Board Topic: financing 5 units in los angeles,ca
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financing 5 units in los angeles,ca

Posted by: marblanca Oct 22 2004, 11:50 AM
Hello, I'm interested in purchasing a 5 unit (triplex + duplex) 10,000sq ft property in los angeles zoned LARD 1.5 (5 units) 550,000k purchase price, rents @ $2715.00pm. under rent control. i have the 25% down but cannot find a commercial loan for more than $185,000. because rents are so low. Compareable properties in area smaller lots with less units sell for same or more. i know area very well. 1 unit will be empty at coe but have used actual rent of sister unit as rent (below market for area).
I own my home with approx. $500,000.+ equity, my credit is good = 694 (as of 3/04 when i refinanced). I owe 295,000.k on home at 5.875 fixed f/30yrs.
The value in this rental property is in the real estate not the rents...I plan to hold on to it for at least 10yrs. Any suggestions? If i manage to get family/friends to loan cash or partner to purchase can i then eventually refi to get some cash out?
thanks!

Posted by: loanuniverse Oct 22 2004, 12:53 PM
”…. The value in this rental property is in the real estate not the rents...I plan to hold on to it for at least 10yrs…” If the value of the property is on the real estate, this means that something else can be built there that would be a “higher and best use”. However, you are also saying that you plan to hold it for ten years. That does not make much sense to me as you are pretty much assuring yourself of a less than average return on your investment for the next ten years thinking of a future payoff that might not happen at all.

If you know where the real estate markets in your area are going to be in ten years then you have a very special gift. I can tell you that in some distressed parts of my city you can buy apartment buildings for $30,000 a unit. This could happen to your property.

”… can i then eventually refi to get some cash out?” A year from now a good lender is still going to look at this with rental income as a source of repayment. If those levels of rent are still there then it will no be possible to refinance.


I am sorry to be the bearer of bad news

Posted by: Commercial Lender Oct 23 2004, 09:36 PM
Hi! We are a commercial lender and i have financed Multifamilies with various debtservices issues. The key to your loan will be debt service. If you would like, email me with the specfics needed to calaulate NOI i.e. annual expenses etc. Have you had an appaisal done yet?
email

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