Issues financing vacant apartment building

[Sean Fagan]

Hey guys,

We have the opportunity to pick up a vacant apartment building with 10 units but after talking with many different lenders it seems that nobody is willing to finance a commercial loan on a building that is not producing income.

Our plan is to purchase the property, complete a mid/high-end rehab, and begin renting out units as soon as possible. We're estimating the total cost of the project to be $350,000 which includes acquisition, rehab, and holding costs. Monthly revenue should be $8-9k/month and an ARV of $450,000+ based on comps in the area.

We really don't want to have to walk away from this deal but we're struggling to figure out a way to make it happen. Right now our plan is to approach the seller to see if they would entertain a seller carryback at around 7-8% on a 5 year note. This would allow us to complete the rehab using personal lines/private money and then set up traditional financing after 1 year of collecting rents. This should allow us to pay off the other high interest loans.

So the reason for this post is to get feedback on our plan and as well as seeing if anyone has dealt with this situation before. Are there other creative financing options that we are overlooking?  This is our first attempt at picking up a commercial property so we want to make sure we give ourselves the best opportunity to take control of the property. 

Thanks in advance for your responses!

Sean