Renovated 14 Unit Building in Detroit. NEED FINANCING ASAP

Real Estate Agent · Oakland, CA · Member since 2015 · 33 posts · 11 votes

Hi all, I've been trying to lock down my first deal and have come across a renovated, 14 unit building in Detroit. The initial price a few months back was $700k but the seller is motivated and is down to $520k. This would be my first deal and I've been searching for financing for the deal for the last few hours. Open to all lending opportunities DSCR, PML, HARDMONEY? I've attached the rough numbers the seller sent me and am waiting on an updated pro forma.

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Travis Biziorek

Investor · Arroyo Grande, CA · Member since 2014 · 1k+ posts · 1k+ votes

Darnell, I'd highly advise proceeding with caution here. This screams D Class garbage all day long to me.

I own 12-doors in Detroit and help investors get started there all the time. I can tell you right away this is likely a very bad deal. Happy to connect and give you some quick feedback on it if you'd like though.

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Brittany MinocchiBusiness Member
Lender · Massillon, OH · Member since 2022 · 1k+ posts · 486 votes
3y
I would expect your maintenance costs to be higher than what you've noted here. As for the lending side of things, DSCR may be doable if your credit qualifies you and you've got the funds for the purchase and reserves. Not sure of your experience level, but this may be a big undertaking for a beginner. Feel free to connect.
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Michael SmytheBusiness Member
Real Estate Agent · Metro Detroit · Member since 2023 · 4k+ posts · 3k+ votes
3y
No lender is going to move forward without property management costs.
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Dennis Muno
Lender · Denton, TX · Member since 2023 · 349 posts · 80 votes
3y
Quote from @Darnell Robinson:

Hi all, I've been trying to lock down my first deal and have come across a renovated, 14 unit building in Detroit. The initial price a few months back was $700k but the seller is motivated and is down to $520k. This would be my first deal and I've been searching for financing for the deal for the last few hours. Open to all lending opportunities DSCR, PML, HARDMONEY? I've attached the rough numbers the seller sent me and am waiting on an updated pro forma.

Hello Darnell,
For a loan to buy like this, lenders will ask what your investing experience is, your amount of cash for downpayment+ closing costs, your FICO, your LLC structure, etc. These will affect your chances of getting financing.
They'll also want information like does the property need rehab or not?
The options you could consider are: hard money, private money and commercial.
If the property won't need rehab: some lenders(not very common) may do a DSCR commercial loan. Or commercial financing will be the way to go.
If you need rehab: Bridge may be the way to go
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Adam Bartling
Lender · Rosenberg, TX · Member since 2022 · 287 posts · 130 votes
3y
@Darnell Robinson The price of the property maybe too low. Typically most lenders will be $50K per door Min. But if it appraises higher and you are getting a deal, maybe I can get you across the finish line.
The problem with Michigan, OK, St Louis , East Texas, is Most lenders have raised their min. above the rural area cost.
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Travis Biziorek
Investor · Arroyo Grande, CA · Member since 2014 · 1k+ posts · 1k+ votes
3y
Darnell, I'd highly advise proceeding with caution here. This screams D Class garbage all day long to me.
I own 12-doors in Detroit and help investors get started there all the time. I can tell you right away this is likely a very bad deal. Happy to connect and give you some quick feedback on it if you'd like though.
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Darnell Robinson
OP
Real Estate Agent · Oakland, CA · Member since 2015 · 33 posts · 11 votes
3y
@Travis Biziorek I haven’t made a move yet as they’re taking a long time answering my questions. Looks like they got the property for well below $300k, put a crown on a clown and tried to call it a king. I’ll move forward if they answer my questions and come down to $450k. If they do, I’ll let you know. Thanks for looking out!
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Travis Biziorek
Investor · Arroyo Grande, CA · Member since 2014 · 1k+ posts · 1k+ votes
3y
Quote from @Darnell Robinson:

@Travis Biziorek I haven’t made a move yet as they’re taking a long time answering my questions. Looks like they got the property for well below $300k, put a crown on a clown and tried to call it a king. I’ll move forward if they answer my questions and come down to $450k. If they do, I’ll let you know. Thanks for looking out!

Haha, sounds about right. Hope it works out!
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Lin Yin
Member since 2022 · 13 posts · 10 votes
3y
Honestly rent is too low for the number of units. You profits are razor thin and even just 1 out of 14 tenants trash the place, all your profit will be gone for the year.
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John Chong
Lender · Houston, TX · Member since 2023 · 235 posts · 255 votes
3y
You'll want to check with lenders to see if they offer a DSCR past 10+ units. It might not be a true non qm DSCR. Also agree with Adams comment about the per door minimum.
NOI and cap rate looks good. Good luck on this deal. Hope you get it.
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