Financing a multifamily rehab - historic

[Matthew Moorhead]

Hi, all. We are considering making an offer on a property here in Houston. The property is currently categorized as multifamily, having 6 apartments spread over a main house and a secondary building. Originally, the main house was a single family residence. It is also a contributing structure in an identified historic district, so the rehab of the property will be subject to specific historical restoration guidelines established by the city planning department. The property is currently listed at $850K.

There is lots of deferred maintenance on the property, enough to warrant a complete rehab (foundation, new plumbing, wiring, mechanical). We are looking at this opportunity as an owner-occupied property, with 6 units total after rehab (including the one we live in). I will be fine-tuning our rehab estimate over the next few days, but figure at least $500K (to rehab house and demolish/rebuild secondary structure). After repair value in this neighborhood would be somewhere in the $1.1 - $1.3 M range.

What I'm hoping to get here is some ideas for different financing options. Some of my questions:

• How can we finance both the acquisition and the rehab, without killing ourselves on holding costs during the rehab construction?
• Does the intention to make this a primary residence make a difference?
• What if we rebuilt to 4 units or fewer? Does that open new financing options?

Thanks!