Anyone in the mortgage/banking/commercial loan sector?

[HRpartsNstuff]

I am kinda in a bind here. I found the PERFECT property for me & the wife. It is zoned industrial with non-conforming residential. It has a small house on the 2+ acre property, with a 40 x 40 (4+ car) garage. The lot is like being at a park, garage needs electric update & roof/insulation issues, house needs a lot inside, but it would be perfect for us & has a lot of potential.

It looks like it should be priced at 250K at first glance, and then after looking it over closer, it's more like 150-170K at best. They are asking $129K, which makes it even more appealing! We were not even looking right now, this just poped up in our lap & feels right. We thought we had it with 5% down & decent rate, but then the industrial zoning thru a wrench in it. The loan now has to be commercial, at a higher rate & 20% down from what we are being told. It also has to be thru a bank that keeps the loan so they don't have to conform to the "sale-able" loan rules.

So.... We are basically 20K short of getting this the way it looks right now. Any ideas? Any help? Any donations to the cause? Don't have any rich uncles/grand parents to beg to, already thought of that. We have exhausted most ideas here. As I said above, we weren't ready or looking right now, so most of our money, equity, and credit is tied up in the business for a while.
Thanks-

 

[Jebadias]

Sorry,
Can't help ya since I'm kinda on an extended buisness trip overseas right now. I'll forward this thread to my friend though and see what she has to say. That's an odd situation to say the least, at least from my experience, which isn't the greatest

 

[HRpartsNstuff]

Thanks for the help! Any ideas or help at this point are GREATLY appreciated. We REALLY like this property, just kinda wish it was this time next year so we could be prepared better. We looked around a little, nothing comes close. It kills me to think this will slip past us. It will really help me grow & be more efficient with the business, and hopefully allow new products to get into production much faster. I thought of selling HRpartsNstuff stock, but too much hassles & paperwork for that. We are even looking into zoning dropping the industrial title and making it residential, but it's a 3 month process. It will sell to someone else before that goes thru. We tried land contract too, but it's thru an estate, so no luck there. Oh yeah, our lottery ticket didn't pay off either Got to be a way somehow...

 

[turbohawg]

Do you have a house loan now? Any kind of equity in it? Do you own any other stock in the market? Do you have a car or truck that you really don't need. Sacrifice a liver? I've been in your place before and it seems the best deals are at the worst time. Good luck and keep brainstorming. Is the 20% cash down only. Tell em that all you have 5% and see what happens. I cashed my visa out once to make a deal happen. Pretty risky but you gotta do what ya gotta do.

 

[Scott Atk]

Paul, How about an 80 - 10 - 10 loan (first loan is 80%, 10% second loan, usually at a slightly higher rate, then 10% down. I would look into an apraisal, If it apraises in the 150 - 170 range then getting financing for the 129 would be much easier.
Good Luck.

 

[XLR8]

I've been a mortgage underwriter for the last 10 years. You will most likely not get a residential mortgage on the property. The 80% commercial loan you mentioned, was it through a bank? If so, you may be able to get a small business loan from another bank to help with the down payment. Also, in the Denver area, there are "hard money" lenders that can do what they want - they base their laon judgemnt or risk - when they don't get paid back, will they get their money from the property? There should be some lender able to do better than 20% down. Call a few mortgage brokers - not lenders like Wells Fargo - but a broker who deals with a lot of lenders. There should be one that has a line on the financing that you seek. If not, you can always use the equity in your current home (assuming you have one) to come up with the money. Good luck.

 

[HRpartsNstuff]

Well, I do have a house, but I took a home equity loan on it for the business. There is really nothing available there, except a grand or 2 for helping with the downpayment. Can't do the credit card thing either, did that for the business too. I couldn't do the business loan when I started, so they recommended the home eq & visa route. And of course from doing that, and because of another detail related to the business I would rather not say for tax purposes, a business loan is out of the question right now. I feel I am quite resourseful, and I am running out of ideas quickly.

I didn't think of the 80-10-10 idea exactly. I thought of "borrowing" the money from a friend & getting a home eq line once in there to pay him back, but our bank won't do home eq's on industrial property. I will look into the 80-10-10, that could work. The property appraised for 139 which I think is light, but helpful. I might be able to buy it for 139 & get 10 back from the seller, but not likely being an estate.

Our realestate agent said mortgage brokers are for residential loans, and banks are for all types of loans. Is there someone online I should try or stay with local bank/brokers?

THANKS for all the help! If I get this, it will really help the Buick community in the long run. Everything is in so many places right now & so hectic, I can't really imagine having it all in one place & room to do some of the "outside labor" & services stuff. That means more stuff, better stuff, quicker stuff, stuff quicker, & other cool stuff

 

[Jebadias]

Our realestate agent said mortgage brokers are for residential loans, and banks are for all types of loans.

That's not alway true. For the most part mortgage brokers are looking for fast turn around times, so they tend to stay away from commercial and industrial loans. I used to work for a broker, and we would do them from time to time. Of course the trick is to find someone who wants to put the time into it. Many times a broker can get you a better deal than a bank can, but it dosn't always work like that. Good luck.

 

[GN One Day...]

Are you going to live in the new house?

What was the area zoned when the house was built? Is it a recent change? Might make a difference. Seems like I remember something about that making for an exception on a residential loan, but I can't put my hands on it. May vary from lender to lender.

There are brokers who do commercial exclusively. Lots of money in that, so you know they're out there. There are all kinds of gimmicky loans that may get you in with less down, they seem to fax me cr@p all the time about that, but it may not be worth it due to rates/fees. Get into the Yellow Pages and find commercial brokers. I don't think you want to work with one who does this type of lending on the side, get someone who does it as his primary type of business. Otherwise, it might turn into a disappointing nightmare. I doubt the 80/15/5 or 80/10/10 will apply to commercial. Shop around, talk to several brokers. Find out what is standard for rates and fees.

-Talk to others on the block and see who did their financing.

-Talk to a small local bank. See if a 15 year if feasible. A lot of banks will keep the 15 yr loans in the branch, giving a little flexibility.


On another note, at least for homestead property, you aren't supposed to borrow any money for the down payment or closing costs, unless it is a bridge loan or a documented 2nd, included in your budget and accounted for in the underwriting. You sign documents at your closing to that effect. Maybe it's different for commercial, but I doubt it. Also, financing over the sales price is not a good idea. Cash back from the seller isn't allowed. There are ways that people do this for home purchases, using Ameridream Gift Fund and similar, but that is using the 3rd party to get it done. Other than that, cash back shouldn't be done, it's shady.

Remember, whatever problems you have buying the house, you'll have again 10 times over when you're trying to sell it down the road. Make sure a fixer-upper is worth it.

 

[HRpartsNstuff]

Yes, we plan to live there. It's in "move-in" condition, just a bit out-dated & not what we want. It is actually a very neat place. The word that kept coming up when looking at it was "unique". Getting the garage up & running will be main priority. It needs insulation & heat for the winter, and a lot of cleaning & shelves & such. We have looked at a few others to see if we are out of our mind & it always comes back to this one. Just something about it, got to have it. This one would probably be the last house we have to buy.

It was residential back in the 20's to (guessing) the 70's or 80's, when it was converted to industrial. Because this property was the only one out of approx 6 properties that had a house, they added a "non-conforming residential" title to the industrial.

We are checking banks & brokers to see if anyone will do it with less than the 20% down that seems to be the "norm" for commercial property. That is really the only stumbling block right now, just can't swing the 20% with everything else going on. We had to invest a lot into parts & pieces to get the swaybar project going and keep up with all the rest. A couple nice donations from some lottery winners that would like to make a huge impact on someone's life would be nice right now, but don't know any.

One broker mentioned they take the size of the building & see what other businesses in a similar profession make per year based on that size, and use it to figure the loan. Guess that's how they see if I can pay it back. Really weird if you ask me, but not my rules. Going to try a couple more tomorrow and look in the yellow pages for more. Got a friend of the wife that we will try on Thurs too. Willing to explore any & all possibilities at this point. I will try to post a couple pics soon, so you can see what the fuss is about.

THANKS again for all the ideas & help. I was kinda hoping I could find a loyal customer that might be able to pull some strings or something. Never know who can help with what these days.

 

[arista5]

paul PM me if you want to talk to my girlfriend, i dont know the info, but she has a bunch of loan officers at her branch (she is the asst branch manager of a Chase Branch) so i am sure she can help ya out....

 

[Phatman]

Paul....

I bought some warehouses some years back for my business. At the time cash was a little tight "like it isn't still" and I really didn't see a way to make it work. I talked to my banker who was no help, you know the old story can't get it when you need it, but when your fat they are all your buddies.

Anyway to make a long story short, I slept on it, went back to the owner, made him an offer. If he would carry the note for ten years at 1.5 points over prime, he would make out far better than if he were to sell to me through a bank and allow him time to avoid capital gains tax as well.

I got them paid off last year, thank God... now to pay off college for my children...

 

[HRpartsNstuff]

arista5, you have mail. THANKS!

Phatman, the property is owned by an estate & is being liquidated. It will be a real long longshot, but I was told they don't want to stretch this thing out any more than they have to.

They had an offer for 105k on it, turned it down. At some point, they will take someone elses offer thousands under the 129k because they don't want to wait/deal with what I can offer. So sad...

 

[Phatman]

Sorry Paul, I wish I could offer you something that would be helpful. Maybe next time, eh...

 

[HRpartsNstuff]

UPDATE with pics....

We are still trying to get this one, seems anyone else has the same troubles too. Seems the more people we run this by, the more ideas & programs we here of. Figure one of them will work out, just hope it's before someone else gets it.

Here are some pics:

Pavillion, 14x20 with stone BBQ/fireplace
http://www.hrpartsnstuff.com/images/miscwebsite/house/DSC05789e.jpg

Rear yard
http://www.hrpartsnstuff.com/images/miscwebsite/house/DSC05794e.jpg

Looking at property from rear yard
http://www.hrpartsnstuff.com/images/miscwebsite/house/DSC05802e.jpg

Front & right side of house
http://www.hrpartsnstuff.com/images/miscwebsite/house/DSC05812e.jpg

Front yard
http://www.hrpartsnstuff.com/images/miscwebsite/house/DSC05821e.jpg

Garage, 40 x 40
http://www.hrpartsnstuff.com/images/miscwebsite/house/DSC05827e.jpg

My friend Big Al, Inside left side of garage
http://www.hrpartsnstuff.com/images/miscwebsite/house/DSC05985e.jpg

Left side of house looking from driveway/front of garage
http://www.hrpartsnstuff.com/images/miscwebsite/house/DSC06001e.jpg

 

[John Larkin]

Zoning that industrial is unbelievable. Any idea of the reasoning behind that decision?

 

[HRpartsNstuff]

Hey John, hope you didn't get all the rain we did. It will take a week to dry out here.

This property is the last one in the county. There are some RR tracks near by, and it seems all the properties past the tracks went industrial. It doesn't show in the pics, but there is a new building and trucks & equipment next to it. That is the asphalt business. There is another big business that has been there for years across the street from us. There are plenty of trees there, so it doesn't show from the road. There are a few trees hiding the asphalt business, but we will need to plant some more. This property kinda transitions the industrial area to the residential area in the adjoining county, opposite the asphalt biz.

I am trying to keep the industrial status if possible. That way I can do as I please without zoning restrictions. This allows mega expansion for years to come

 

[zam70]

Very nice Paul..I wish you all the money you need....Unfortunately , I have none to invest

 

[GN One Day...]

That is an incredible place, I see why you're hooked on it. Looks like a park out there! Best of luck, keep plugging at it! Can the city council help any?

 

[HRpartsNstuff]

UPDATE:

Well, still trying....

The estate won't do any kind of land contract or hold a second mortgage for 20% so we can get a loan on the 80%. Reason they won't is because it keeps the estate open for years to come, and they need to close it.

Also, the next lending company tells us we can't get a residential (normal) loan on it because of the zoning being Industrial with NON-CONFORMING residential. That means the city wants it to conform to the industrial only at some point.
They also can't do a commercial loan on it because it "looks" like a residential property, and not an industrial property. Even if I had 20% down, it probably won't go thru & I would waste a LOT of money on appraisals & app fees & more.
Total catch 22 it seems, total PITA if you ask me. I HATE this red tape, got to go exactly by the rules, & people are not allowed to think for themselves **** (stuff).

Sooo, now we are looking into more lenders to see if they have different rules, or feel comfortable bending them a little. If all else fails, we will push for changing the zoning if possible. We don't want to, cause then they could tell us to stop making cool high quality performance products. That would pisss of me & a few thousand other folks I would imagine

Got another nice property lined up, but it's got the residential issue there & shouldn't run a biz out of it. Plus no room for future expansion, but WAY better than what we have now.

THANKS again everyone for the ideas/help/input/crossing fingers for us