Build from grown up section in to a refinance

[Javier Rosales]

HI BP Community

I have an idea for a Zoned Parcel of C2. This parcel has a triplex and a small detached novelty shop. all fully occupied. their is still a lot of empty space to build a ADU, Duplex. but of course still need to get a CUP and planning approved from the city planning department.

is it or is their a construction loan to acquire to fund the build of a ADU, Duplex than refinance the exciting loan to and new loan to pay off the construction loan?

[Frank Pyle]

You are not stuck waiting five years unless you choose a loan with a hard prepay, so line up the loan to match your exit before you close in Bakersfield. If the CUP is the big swing factor, call planning this week and get a written read on feasibility and timeline because that drives whether you need a light bridge with no penalty or true construction draws. Quick numbers check is simple, take current monthly rent minus taxes insurance and realistic expenses and see if it still covers the new debt at a higher rate, because you might be carrying this longer than you think while permits move. If the as is DSCR is thin, a five year prepay can turn a good value add into a trap even if the build pencils.

What is the purchase price, current gross rents, and the loan terms you are being offered including rate interest only and the exact prepay language? How much extra cash do you have set aside to cover a six to twelve month CUP delay if rents dip or vacancies hit?