$50,000 loan for materials

[John Murphy]

Hi, I own an old 2,000 sq ft church built in 1917.  I own it free and clear.  It has a full unfinished basement with tall ceilings.  I am retired and would like to borrow $50,000 for materials to turn the basement into a four bedroom, three bathroom, large spacious apartment.  I would do all of the work.  My income consists of social security retirement ($1,700 per month).  My credit score is 830.  I'm guessing it will take me a year to do all of the work to complete the apartment.  I am looking at financing the project through a second mortgage.  Interest rate would be 8 and 1/2 percent.  I live in the parsonage next door and I have a mortgage on my house and so financing for the apartment would be through my bank where I am in excellent standing as I have never missed a payment or never been late on a payment over the past 7 years.  When finished the apartment would rent for $1,200.  The old church/apartment would be worth $150,000.  Are there any better options for financing? (cheaper interest rate).  Thank you.

[Scott E.]

Your biggest challenges with finding anybody to lend you $50k on this deal are:

1. Based on your post, I doubt this church basement is zoned residential, and I don't get the impression that you are going through the re-zoning process.

2. You say you'll do all of the work. But I'm also going to guess you are not a licensed, bonded, and insured general contractor.

I could be wrong on my assumptions. But if the above 2 factors are true, you'd not going to find that $50k outside of using a credit card.