Any creative lenders for 6-unit (high DSCR) property? - Fast Close Needed!

Atlanta, Georgia
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Any creative lenders for 6-unit (high DSCR) property? - Fast Close Needed!

Jeremy Greenwald
Investor · Atlanta, GA · Member since 2021 · 6 posts · 8 votes

Great small multifamily investment opportunity!

I am UC on a 6-unit property in the Atlanta metro area with great value and metrics, but I am having trouble finding financing for the deal due to it being classified as a legal non-conforming use by zoning. It was grandfathered into the current zoning code. We have already completed the inspection and appraisal, both of which have come back clean. We are closing on June 28th. The lender we were working with initially said they could do legal non-conforming uses, but now have backed down from that. We are looking for a 30-year DSCR product at 55% LTV, but open to other creative financing terms to come up with half the purchase price.

Here are the details:

  • Property: 6-units (mix of 2/1 and 1/1's) – configured as 1 SFR, 1 duplex, and 1 triplex on 0.47 acres
  • Condition: Older structures but significant renovations to SFR and duplex in last 3 years. Triplex is fair quality with some deferred maintenance, but livable. Recent exterior spot repairs.
  • Purchase Price: $680K
  • Rent Roll: ~$6,200 per month, all units rented with long-term tenants and multi-year active leases.
  • Appraisal: $850K
  • LTV% Requested: 55%
  • Zoning: Located in an overlay district zoned for 12 attached DU per acre.

Are there any creative lenders who are willing to lend on a legal non-conforming use and can close in a week? Please send me a private message and I can share more details.  

Offering Memorandum and Appraisal Available Upon Request!

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  • AJ WongBusiness Member
    Real Estate Broker · Oregon & California Coast · Member since 2022 · 834 posts · 696 votes
    2y
    Quote from @Jeremy Greenwald:

    Great small multifamily investment opportunity!

    I am UC on a 6-unit property in the Atlanta metro area with great value and metrics, but I am having trouble finding financing for the deal due to it being classified as a legal non-conforming use by zoning. It was grandfathered into the current zoning code. We have already completed the inspection and appraisal, both of which have come back clean. We are closing on June 28th. The lender we were working with initially said they could do legal non-conforming uses, but now have backed down from that. We are looking for a 30-year DSCR product at 55% LTV, but open to other creative financing terms to come up with half the purchase price.

    Here are the details:

    • Property: 6-units (mix of 2/1 and 1/1's) – configured as 1 SFR, 1 duplex, and 1 triplex on 0.47 acres
    • Condition: Older structures but significant renovations to SFR and duplex in last 3 years. Triplex is fair quality with some deferred maintenance, but livable. Recent exterior spot repairs.
    • Purchase Price: $680K
    • Rent Roll: ~$6,200 per month, all units rented with long-term tenants and multi-year active leases.
    • Appraisal: $850K
    • LTV% Requested: 55%
    • Zoning: Located in an overlay district zoned for 12 attached DU per acre.

    Are there any creative lenders who are willing to lend on a legal non-conforming use and can close in a week? Please send me a private message and I can share more details.  

    Offering Memorandum and Appraisal Available Upon Request!

     We just helped a client with an excellent 5-8 unit product with 30% down and can go up to 75LTV.  Connect with @Joseph Chiofalo ASAP. Cheers. 

    541-800-0455
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    0Reply
  • Joseph Chiofalo
    Banker · Henderson, NV · Member since 2023 · 317 posts · 74 votes
    2y

    Hi Jeremy, 

    There are lenders that have an excellent 5-8 unit DSCR product but the LTV is based off the lower of the appraised value or purchase price.

    How much are you looking to put down based on 680k sales price?

    0Reply
  • Jeremy Greenwald
    OP
    Investor · Atlanta, GA · Member since 2021 · 6 posts · 8 votes
    2y
    Quote from @Joseph Chiofalo:

    Hi Jeremy, 

    There are lenders that have an excellent 5-8 unit DSCR product but the LTV is based off the lower of the appraised value or purchase price.

    How much are you looking to put down based on 680k sales price?


     Hey Joseph, we are looking to put between 40% - 50% down on the $680k, but are somewhat flexible. 

    0Reply
  • Erik EstradaBusiness Member
    Lender · Member since 2022 · 6k+ posts · 1k+ votes
    2y

    Closing in a week on a 6 unit definitely is not possible unless it's a private lender using their 401k or HELOC to lend to you.

    If you are looking to close with a bridge loan and the appraisal is completed, you might be looking at a 14-21 day close. You should be okay with the legal non-conforming use as long as you have documentation to support it on a normal DSCR loan. I don't think the lender may have backed out for that reason, so there needs to be more to this story.

    The issue you may have is finding a long term lender that will be okay with deferred maintenance on a long term loan, the purchase price being significantly lower than the appraised value may raise some questions as well (is this a non-arms length transaction?). Can you get the seller to complete the deferred maintenance and increase the sales price? 

    Also are you requesting 55% of $680k? You may run into roadblocks with many lenders since most will want to see a $500k minimum loan amount on 5+ unit deals (there are some that can go down to $250k, but the terms will not be the best). 

    [email protected]818-269-7983
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    0Reply
  • Robin SimonBusiness Member
    Lender · Austin, TX · Member since 2022 · 5k+ posts · 4k+ votes
    2y
    Quote from @Jeremy Greenwald:

    Great small multifamily investment opportunity!

    I am UC on a 6-unit property in the Atlanta metro area with great value and metrics, but I am having trouble finding financing for the deal due to it being classified as a legal non-conforming use by zoning. It was grandfathered into the current zoning code. We have already completed the inspection and appraisal, both of which have come back clean. We are closing on June 28th. The lender we were working with initially said they could do legal non-conforming uses, but now have backed down from that. We are looking for a 30-year DSCR product at 55% LTV, but open to other creative financing terms to come up with half the purchase price.

    Here are the details:

    • Property: 6-units (mix of 2/1 and 1/1's) – configured as 1 SFR, 1 duplex, and 1 triplex on 0.47 acres
    • Condition: Older structures but significant renovations to SFR and duplex in last 3 years. Triplex is fair quality with some deferred maintenance, but livable. Recent exterior spot repairs.
    • Purchase Price: $680K
    • Rent Roll: ~$6,200 per month, all units rented with long-term tenants and multi-year active leases.
    • Appraisal: $850K
    • LTV% Requested: 55%
    • Zoning: Located in an overlay district zoned for 12 attached DU per acre.

    Are there any creative lenders who are willing to lend on a legal non-conforming use and can close in a week? Please send me a private message and I can share more details.  

    Offering Memorandum and Appraisal Available Upon Request!


     I'll take a look at the appraisal to see if we can help on this - can you send?  Is appraisal a commercial appraisal or residential style

    [email protected]
    Harpoon Capital515 Reviews
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    0Reply
  • Jeremy Greenwald
    OP
    Investor · Atlanta, GA · Member since 2021 · 6 posts · 8 votes
    2y
    Quote from @Erik Estrada:

    Closing in a week on a 6 unit definitely is not possible unless it's a private lender using their 401k or HELOC to lend to you.

    If you are looking to close with a bridge loan and the appraisal is completed, you might be looking at a 14-21 day close. You should be okay with the legal non-conforming use as long as you have documentation to support it on a normal DSCR loan. I don't think the lender may have backed out for that reason, so there needs to be more to this story.

    The issue you may have is finding a long term lender that will be okay with deferred maintenance on a long term loan, the purchase price being significantly lower than the appraised value may raise some questions as well (is this a non-arms length transaction?). Can you get the seller to complete the deferred maintenance and increase the sales price? 

    Also are you requesting 55% of $680k? You may run into roadblocks with many lenders since most will want to see a $500k minimum loan amount on 5+ unit deals (there are some that can go down to $250k, but the terms will not be the best). 

    Erik, 
    Great advice here - thanks! 

    Seller is aging and downsizing his portfolio. This is an arms length deal. I have all of the zoning confirmation documentation, seller and I have completed small deferred maintenance repairs that showed up in the inspection and appraisal. If there is more to the story, I’m not sure what it is. 

    Interesting feedback on the commercial LTV preferences. I didn't realize the $500k preferred min. I was thinking my low LTV would translate to low risk for them since I have more skin in the game.

    0Reply
  • Devin PetersonBusiness Member
    Lender · Sarasota, FL · Member since 2022 · 2k+ posts · 676 votes
    2y
    Quote from @Jeremy Greenwald:

    Great small multifamily investment opportunity!

    I am UC on a 6-unit property in the Atlanta metro area with great value and metrics, but I am having trouble finding financing for the deal due to it being classified as a legal non-conforming use by zoning. It was grandfathered into the current zoning code. We have already completed the inspection and appraisal, both of which have come back clean. We are closing on June 28th. The lender we were working with initially said they could do legal non-conforming uses, but now have backed down from that. We are looking for a 30-year DSCR product at 55% LTV, but open to other creative financing terms to come up with half the purchase price.

    Here are the details:

    • Property: 6-units (mix of 2/1 and 1/1's) – configured as 1 SFR, 1 duplex, and 1 triplex on 0.47 acres
    • Condition: Older structures but significant renovations to SFR and duplex in last 3 years. Triplex is fair quality with some deferred maintenance, but livable. Recent exterior spot repairs.
    • Purchase Price: $680K
    • Rent Roll: ~$6,200 per month, all units rented with long-term tenants and multi-year active leases.
    • Appraisal: $850K
    • LTV% Requested: 55%
    • Zoning: Located in an overlay district zoned for 12 attached DU per acre.

    Are there any creative lenders who are willing to lend on a legal non-conforming use and can close in a week? Please send me a private message and I can share more details.  

    Offering Memorandum and Appraisal Available Upon Request!


     I think most people here are missing the point here of your question. If you’re grandfathered in and you can get a rebuild letter from the town you should be able to do this. Title should also be able to help you obtain a rebuild letter from whatever municipality you’re dealing with. Also, in reality nobody can pick this up and do it within a week unless it’s hard private money and you’re paying top dollar premium ticket fees. If you’re gonna do this deal I would request at least a 30 day extension to give a lender time to do it the right way.

    [email protected]860-538-3672
    ProAlpha Capital56 Reviews
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    0Reply
  • Ko KashiwagiPro Member
    Lender · Los Angeles, CA · Member since 2022 · 967 posts · 445 votes
    2y

    Hi Jeremy,

    Closing in a week sounds difficult especially if title, appraisal, escrow has not started unless you find a private lender that can fund it. However, there are plenty of lender out there that should be able to fund this in 3-4 weeks!

    310-848-9776
    0Reply
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