Considering a multi use build in downtown Birmingham

[Daniel Reeder]

We are considering buying a 9800 square-foot two-story building in downtown Birmingham. The bottom level to house our business. It is the only building left available in this specific district. The building is structurally sound. The upper level to build out as apartments probably 4, absorb the expenses, and be income producing. Estimating the build out is going to be around $125 per square foot. I want to understand better how to leverage the upfront cost of doing this. Meaning the the loan for the down payment and I’m not really familiar with construction loans. The purchase price of the building is $670k.

The apartment rent is between $1500-1700. So looking for thoughts on how to best do this.

[Greg Dickerson]

Originally posted by @Daniel Reeder:

We are considering buying a 9800 square-foot two-story building in downtown Birmingham. The bottom level to house our business. It is the only building left available in this specific district. The building is structurally sound. The upper level to build out as apartments probably 4, absorb the expenses, and be income producing. Estimating the build out is going to be around $125 per square foot. I want to understand better how to leverage the upfront cost of doing this. Meaning the the loan for the down payment and I’m not really familiar with construction loans. The purchase price of the building is $670k.

The apartment rent is between $1500-1700. So looking for thoughts on how to best do this.

This is a loan product for clicks or regional bank. They will loan you a percentage of the total cost or appraised value after the project is complete, whichever is less. The bank will provide the funds to purchase the building at closing and construction funds in draws as the project is complete. He will need a complete set of plans and specifications along with a contract from a qualified licensed and insured general contractor to do the project.

Next you will need to qualify for the loan, put up 30-40% down, show you have at least 6-12 months cash reserves etc. If you do not have the cash to put down and the reserves you could always raise the money for my private investor or investors and or ask for owner financing or for the owner to participate in the deal.