Experienced investor looking for advice - how to finance very small purchase & rehab?

[Ken P.]

I have an opportunity to buy a condo at an older complex where our LLC already owns 22 units. All the units bought to date have either been through conventional commercial bank financing, or owner financing. The latest condo, however, is being sold as the assets of the deceased former owner are liquidated and passed to the heirs. It hasn't been updated in decades, and needs renovations. My company has renovated many other units in the complex and is ready to tackle the work, and in the past we've always been able to put 20-25% down and $3-$4k into updates. The total usually comes to around $8k cash to control a unit worth $25k to $30k.

In this case though the estate wants to sell the property outright, and it will take ~$6k to update.  Because of the condition we might be able to pick it up for $13 - $15k, taking total cash required to ~$20k or more after updates.  This is enough to buy three units financed by owner or a bank, or even a small house, so it isn't something we want to do.

Our commercial lender isn't lending any more (nothing we did, they're just going in a different direction with their new loans), and our other business bank isn't doing any RE loans either. We could use our HELOC, but are paying it down, and don't want to increase lending against our primary residence.

Any ideas? Maybe a HELOC against one of our other rental properties with substantial equity? An ideal solution would be a loan with 4 - 5 year payback @ 5% interest, which is typical of our owner finance deals.