Any ideas for how to get this done?

1 Reply

We need creative financing ideas! We’ve been mostly focused on just selling our property, but a property we’ve been interested in for the past year has just come back on the market after falling out of escrow for the third time, and we really want to make an offer, asap. We know we can get hard money, but that’s just going to cost a lot, so we’d love an alternative that makes sense and works with all of our complicating factors. Bonus points for an option that let’s us maximize the potential in our current property.


We have a $2-$2.1M 2-unit in SF with $800k in debt/$1M+ in equity. We want to put a $1.5M offer on a $1.77M 3-unit in Honolulu.


We’ve got a couple of options (and are wondering if there are others):
Secure the Honolulu prop now with hard money and a Reverse 1031, then sell the SF prop and apply half the gains (one unit is our primary residence) to the Honolulu hard money loan. We'd still hold the HML until we could refi into a conventional.

Acquire a cash-out refi or a bridge loan that would allow us to tap equity in the SF prop to fund a condo conversion, which would be complete in 6-12 months and would take the total vale up to at least $3M. We’d still need to fund the Honolulu purchase somehow.

Acquire a blanket mortgage for both SF and Honolulu, use our own cash to complete the SF condo conversion, sell 1 or both SF condos within 12 months (if rental potential does not justify keeping the SF units.)


The SF property has one unit that can be placed on the short-term AirBnB rental market within a month.
The SF property has one unit that can secure a $6k/mo sublease (avoiding rent-control tenant permanency issues to avoid impacts on future sale) within a week.

The Honolulu property has two units (one 2bedroom, one 3 bedroom) that could be placed into the short-term rental market as soon as a bit of cleaning, refreshing, and furnishing is completed. The third unit would be occupied by a property manager paying a discounted rental rate.


My partner holds the mortgage on the SF property. He is an advertising writer/creative director who works on contract assignments, but not 1099s. (All of his clients pay W-2 wages via a payroll processor.)
He has been in the biz for 27 years but has gaps in between contract gigs.
HIs current gig started 5/17.
Prior to that he took a 9 month break from paid work to work with me on setting up a new business, but a family situation forced us to put the business launch into hiatus after having accrued ~$35k in cc debt for the new business. This has depressed his credit score and is proving difficult for conventional lenders to get around. Plus, conventional lenders don't offer blanket loans.


My partner has not filed 2015/2016 tax returns because my mom became a tenant in 2015. We did not know if we would pursue a condo conversion or a sale and 1031. Condo conversion would require 100% owner occupancy but a 1031 would require a reflection of that tenancy. Consequently, the type of loan and forward path we choose will affect how we file those taxes, but of course, many loans will require filed returns prior to approval.


My mom is in the mix and is willing to co-sign or even be the primary borrower if possible/needed. She does not make as much as my partner, but her employment is a standard, full-time, W-2 position, since ’07, her credit score is outstanding, and she has over $300k in cash/retirement reserves.


First thing, I would want to know why it fell out 3x. If it's not a problem that worries you, then I suggest:

HELOC SF to 90% (should give you $1MM cash) with a resulting1.8MM loan on SF

Offer 1.5MM on HI, 1MM cash in, 500K loan from bank, HML, or Seller. Adjust HELOC/cash/loan to suit needs or conditions.

This should be a low cost option compared to HML.

If the HELOC at 90% worries your banker, then tell them you will cross collateralize both properties on the same loan (blanket). That should give them about a 66% LTV overall. 1.8M SF + 0.5M HI = 2.3M loans vs 2.0M SF + 1.5M HI or 3.5M assets. 2.3M Loans/3.5M Values = ~66% CLTV.

You should be able to get that to go, even in the commercial realm (probably as a refi/purchase) . The only issue with the cross collateralization is being able to pull one property out to sell. Make sure you set up the required pay down before signing on the dotted line if you want to sell them out individually. 

Hope that helps!

Good Luck,


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