Tenant Requirements with Banks

[Cody Bell]

This is a pretty random question.. but I am curious of the legality of it. There is an 8-unit complex near me that is completely vacant and in terrible shape. So getting bank financing would be fairly difficult. I had an idea to require any tenants who wanted to live in the property to make the bank I use for financing their primary bank. Can I actually use that as a requirement? Basically the thought is, by bringing more money into the bank with new clients, they may be willing to finance the building + construction. Thoughts? Thank y’all!

Cody Bell - Montgomery, AL

[Geordy Rostad]

@Cody Bell

You need to get a bridge loan on the property. This is sort of like a hard money loan when you fix and flip a single family house.

While you're on the bridge loan, you fix up the property nicely and start filling it with renters. Then you refinance it with permanent financing after you have a fist full of 1 year leases. If you did everything right, you might even be able to pull more money out of it than you put into it. If you don't think that would be the case, you should re-evaluate the deal to make sure it's worth all the risk and headache.