Hello BiggerPockets Community!
After several months of studying and getting prepared for the highs and lows of real estate investing, I've managed to make my first deal. I'm super excited but can't quite celebrate yet due to a caveat. I received a cash offer on my current primary residence in late February after it had been listed for about three weeks. Inspections have been done and it's under contract scheduled to close on April 4th. In the meantime, I located two homes currently being used by a non-profit organization as their offices in a residential neighborhood. One is a two-story with four bedrooms and 2 baths, asking price $65,500. The other is a 2 bedroom, 2 bath partially bermed house, asking price $35,000. I made a portfolio offer of $86,500. The seller countered $95,000 which I think is reasonable given the fact that both houses are in good condition. They've replaced or repaired what you'd consider your capex items such as water heaters, furnaces, etc. Plus, I had my uncle who's been a builder for over 30 years tag along and be my experienced pair of eyes. The sale also includes a vacant lot that divides the two houses. Now comes the fun stuff....the issue is with the partially bermed house. No lender here in KC is comfortable with approaching it due to concerns with comps. The house is made from typical building materials and slightly built above grade. I think when I've used the term 'earth' home or 'bermed' home, lenders envision it being made out of either recycled materials or earth. My plan is to use the bermed house as a live/work space and rent out the larger house. I've spoken with three lenders and only one of them said that the bermed house might need to be done as a commercial loan. Finally, due to the bermed house being $35,000, most lenders have a minimum that they will finance so after factoring in the down payment, if I were able to go with traditional financing, it falls below minimum loan requirements. Any suggestion on how else I can approach this is very much appreciated. Thanks!!
