Commercial property financing info needed

[Jeremy Christ]

Looking at a property that consists of two apartments and a vacant shop front.  Looking to remodel and rent the apartments, and renovate and either rent or start up a business (down the road) in the store front.  We have the personal finances that I would expect to qualify for a loan(credit score/assets/debt to income/down payment/etc).  But we do not have an existing business entity or business income to show.  IDK if it's relevant, but the property is listed at $235K, and we would like to offer $190K based on the time on the market.  

Financing seems to be the confusing part.  They(the bank) want estimated and previous rental income, utility info, etc.  And the seller seems less than willing to supply an of that.   Can't we just get something similar to a real estate loan without posting a full business plan/expectations?  Or is every commercial property considered a business purchase and need to be tied into a business plan?  Any tips on first time commercial real estate purchasing would be very helpful.  Thank you.

(Not requesting any offers/lendors/mentors/etc. per guidelines.   Only advice on the processes)

[Mav Larson]

@Jeremy Christ I've done a handful of rehabs like this and they've been great. Communities and local governments love to see buildings like this come to life again. If it were me, I'd start a new LLC and come up with a simple business plan that involves rehab costs for each unit, expected rental rates for each unit, and your plan for the lower level commercial. To find tenants for the commercial unit, I go to local farmers markets and find the most popular booths, then start conversations about taking the next step and starting a brick and mortar. Explain your dream and vision for the property and try to create buy in from the perspective tenants.

I usually have to do the initial basic buildout for the commercial tenant because perspective tenants at farmers markets typically don’t have the resources for their own buildout. I also use this as a selling point though too - your store’s layout will be to your specs. My tenants also really appreciate my effort in helping them build their dream as I’ve never had one vacate in 10 years. 

I’d then go to the business lender of local credit unions and local banks and start discussions about financing. In the follow up meetings, you’ll again share your dream and vision with the banker which will be backed up with numbers that make the investment financially viable. My loans would typically pay for the renovations and would be interest only for the estimated rehab time. I would set my rehab time for 6 months, and then the loan would convert into a traditional loan at the end of the 6 month time frame .

Check your local community redevelopment programs to see if facade grants are available. These have helped me out a lot also. 

Good luck!