Small commercial multi-family general questions

[Allen L.]

Hi guys,

I have a few general questions about investing in small commercial real estate properties:

Estimating expenses:

- The property is located in uptown NY and has four 1/1 units and one 2/1 unit and was recently rehabbed throughout. When estimating capex and maintenance costs, what are some ballpark figures? In my head the number comes out to $5000 a year, but I'm not sure if that's accurate.

Obtaining loans:

- I own and manage 2 SFH and manage another SFH for my fiancee but I have no past experience owning multi-families. We rent the SFH to college students but we pays all utilities. I want to reach out to the local bank in the area to see if they'd provide me with a commercial loan on the property, but I heard it's tough to get a loan if I don't have experience managing multi-unit properties. Can someone confirm if this is true? Can I spin my experience managing SFH as student rentals as related experience to owning a Multi?

- Would banks generally allow borrowers to put the commercial mortgage under a brand new LLC (no profit history)?

Thank you!

Allen

[Greg Dickerson]

Hi Allen,

You can get historical maintenance cost information from the seller. CAPx will be based on condition of the property. You can get contractor estimates for any future repair items.

Financing small properties like this is not difficult. You just need to find a local bank or commercial lender that specializes in these types of loans. They will allow you to put the property in an LLC and they will lend to an LLC but you will be asked to personally guarantee the loan. Since this is a very small del I do not think your experience level is going to be an issue since you already own rental property. If experience or qualifying becomes and issue then you should find a partner to go in with you.