Board Topic: Mixed Use I have found I property I like
Click here to view this topic in its original format
LoanUniverse Community > General Chat >

Mixed Use

Posted by: Covet4me Nov 10 2004, 03:48 PM
Ok, so just like everyone else, I have found I property I like. It is mixed use, 2 commercial store fronts, and 4 rental units in one building structure. The other building structure is a single family house that I would like to occupy. My bank wants 20% down. The seller (at first offer) doesn't want to do seller financing. I don't have the money to shell out 20% or even 10%. Asking price is 1.1 million.

According to the spreadsheet I am using, Which I got from my banker, if I fully financed the 1.1 at a rate of 7%, assume 10% vacancy, 5% for management, and 5% for improvements, along with all the other numbers (Taxes, insurance, maintenence) at the end of the first year it makes $5500. (1 of the units is under a 3 year contract, the others are all month to month - which does make me a bit nervous but I know the area and renting, at least the residential spaces, shouldn't be a problem.)

Overall, I guess I want to know where can I find a financial institution that would assist me with this? Also, I would like people to start punching holes in my numbers. I would rather my hopes be dashed now rather than later when I have a 1.1 million dollar debt over my head.

Posted by: loanuniverse Nov 10 2004, 10:59 PM
”… I would rather my hopes be dashed now rather than later…” "Ok let me get to the dream killing if I fully financed the 1.1 at a rate of 7%…” 100% Financing is not going to happen specially if the seller is not receptive to providing partial financing.

”… I guess I want to know where can I find a financial institution that would assist me with this? …” Nope, I don’t think you will get 100% financing. There could be 90% financing offered by some non-mainstream lenders, but there has to be some equity involved. Assuming 7% on the loan is probably not based on reality due to the impossibly high loan-to-value. The risk is much higher for a theoretically 100% ltv loan compared to the industry standard 80% ltv.

”… Also, I would like people to start punching holes in my numbers.…” $5,500 profit on a $1.1 million property? While your reserves, management and vacancy numbers seem conservative, there just isn’t any cushion there. If you want some more feedback, give me actual rental income broken down by unit, and detailed operating expenses.


Good luck

Posted by: Commercial Lender Nov 26 2004, 12:25 AM
Admin is right, $5K on a $1 million+ plus property esp with month to month is a red flag. If you do not have atleast 10% down, hate to be harsh but forget it. Once the final calculations and vacancy ratios are factired in by underwriters higher up in the food chain, this will be a dead deal (Admin can shed some light on concrete numbers).

Be VERY careful....i see it all the time...someone as u said 'finds a building' and is so hell bent on getting it that they loose their objectivity. Ur goin about it the right way, better to kill it now than realize a mistake when you are between lunch and forbearance.
email

Comments are closed.