Borrowing Scenario?? Looking for Guidance...

My business partner and I have a question regarding a scenario for which we’d like to borrow $$ on existing properties, but aren’t sure how a bank will look at the deal and are looking for some feedback first. Here are some details…

  • We’ve owned 10 of 18 condominium units in an inner-city complex for close to 3 years.

  • The units were purchased for an average of 22k/unit, and are worth between 10-15k more/each.

  • There is no debt on these existing properties.

  • We purchased the units at a discount, and they cash flow nicely.

  • There is considerably greater value for us in owning the entire 18 units.

  • The units are owned in an LLC that has existed for 4 years.

  • My partner and I both have good full-time jobs and good/excellent credit.

  • We have done considerable work to the properties and have a solid rent roll and income/expense #s from 2010, but not numbers that reflect the property’s full strength for the previous years of ownership.

  • We’d like to borrow against these properties to purchase additional ones.

  • We’ve contemplated getting some of the additional units under contract, then taking those contracts to the bank as part of the application process.

Can anyone give me any thoughts how this deal would look to a bank?
Anything we can/should do to strengthen the deal - other than waiting another year and showing strong tax returns?

I really can’t stress enough that is is not necessary to ask the forum what the bank will say. Just go ask them. If you ask what their guidelines are, they will tell you. If you might not be right on, you can still make some adjustments and go back to the same bank.
I don’t know why people are so scared to ask lenders questions. It isn’t a job interview where if you don’t have the right answer the first time, you don’t get asked back. You can go back over and over.

Cash out refis are very hard to get, but you have seasoning and should be able to find something depending on your personal DTI’s. You probably won’t be real happy at the LTV they offer but the rate will be nice.

I don’t think the idea of having other units under contract will help and it may hurt. It will muddy up the clear water. The bank won’t care or recognize if there is some synergy to owning more units.

This is where YOU need to interview your small local bankers to see how they can help YOU. Tell them that you are looking for a long-term relationship, how you are helping improve the area with your fix-up of the units, show them your financials.

Get formal appointments with your partner and let us know what you find out.


There is a small community bank in my family.
I can tell you that I definiteley echo the statement that saying “looking for a long-term relationship” will help.
Also having a checking or savings account with them (with a big balance) would help.
Different banks have different lending guidelines, and they even sometimes differ at the moment, based on their cash reserves and liquidity.
Ask, if you don’t get the answer you like ask again, then ask somewhere else.
Also the lower ltv you ask for, the better your chances (and rate) will be.