Complex Hard Money Question

[Dustin Smith]

Hey all,

I recently came upon an interesting opportunity to purchase an 8000 sq. ft. 20 bed 7 bath retirement home that I plan to turn into 6 apartments.  I figure I can get the property for $210,000 plus closing costs, spend around $95,000 in repairs, new construction, appliances, etc. for a total of around $315,000 and have a property worth $450,000 on a bad day, which I would plan to rent out.  Most hard money lender sites that I've visited are strictly single family fix and flip or at most 4 unit.  The ones that are willing to do bigger buildings or loans over $250,000 aren't playing in my state, at least based on the information on their websites.  Does anybody have any experience with anything like this?  I assume they have to be licensed in a specific state to do business there?  Alternatives?

Also, side question. Being that I would have a $450,000-$500,000 finished property with $315,000 into it (70% ARV) is there any reason that I couldn't just refinance the hard money debt into a conventional commercial mortgage with the 70% LTV and no down payment? Seems to me they get the security they want, I don't have to put the extra cash in. Or am I completely crazy?

Thanks in advance!

[Travis Sperr]

happy to connect further if needed. I make hard money loans in Colorado and Minnesota making loans larger than $250k and more than 4 units. The biggest challange in a senior living facility is that the repairs/improvements made are not the highest and best use from a value standpoint, rather a business model, there is zero value in the business model to a lender if there is a default. So although the numbers pencil, all of the value in this business model is the business not as much in the real estate, because time property would need to be rehabbed again for resale. Further issues could also be in zoning and use of said property.