Commercial Lender? Local Bank?

Question

I'm under contract on an interesting property. It's one structure that is a duplex on one side and commercial on the other. 130K. I found a lender who will do it but I wasn't thrilled with his terms but he did say he could do it in 30-45 days. Yet, I was wondering if approaching a local bank would be best? If so, any recommendations on who to approach? I live in Austin so any contacts/advice would be greatly appreciated!

Jason Hirko · Answer

@Kristina Modares Give Sonora Bank a call - they're pretty good

Kristina Modares · Answer

Thank you, Ben! Yeah, definitely a learning process with the financing. I bet I'll look back on these posts one day and laugh.

It's for long-term financing. There are tenants currently renting out the two units and commercial side...month to month. We figured we could fix it up a bit while they are living there and eventually raise rent. We have a list of people to call and have learned a lot through BP and already talking to lenders. Hopefully, lock something down tomorrow. Thank you for the tips!

Ben McMahon · Answer

Hey Kristina, I have gotten so many different types of loans that they are all blending together now.  Are you looking for long term financing, or short term?  I think that is what is going to ultimately determine your approach.  If you are just going to sell it in a year, it doesnt really matter who finances the deal, or if they are a half a point higher or whatever.  There have been a few times, I just wanted someone to finance because I knew the numbers were good, but most of the banks were too set on the rules.

I can offer a few points though.  Every Lender is going to tell you that they can help you, and a lot of them can't.  Its annoying, but just be ready for that.  I bought a similar property in Winchester VA.  It had an upper under duplex attached to commercial retail/warehouse space.  Same price range too.  I think I bought it for 135k.   I figured it was easily worth 220k, but was vacant and needed a little lovin.

I ended up just using a private investor and flipping the property, because it was too odd for a lot of the lenders.  If you have other properties you can leverage, you can get a portfolio line of credit, or something along those lines.  Its about 10 times easier to get money from a bank when you already own it. Thats what I do.  Buy it with an investor and either flip it or refi.  Hope that helps, and good luck.  I know exactly where you are in your investment career if this is what you are looking at.  Haha

I can relate.  Cheers