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purchase + renovations - LoanUniverse Community

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purchase + renovations


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#1 Guest_ed_*

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Posted 09 December 2004 - 10:19 PM

Hi, I'm looking at a 6 unit building in nyc. Actually the building has been gutted to a shell. It needs total renovation. How does this type of loan work ? The building price is 450000 and it needs 150000 of renovation. I can come up with 25 to 30% but I need the money to renovate it. Any help is greatly appreciated. ed

#2 Commercial Lender

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Posted 10 December 2004 - 09:50 PM

Have you purchased it yet? You are looking at a rehab/hardmoney loan. We are on long island. I may be able to help you out. If interested, give me a buzz monday. Thanks!

#3 loanuniverse

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Posted 12 December 2004 - 02:37 PM

I encountered a similar situation when going over a loan for one of our corporate clients. They wanted a loan to purchase a warehouse/office for about $4MM and an additional $1MM for renovations. The problem is that by giving them $5MM on this property we would have exceeded our policy limits. We were able to work around it by giving the $1MM for leasehold improvements to the operating company tenant.

In your situation unless you are going to occupy the building with your own company, this strategy will not fly. I am assuming that the building is being purchased for either sale or rental.

If I were in your position, I would try to give as little as you can for the purchase so that the borrowing needed for the renovation is kept as low as possible. Maybe separate it into a junior lien loan. You probably do not want to borrow the whole amount at 90% ltv and having to pay a higher overall rate of interest.





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