Commercial loan needed to buy and fix up apartment building

[Jemma Jacques]

Hello,

I am in escrow on a building in North Memphis and need to get a loan to buy the property and fix it up, can anyone point me in the right direction please of a good lender for this? someone who is quick is ideal since I am already in escrow. I also have some 1031 funds from a property sale as the down payment....Alternatively a personal loan to buy the building and then I can fix it up down the road since it is a historical building and I might need time for all that process and getting the tax credits.

I have 50% down payment (some of this is part of a 1031 exchange) and excellent credit,
Other option is to get some type of portfolio on loan based on my other investment properties?

Any advice appriciated

Thank you

Jemma

[Ian Stuart]

Depends on how much equity you have available to put in the deal, how much leverage you need (LTC %?); the value-add renovation business plan (renovation scopes - units / buildings / common areas), the value add capex budget (how much are you looking to spend on the rehab, broken down by unit interiors / building exteriors / common areas / amenities), the team doing the renovations, your team's track record executing value-add multi projects, your stabilized NOI proforma (stabilized DCR, DY, etc.?), target renovated rents, expense comps, sale / exit assumptions, etc. Then - of course - general deal optics (does it make sense to rehab this deal given the market / tenant base / demos / etc).

If this is your first time doing value-add multi, probably need a hard money bridge loan (which isn't cheap - probably SOFR+500bps+). Hard money guys will rip your eyes out on rate, fees, etc. - but they'll get you the leverage you need. 

If experienced, probably a regional bank deal priced at SOFR+350-400bps sized to a stabilized 1.25x-1.30x DCR; 7.50%-9.00% DY on exit.

Also depends what your takeout financing plans are, when it comes to refinancing out of the value add bridge debt.