NEED LOAN FOR A UNIQUE PROPERTY (UNDER CONTRACT)

[Tristan Beavers]

     Myself and a partner have a property under contract in Fort Pierce, FL. It's a dormitory style property, with 17 bedrooms, and 11 bathrooms, as well as shared space for cooking and dining. The property has been difficult to obtain financing for, I'm wondering if anybody here is familiar with a lender for this type of asset. The address is 1305 N 19th St, Fort Pierce, FL 34950. The current owner runs a rent by the room model, bringing in about 10,200 per month in revenue at full occupancy. The previous appraisal done in 2020 valued the building at 800,000, we're hoping an updated appraisal will place this closer to 850,000 in valuation since we're seeking a loan as close to 590,000 as we can get. My partner who would be sponsoring the loan has good credit, and plenty of experience investing. If anybody knows any lenders willing to have a look at this with me, please reach out to me! I'd greatly appreciate it!

[Don Konipol]

Quote from @Tristan Beavers:

     Myself and a partner have a property under contract in Fort Pierce, FL. It's a dormitory style property, with 17 bedrooms, and 11 bathrooms, as well as shared space for cooking and dining. The property has been difficult to obtain financing for, I'm wondering if anybody here is familiar with a lender for this type of asset. The address is 1305 N 19th St, Fort Pierce, FL 34950. The current owner runs a rent by the room model, bringing in about 10,200 per month in revenue at full occupancy. The previous appraisal done in 2020 valued the building at 800,000, we're hoping an updated appraisal will place this closer to 850,000 in valuation since we're seeking a loan as close to 590,000 as we can get. My partner who would be sponsoring the loan has good credit, and plenty of experience investing. If anybody knows any lenders willing to have a look at this with me, please reach out to me! I'd greatly appreciate it!

It’s the relatively high LTV or LTC that’s tripping you up.  Most lenders lending secured by “special use” real property have much lower LTV caps because the property can be very difficult and time consuming to liquidate in case a foreclosure is necessary, and can be difficult to refinance so takeouts are also more difficult.  Our max LTV on these type assets is 50% of the lower of appraisal or cost.  
The way to make this deal happen is to find a lender at 50% LTV who will allow a second mortgage behind their first and have the seller carry back a second mortgage for 25% LTV.  With an asset hard to finance and thus with limited number of potential buyers able to complete an acquisition, the seller has a motivation to provide subordinated financing.  If the seller balks at the second position of his loan tell him he can be in first position if he will provide a 75% LTV loan.
There are other ways to structure this transaction that can be done but involve a willing seller.  The seller can become part of the buyout reinvesting some of the cash he’s to receive in the sale for a minority equity stake.  A master lease can be used to obtain CONTROL, with a deed transfer at a later date when the establishment of a successful track record can make financing much more likely.  And the deal can be syndicated as either equity participation or as debt.