How to get financing to convert a SFH (M1) to MFH

[Alex Padilla]

I'm having a hard time finding options for financing a construction project in an existing home. This is a M1/Mixed use property currently used as a single family home. My town has allowed me to add 3 more units to the building. There will be no new construction needed everything will just convert the whole downstairs and separate it into 3 units. It's a pretty big home.

What kind of loan can I get in this case? I just bought the house in April at a 3.5% interest rate with only 5% down, so HELOC is not an option & anything requiring re-financing is tough because it would raise rates dramatically (4-7%). The house was appraised at 800k, and I'm thinking this would bring it up to 1.4-1.6 million. (But who know with rising interest rates though). I'm guesstimating the construction costs will be 250-450k.