My wife is a dance school owner. She has been in business for 5 years. The rent is roughly $30,000.00 annual. She averages roughly $6,000.00 monthly gross income (SI). I am also self-employed, making roughly $60,000.00 annual (SI) Her credit score is approx. 600. My score is approx. 650. We are currently looking to purchase a commercial piece of property roughly $100,000.00 plus build a building that could house the dance school plus two or three other rentals spaces (approx. $150,000.00).
We have approx. $55,000.00 equity in our home. She owns 1/4 property valued at $600,000.00, clear (no liens or loans). 2 vehicle loans (total $1,160.00) and student loans ($25,000.00) are only other debts. What types of loans are available and what options do we have...if any?

Thanks for any replies.

For a construction of this type of property {multi-tenant}, most lenders are going to be looking at 30% to 40% equity contribution based on total costs. This means that you need about {$250,000 x 30% = $75,000 }. The problem that I see is that the only readily available source of money is the equity in your house. I see problems in accessing the ¼ ownership if the other owners refuse to sign off on a loan involving that property. This does not mean that it is impossible to get the loan, it just means that you might have to be creative.

If it was me, I will offer the seller $50,000 in cash and have him carry a mortgage on the land {you have to make sure that it is agreed that in case of you obtaining construction financing that he will agree to subordinate his loan to the lender}. This will allow you to walk into the lender with the offer of a $100,000 cushion.

So far, all we have talked about is structure, we have not talked about the capacity of repayment. For that, you will need to take a closer look at your wife’s company, the possible rent from other tenants, the rental market in the area, your global cash flow.

Other comments;

- A 600 credit score is bad.
- I would do this under its own real estate holding corp.

Good luck

Firs of all improve your credit scores this is a must at leas to 680 it will open up some doors for you. you can do it with Reputable credit cleaning agency. then a small business loan up to 150000 is with in your reach and no ewuity needed, just make shure you have enought cash flow to support such a big loan