This is my first post on this website but have been reading everything on here for a long time now.
I am just starting out in rental properties in Illinois purchasing and renting 3flats. The big wall that i seem to be hitting is financing. The question I have is has anyone here heard of, or used an SBA 504 loan?! Like i said I am just starting out and have nothing to begin with not sure if this would be a option for me. So here I am asking the Pros any help would be greatly appriciated.
From what I understand, in order to qualify for a SBA 504 loan, 51%+ of the property must be occupied by the you (the borrower). This will prove impossible if you have a triplex. (3 flats)
A good mortgage Broker/Loan Officer should be able to assist you with the qualifications.
Have you already purchased a three flat?
Depending on the area you can occopy at least two properties in most states.
I would cut a hole in the top floor and put a winding stairwell leading to the second floor
making it one unit. rent out the first floor and use the rest of the building as my secnd hme address.
then qualify for the SBA 504.
Or turn it into a single family condo and lease purchase it to a potential buyer.
Either way fix it up and refinance it or rent it out.
Depends on the area in Illinios, Illinios market right now is in bad shape
so I would be very careful and remember location location location
Hello: I’m a newbie and trying to work my first deal, and asking if anybody may have some
insight on what to do. I have very little money but have fount a multi family unit, 8 vacant
units, apartments. About half the units are near ready and the other half need some work before renting mostly efficiency units should be in the 375.00-425 range. Asking price
104,900 mortage 100,000, arv 170.000. In a semi good location listed by an realtor
2 stories, It has significant deferred maintenance and needs some repair to the brick south wall. What are some of the questions that I may ask the realtor? Is there a way to structure
a deal? What kind of home work do I need to do before I make an appointment to do a walk
through with the realtor, with a contractor to see what repairs need to be made? Does
anybody have any suggestions please? Thank you in advance for your help.
KV,
In the future, you should probably start a new thread, but welcome to the forum. This building will fall under commercial financing rules, so banks will likely want more money down on a deal like this than they would on that same purchase price if it was a single family home (SFH). Be prepared for twenty five to thirty percent down.
At roughly four hundred per unit, the numbers look very good in relation to the purchase price. The real issue here will be the repairs. If you have a whole brick wall that’s failing, it could be very expensive. Given that as well as knowing that all the units will need at least some work to be rent ready, that explains the asking price.
Sounds like you may want to consider partnering with someone because of the money issue. The question is what will you bring to the table. Will you be able to fix up any of the units? Will you be managing the building?
You could get some estimates on repairs, but it would be nice to know you could actually do the deal if it looks like the numbers work.