Historic District Vacant Commercial Property Purchase and Rehab

[RaeLena Morrison]

Looked through BP and could not find an answer so here goes ;). 

I am looking at a property located in a historic district in a small town in Ohio. The property is from the 1830/1850s and has been so many things no one seems to know anymore. 

https://www.sibcycline.com/Listing/CIN/1563276/13-...

The space on both floors is huge with about 2840sq ft per floor. I walked my contractor through and we think we can easily do 4 studio apartments on top and either 4 one bedroom units on the bottom or 2 units and a retail space. The local community has a USDA loan they are offering me at 3% as they are desperately trying to get this historic buildings rehabbed and re-purposed. However, I don't believe the funds they currently have available are going to cover the cost of rehab and constructing units. We know the following;

Roof needs replaced  (gravel slant)

Back wall needs restoration work and windows replaced

Several Joists in basement need to be replaced (new concrete block posts were put in 5 years ago)

Second floor corner flooring needs to be repaired

The electric has already been converted from knob and tube and plumbing is currently available on the 1st floor

I have been researching the Ohio Brownfield Fund which provides a grant to cover the cost of a phase 1 assessment and have reached out to the state requesting information about other funding sources. 

Our contractor believes it will cost $25-$30K per studio apartment and $45-$50K per 1 bedroom to build out. (These seem a little high to me but haven't gotten a second estimate yet)

I have run the analysis based on average rents for the area converting the whole building vs building out the top floor and running a business from the ground floor. We would love to be able to fit out the whole building with apartments though both strategies are above a 10% ROI with the numbers we currently have.

Does anyone have experience using HUD or other government loans/guarantees to fund a project similar to this? I believe that these funding sources put restraints on who can be tenants but unsure of other pitfalls.

We are also looking into multiple sources to cover housing/historic/low-income community/small business/micro-enterprise/rural area/anything else to off set some costs. Also would like more information on selling off the tax credits at the beginning of the project to bridge the gap in financing.

I am liking the idea and numbers of the project are promising. The area is desperate for new rental units as all the current units have no vacancies and have waiting lists. I have reached out to the local government and need to find new resources and ideas. If we can create a good strategy then I would be inclined to look at the other buildings in town later on.

Sorry for the length but I am trying to branch into a new area here and trying to get my feet under me. All help is appreciated.