Rehab - Deal structuring help?

Looking for some expertise how to structure a deal…

20 Unit Apt. Building + mini storage on same lot
Purchase price $500K
Needs about $60K in Rehab
Vacancy @ 40%
Post rehab value (includes lowering vacancy to market average = 10%) = $750K

I’m looking to finance the full $560K, cuz I don’t have the cash in hand. Is there a way to structure it where I get cash back at closing for the rehab?
I was thinking about asking for a conventional loan for $360K (Less than 50% LTV on post rehab value) then getting the seller to carry $200K and getting back the $60K at close to fund the rehab. Exit strategy would be to rehab, stabilize rents and expenses, increase occupancy, then either sell and cash the seller out, or refi? Would this work?

My FICO’s in the low 600’s.

Any help would be much appreciated. Thanks.

Would the seller be willing to hold a second mortage?

Your on the right track. Since your gonna ask him to carry a second that would help a ton. Get easy terms on the second and in return create a small term on it. Say a one-two year balloon.

Banks will look at this deal. Your credit is a little low so you may get hit with ok terms instead of great terms but if they can do the deal then its a moot point. I would spend a couple hours and make a nice layout of this deal and put it on paper. Then I would go to the banks in your local area (since they know your property and area the best) and see what they say.

They could probably put you into a construction/rehab loan where you get the purchase price and rehab money rolled into one loan. When you visit the banks ask for the commercial loan officer so you get to the right person. Just some thoughts,


Thanks a bunch for your replies. Ya, the seller is willing to carry a second. There’a lot of motivation on the seller’s part so I think I can squeeze some pretty nice terms out of him. I"m gonna ask for a 5yr balloon, with the notion that I’ll probably get 2yrs. I’d be happy with that. The only problem is that the property is out of my home area (hours away). Would I be better off trying to get a local bank where the property is located, or in my home town?

Both. See who offers the best terms.