Options for 8 unit multifamily gut remodel?

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Dav,There are fix and flip loans available on 5+ units, but, the products are more niche than 1-4 unit residential. The fix and flip loan will either more expensive, a higher rate, or generally a bridge loan without rehab (it may also require more down) in most cases. For the refinance, there are some DSCR loans on 8-unit properties that could work. Usually seasoning is 6-months or more (depending on the program) and the lender will want to see leased units. I hope this helps!

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You can do a bridge loan that would incorporate the renovations. Typically it would be on drawn funds only, so you would pay interest only as you draw down on the repairs budget. Frankly, too the lower leverage you take the better your terms are. You are able to refinance pretty easily at 6 months and on an 8 unit would need to show 80% occupancy or have signed leases in hand to get the best rates/terms. Reach out if you want to talk more.

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@Dav Pohote You are looking for a construction loan and this is something many banks offer. An alternative lender may offer better leverage but will be more costly. Expect to pay WSJ Prime + 1 point or therabouts from a traditional bank on interest and 1 point for the origination whereas you will be a few points higher on the origination and the rate through an atlernative lender. Banks will be more likely to have an adjustable rate with a floor which could benefit you if the fed starts to reduce the rates. Expect to pay 25% or so on the total project cost through a bank as your equity contribution, again alternative lenders may provide better leverage. Also importnat to understand if soft costs and interest reserve are financable, will reduce the true cash requirements significantly. Banks may also offer a construction to permanent option and in some cases you can negotiate a stabilzied release which can be a cost effective option in lieu of completing a refinance. Basically, there are a lot of options and variations but you should be specifically seeking a construction loan and from there its really up to you to decide what is the best option. Depending on the borrower and their circumstances at the time, this will vary.

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@Dav Pohote reiterating some of the points here but one note to add is commercial property exit financing is different than DSCR 1-4s. 6 month title Seasoning is low as most lenders require 12 month stabilization for best rates, occupancy percentages of 90+, to name a few. There is some appetite for 5-8 units but I have not seen pricing being favorable. Regarding the Fix and Flip, my lenders who allow 5+ commercial flips require 5+ experience and the down payments are 25-30% min and do fund some, not all, of the reno. These deals are case by case. Hope that helps

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Hey Dav, yes a bridge loan wouldn’t include reno budget if you wanted to do it out of pocket. Not much difference in rate, so typically best to include the reno. Fix n flip would include the reno and yes they’re available on 5+ unit buildings. Neither should include prepay penalty and refinance when you’re ready. Happy to connect on this one!

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Could be possible for a fix and flip hard money loan for a lender that ventures past single units. Whats the general price/rehab budget and location on this one?

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Hi Dav, Yes, there are short term financing for 5+ units, usually in 10-12% interest at the moment. Once all units are rented, you should have many options for 15 year or 30 year fixed financing.

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Yes definitely . You are able to use a no income no doc fix and flip product . 30% down on the purchase providing 100% of construction upto 65% ARV

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Its based off of what it will be worth after the renovation is complete

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Yep, that part is easy and straightforward to me. I've talked to suppliers and sub contractors and gotten the measurements and quotes I need. The financing part is new as this is my first multiunit. On a 550k purchase w/ a 200k remodel, am I paying the down on 550k or 750k? When the rehab is done in 6 months and I refinance to commercial, is that on the 750k total? And I'm hearing some commercial lenders require 30% of balance in their bank. I would rather pay cash on the rehab in addition to the downpayment on the purchase. Have multiple investors so want to pay interest on as little cash as possible.