Pricing and financing a 6 unit building in NYC

[Andy Finneran]

I'm looking to buy a 6 unit building and running into difficulties finding financing. Building has a 1st floor retail space and the other 5 units are apartments so it falls under a commercial loan. Having a hard time getting a loan officer to even call me back. I currently own a 3 unit multi family and single family as rentals in NJ so maybe I'm not asking the right questions. 

I have all the numbers (leases, taxes, maintenance, electric, gas, garbage, etc.) ran them through the Bigger Pockets and two other calculators to get a good estimate on the price. Just need to get in front of a loan officer to present this.

Also need a real estate lawyer to close that can do a trust later.

Thanks,

Andy

[Marty Johnston]

@Andy Finneran, an application before a quote is pretty much necessary on most commercial loans, since their 80% the property and 20% the guarantor - I'd say that's fairly standard practice. Now you should be able to still get a phone call for a consult.

As it relates to Owner Occupancy - you'll have an incredibly difficult time finding a commercial lender allow you to live in a commercial property. I'd say 95% of Commercial Lenders require it to be solely non-ower-occupied investment. So probably a good idea to not live in the property (at least not right away to be sure) to make your life much easier. It's possible a note could be call-able as well if they find out you did ultimately decide to live in the property. Always consult with an attorney first if this is your end-intention.

If you do make it your business place of work, the biggest benefits would be after you utilize 51% or more of the SF of the property for your business. This would allow you to go SBA 7(a) or SBA 504. rates and terms can be preferable here.

The non-QM market would be a great place to look - banks are being pretty stingy in most markets around the country, and you're absolutely right - it's very largely a result of COVID... Lender's went on the extreme defensive in March-April when it first hit, most pipelines were wiped out 90-100%. Lender's are now slowly rolling back their recently tightened guidelines, but everone is still have some extra 'reserve' requirement, slightly lower LTVs (in many cases - some are back to pre-COVID) etc. Banks in general will have the highest requirements in most cases (although this was true even in the best of times). Non-QM (secondary market or private lenders) will be more easily obtainable.

Send me a DM if you'd like to chat more on this. Would be happy to!