Funding a property with commercial space on the first floor and 4 apartments on the second... I occupy the first floor commercial space.
Place needs work first off. I want to use the first floor for my business and the second floor apartments to rent out. What kind of financing would be available off the top of redditor’s heads?
[{"id": "fgjrwua", "text": "Commercial real estate loan.", "replies": [], "depth": 1}, {"id": "fgjryvn", "text": "Potentially an SBA 504 or SBA 7a loan for owner occupied", "replies": [{"id": "fgjv5aj", "text": "No. Sba rules are 51% owner occupied of leasable space.\n\nUnless he condos the retail, maybe?", "replies": [{"id": "fgk379i", "text": "Thank you - I did not take into account the 51% rule", "replies": [], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "fgk9d8a", "text": "Depending On the size and scale, and depending on your cash available.\n\nLikely a bank loan followed by some mezz or pref equity. You don\u2019t have to inject much in that financing structure. You are GP, get some LP money to fund the delta between the bank note and your construction costs. Run a proforma to show your returns to investors based on reliable market data, including waterfall, estimate a decent hold period and exit cap. If you plan to hold, once stabilized, refinance and payback all or part of your equity holders (hopefully), and enjoy sweet passive income.\n\nAssuming you hire a leasing company, or leasing manager to run the apartments for you.\n\nWhat kind of business? I assume office space.", "replies": [], "depth": 1}, {"id": "fgku83q", "text": "Regional banks and credit unions. If you are occupying the commercial space with your own business, the profitability/tax returns of that business will be a part of the underwriting process, as will your experience as a multifamily owner and your personal net worth/liquidity. The bank/CU won't have any perks from an SBA guarantee, so don't expect high leverage. Your business will need to either guarantee the lease (and the value of the entity/guarantor behind that will be analyzed) or be pledged as collateral. The lender will also underwrite the historical and current cash flow of the multifamily units.", "replies": [], "depth": 1}]