Rehab Roadblock

[Timothy Bonham]

You never want to find a property deal that is to good. Example, we located a commercial property that could be purchased for 10 thousand the property is zoned mixed use it has 1 existing apartment that needs full rehab and could allow up to 4 apartments in the entire building and a large retail space. We will add 2 more apartments and rehab the existing apartment and creating a 1000 sq foot of retail space. Each unit could rent for 800+ per month. Other apartments located in same downtown square are renting for 800/month with minimal upgrades retail space at less than 10.00/sq foot makes that 800/month in rent. Total rent on property would be 3200/month. Upon completion the property should appraise between 228-299 thousand. The property will qualify for tax incentives offered by the city with a downtown revitalization program. The city is excited about working with us, we have spoke to the building inspector, a structural engineer has already inspected and cleared the building. The tax incentives are 100% tax cut for the first 5 years years 6-8 are 75% cut and years 9-10 are a 50% tax cut. Total demo and rehab at 147,000. This is less than a 65% ARV which is what everyone says we need to stay below. Local banks have approved refinance loan after rehab is done. So we already have the exit strategy in place. And we keep hitting the same road blocks, the purchase price of the property is to cheap, we don't want enough money. We are licensed contractors, we will put all the sweat equity in ourselves keeping the LTV low. Estimated completion time of 7 months. Already has 600 amp of service going to the building, 6 inch sewer lines already in place. I view hard money lenders not as private investors but banks without the same restrictions, you say it is about the deal but only as long as the deal is not to good.