Difficult financing situation in Boston

12 Replies | Boston, Massachusetts

I'm in the final weeks of construction on a 3-family in Roxbury, MA. The property is held under an S Corp, and I'd like to keep it as a rental rather than selling it. I have a ~$650,000 hard money loan on the project, and the appraised value of the completed project will likely be about twice that.

I'm attempting to refinance into a conventional loan, but am finding it very difficult. I am self-employed and moved 2 years ago, and had to build my other business up again in my new area, so my income over the last couple of years has been very low. The S Corp that I started to hold the 3-family is less than a year old. I have some significant debt, and I've put some of the project expenses on 0% APR credit cards to bring it to completion, lowering my credit rating. I'm confident that the rents on the units can easily cover the mortgage, taxes and insurance, but am unable to find anyone willing to lend to someone with my situation. Anyone know of lenders able/willing to finance this? Thanks in advance for any advice.

@Brien Tal-Baker Tough situation.  Without 2 years of W2s, most lenders will decline.

There's one thing I'd try - talk to local lenders and ask if they would consider a portfolio loan.  These are loans held in-house (not sold on the secondary market).  As such, they can relax some of the rules.

Failing that, you may just have to sell it.

I'm a little worried about your ARV though. In the last 12 months, there were 10 3-plexes sold in Roxbury, ranging from $531,000 (used as a duplex - no kitchen on 3rd floor) to $1.2M (nicely renovated - granite, stainless, etc). The average sale price was $809,000.

@Charlie MacPherson Thanks for the reply. We're reaching out to some local lenders. We'll see if anyone can help us there.

As for the ARV: This is actually a new construction, energy efficient, high end finishes. Not sure if we'll quite hit the numbers we're looking for, but we've been advised by realtors we've spoken to that the price seems in the range of reasonable. Even if it ends up being lower, we think it'll be decently above the construction cost.

I know a HML that will finance for long term investment as long as you're not owner occupying it at very competitive rates of 6%. It is specialized for properties that have been rehabbed and then refinanced into a long term structure.

Let me know if you'd like me to make the connection. 

The struggle is real my friend. The low inventory in Roxbury makes it very hard to comp that area. I have purchased 5 units in Roxbury this year. Don't give up keep reaching out to different lenders. You should also reach out to lenders in the area. If you find any properties  you want to wholesale in the area please let me know. I am looking to double my Roxbury portfolio this year.