What is the name of the loan I want? I cant find a lender if I don't know what I am looking for!
So I own a 8 unit property. They are small houses that are serving low income tenants in an agrarian area. Several of the long term tenenats have said they are willing to sign long term leases (5+ years) and increase their rents if I was able to increase the size of their units.So I need a loan! But what kind of loan? I don't have enough equity to do a home equity loan. I just need $500,000 that I can pay off easily if the interest rate is 5% or less.What is the name of the type of loan I am looking for?

 

Edit to add some more information:  
Mortgage balance is $644,537.55. Purchase date: May 10, 2019 for $625,000 (our lender lent an additional $25K for expenses and needed repairs).

Estimated Value Current: **790K**

Current NOI is $58,781 per year

Number of Units Current: 8 units in 4 buildings:

* \*Building 1 has an efficiency, a 2 bedroom unit, and a 4 bedroom unit.
* \*Building 2 is just a 2 bedroom unit
* \*Building 3 is just a 3 bedroom unit
* \*Building 4 has an efficiency, and two 2 bedroom units.

Estimated Value post Loan: **1.5M**

Our estimated NOI once the rebuilding will be $119,299  
Number of Units post Loan: 8 units in 4 buildings

* \*Building 1 would become a 3 bedroom unit, a 5 bedroom unit, and a 5 bedroom unit.
* \*Building 2 would become a 5 bedroom unit
* \*Building 3 would become a 7 bedroom unit
* \*Building 4 would become a 3 bedroom unit, a 4 bedroom unit, and a 2 bedroom unit.

Amoritization is what I was thinking of for the loan.
[{"id": "hlxdc69", "text": "Following", "replies": [], "depth": 1}, {"id": "hlxeli1", "text": "What's the value of the 8-unit property? Would be a senior term loan secured by first d/t + assignment of leases &amp; rents on the 8-unit property. Would also help if you brought significant liquidity/personal cash flow independent of the of the property. Honestly, I think a deal like this would depend on your personal wherewithal given the nature of the property and its location.", "replies": [{"id": "hlxn0rb", "text": "The value is 790K right now. I am able to bring about 50K-70K of personal cash into this project.", "replies": [], "depth": 2}], "depth": 1}, {"id": "hlxem97", "text": "How much are all the properties worth currently? \n\nHow much do you owe on your current loan?", "replies": [], "depth": 1}, {"id": "hlxg3sr", "text": "8 houses on one parcel?\n8 houses on 8 parcels?\n8 attached units under 1 roof?\nExisting loans? \n$500,000 worth of construction gets you what increase in rents?\nDo you want amortization or interest only?\n\nYou haven't really provided enough information to tell you what your options are...", "replies": [{"id": "hlxmtpt", "text": "Estimated Value Current: **790K**\n\nCurrent NOI is $58,781 per year\r  \nNumber of Units Current: 8 units in 4 buildings: \r  \n\\*Building 1 has an efficiency, a 2 bedroom unit, and a 4 bedroom unit. \r  \n\\*Building 2 is just a 2 bedroom unit\r  \n\\*Building 3 is just a 3 bedroom unit\r  \n\\*Building 4 has an efficiency, and two 2 bedroom units.  \n\n\n\r  \nEstimated Value post Loan: **1.5M**\n\nOur estimated NOI once the rebuilding will be $119,299  \nNumber of Units post Loan: 8 units in 4 buildings   \n\\*Building 1 would become a 3 bedroom unit, a 5 bedroom unit, and a 5 bedroom unit.   \n\\*Building 2 would become a 5 bedroom unit  \n\\*Building 3 would become a 7 bedroom unit  \n\\*Building 4 would become a 3 bedroom unit, a 4 bedroom unit, and a 2 bedroom unit. \n\n  \nAmoritization is what I was thinking of for the loan.", "replies": [{"id": "hlxqllx", "text": "What is your tenant profile that you\u2019d need to build a 7 bedroom house? Just mental math on this makes it seem dilutive and if your tenant blows out on the 7br who is going to backfill it? You\u2019re in a rural area is there a market for 7br homes?", "replies": [{"id": "hlxs60z", "text": "I work for a high school and I have a ton of graduate guys who are always looking for a room.", "replies": [{"id": "hlxzeh4", "text": "Due to the idiosyncrasies of this your best bet is to look at the development from a cash on cash return perspective, not so much an increase in value - going to be really tough to ever sell something like that. You should consider how much cash you\u2019re getting out annually divided by how much cash you\u2019ve put into the deal. Compare that to the same metric after you\u2019ve done your expansion - sure NOI goes up but so does debt, and you probably have a limited buyer pool if you sell this stuff. Compare the two returns and just ask yourself if the return you\u2019re getting justifies the cost. To do it apples to apples look at both instances on a pre-amortization basis. \n\nAnyways good luck! Have a great Thanksgiving", "replies": [{"id": "hlygxhw", "text": "Thank you!", "replies": [], "depth": 6}], "depth": 5}], "depth": 4}], "depth": 3}, {"id": "hlxurg8", "text": "Frankly it all seems like a stretch...\n\nYou're expecting to more than double rents post construction?\n\nHow much vacancy are you going to have during this and how long will it all take? \n\nSounds like you got a 100%+ LTC on the purchase and you're currently at 82% LTV (depending on the source of your \"value\")... those aren't great numbers to borrow against before construction risk.\n\nThat being said you want a commercial real estate construction/renovation loan. Find a local lending institution (definitely wouldn't try any over $10 billion in assets) and ask to speak to a commercial loan/lending officer and lay it all out. Expect to do this several times because you don't exactly have a slam dunk deal.", "replies": [{"id": "hlygv16", "text": "Thank you for the help! \n\nI already have people willing to sign a lease at those double rents. We have a waiting list ever since we started. So things are going well!", "replies": [{"id": "hlysgxs", "text": "Have them sign rents at increased prices before you apply for the loan.  FreddieMac multifmaily rehab if you have good scores.  https://selectcommercial.com/freddie-mac-moderate-rehab-multifamily-loans.php", "replies": [], "depth": 5}, {"id": "hlyswy4", "text": "You need to do as above. You should be able to get an appraisal for the \u201cas complete\u201d value and then build a construction budget that fits within 75% (existing debt + construction)of the end value. The new lender will take out the existing debt and provide construction advances as you spend money. It should be interest only and you should be able t build in an interest reserve to cover your interest payments. At the end you will convert to term debt (principle and interest) with that lender or another.", "replies": [], "depth": 5}], "depth": 4}], "depth": 3}, {"id": "hlynug5", "text": "&gt;Amoritization is what I was thinking of for the loan.\n\n????", "replies": [{"id": "hlynz4v", "text": "As opposed to interest only", "replies": [], "depth": 4}], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "hlynb27", "text": "Around here the US Dept of Agriculture has some very attractive and flexible loans if you live in an area that they consider their kind of people. Google USDA loans.", "replies": [{"id": "hlyqegy", "text": "Thank you!", "replies": [], "depth": 2}], "depth": 1}, {"id": "hlys126", "text": "After you put 500k into it, what will it be worth?  Is it 8 houses on one parcel?  Or are they connected?", "replies": [{"id": "hlysbkp", "text": "1.5 million. It is four houses on one parcel.", "replies": [{"id": "hm04qf3", "text": "Unfortunately the 1.5m is a stretch and this will be a hard deal to make happen. Therr are easier ways to make 500k in real estate.", "replies": [], "depth": 3}], "depth": 2}], "depth": 1}]