taking the job from the Appraisal Management Company (AMC) because there are no comps and because they don't know how to appraise a mixed use property.  It's a commercial loan at best.

If you want to go conventional, the church has to go.  See if it can be removed from the transaction and if the SFR will appraise without it.  Are they on the same parcel?

An open ended extension isn't the problem and neither is a bridge loan. Sounds like your have Realtors and lenders that don't know what they're doing.  Restructure the deal without the church and you should be fine.

Stephanie

Stephanie P. · Answer

No worries.  You are on the path to the solution but if you want a loan on the property, you'll have to get the SFR split before the purchase.  You'll have to get the seller to separate the church from the deed and then get a survey showing only the SFR.  Then get the parcel either rezoned to put it into a residential status where a single family residential property is allowed or leave the zoning alone and get the property designated "legal non-conforming" with a 100% rebuild letter from the taxing authority like the county or city.  Have a side deal for the seller to sell you the church for a dollar or something like that, completely separate from this transaction or make that side deal contingent on closing on the SFR.

You're right.  It's too small for any commercial lender (unless they're very local to the property like a local bank or credit union).

Lance Bradshaw · Answer

Thanks @Denver McClure! I will look into it.

Lance Bradshaw · Answer

Thanks for your response @Stephanie P.! Yes, they are on the same parcel which is zoned limited commercial. Since the SFR cash flows by itself, the church is basically coming free with the purchase. I'm running into the same challenge finding insurance on this parcel; seems no one knows what to do with this!

The other challenge with such a low purchase price is that I'm not finding any commercial lender interested in the loan, either.

I am planning to have the SFR split from the plat after the purchase so they are on separate deeds. The problem is getting this closed beforehand.

Thanks for the guidance on this one. I'm sure there is a solution; just need to keep digging. 😕

Denver McClure · Answer

Hey @Lance Bradshaw, glad to see you're investing in Wichita Falls, I went to college there at MSU! I don't have any bridge loan recommendations, but I would suggest utilizing a Margin Loan if you have an Individual or Joint Taxable account. It's a common strategy I've utilized myself and one that I build for clients. You'll be able to get cash within a very short timeline depending on your brokerage.

Bridge Loan for On-Time Close, i.e. where are all the appraisers?

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