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talk to the Commercial guys around town. There are always three or four. And if they know you have a potentially commercial property they will talk to you.
You are likely to need a hard money lender...but check into Small Business Admin and such. Sometimes there are programs. But the commercial guys will know where you can pick up 50K for 5 years at 10%. Note that you need to make sure you can pay it back...but it is probably not a bad gamble.
And it is often possible to renegotiate such funding half way through...
A purist will tell you it is to big a risk. However if you can't borrow from Daddy or such you do what you gotta do.
talk to the Commercial guys around town. There are always three or four. And if they know you have a potentially commercial property they will talk to you.
You are likely to need a hard money lender...but check into Small Business Admin and such. Sometimes there are programs. But the commercial guys will know where you can pick up 50K for 5 years at 10%. Note that you need to make sure you can pay it back...but it is probably not a bad gamble.
And it is often possible to renegotiate such funding half way through...
A purist will tell you it is to big a risk. However if you can't borrow from Daddy or such you do what you gotta do.
hey olecapt, thank you very much for the advice. YOUR comments are EXACTLY what i was hoping to find here. too many saying can't been done, ain' t gonna happen and good luck to you. just to be clear, my property is zoned v2 (village commercial). many in this zone DO NOT run a business from their home... as a matter of fact, most just live in their houses, like everyone else.
i'm confused... am i being led to believe if one rents out ANYTHING, ie. collecting rent from roommates sharing my house and/or a the separate cottage, this is what leads (an owner) to a commercial lender... or is it the zoning itself? more specifically... are those who rent out "private residences", forced to commercial lenders and/or hard-money, simply because they are renting out their private property, for financial gain?
before this housing, oil and/or economy debacle... ALL the economists and/or "financial talking heads" said "small business is the back-bone of AND what fuels this country and/or economy". while working on this deal of a lifetime, i made the decision to INVEST in a small business, work for myself (@ something i had been doing for friends and family for a few years), use my own money to do so and what happened... i'm now being told that "technically" i do not have a job, i am not eligible for a loan and it will take at least 2 years in (any) business to be considered for one.
the way i see this problem is, once again the "middle class" are having the s#!t squeezed out of them. sure the poor will continue to have their programs and the rich will continue, as they are right now, to play with and/or steal everyone elses hard earned money... all without accountability. what's really p!$$ing me off is... i own this property and equipment OUTRIGHT, have a plan for BOTH the property and my small business and NO i can't seem to get a lender to look at my unique situation... something is fundamentally wrong with this picture!!! it's all about detail and fine tuning. you cannot cover EVERYTHING painting with a "broad brush"... by doing so you'll certainly miss crucial areas and "decay" will be quick to take over.
i'd rather not go the hard money route if i can avoid it, however just like you said "when you can't borrow from DADDY or such you do what you gotta do"! i' ve heard of it but, i'm not too familiar with the small business administration and/or commercial guys... could you please led me in their direction? thanks again for you comments, i REALLY appreciate your help. have a good one.
The reason why you are being led to commerical lenders if they have a different set of criteria to follow than residential lenders.
Residential lenders most frequently lend on properties that conform to Fannie Mae/Freddie Mac lending guidelines. That means they are owner occupied, the loan amount is below a certain threshold, the house is in good condition, and the money is used to purchase this house. Residential lending can also be considered for loans that don't meet all of the requirements but most of them.
This doesn't even come close to applying to your situation because you will not be using the money to purchase the home, you will be using the money for other purposes.
What you are looking for is to borrow through an ordinary loan from the bank (not a mortgage per se) or open a home equity line of credit using your house as colleteral for the loan. HELOC's are residential loans, but ordinary secured loans are not. They fall into a different lending class.
In all cases, the bank needs a comfortable feeling that you will be able to repay the loan. Having stable employment is typically the case. Other income can be used (such as money from an estate) if it will last for at least a couple years and you can show evidence of it on your tax income statements. Income from self-employment can be considered if you show that you are experienced in the industry and a history of stable income. Income from rent can be considered if you can show to the bank that you have a history of income through rent payments.
Commerical loans do not have the same requirements as residential loans. But the interest rate is higher and you may not be able to claim a tax deduction on the interest you pay.
Student loans are different because you have them for life since you cannot get rid of them through bankruptcy. Other loans can usually be discharged through bankruptcy so banks are more nervous about providing those loans.
the inheritance will last until my grandmothers siblings decide to sell their commercial buildings. my great grandparents left my grandmother and her siblings these buildings which have been rented without any vacancy, since my great grandfather passed in the 50's. in the event they decide to sell, i'll receive 1/6 of my grandmothers interest in their llc and buildings. they are valued in the 7 figures (each) and NO i won't go to them for a loan or to cash out early. my great-grandfather ran several successful businesses right thru the great depression without missing a beat, hopefully i can do the same in this DEEP recession we're in.
i've gotten so much negativity about taking ANY loan, that i re-ran #'s to see how long i'll have to go it alone before geting done what i want to. still NOT happy with what i'm coming up with. i'd rather pay more now and get a real good head start, than on my own, slow and steady, hoping to be where i want to be in 5-10 years! if i decide to go the commercial loan route, much should i expect (interest rate) for a commercial loan?
thanks again for your comments and suggestions, i really appreciate your candor. looking forward to your response. have a good one.
I had to laugh when I read the description of your home....so VERY like the house we just bought in Februrary, with cash. The difference is we are in our 40s and are using our own money to fix it up. I appreciate the difficulty of your situation and boy, your timing could not be worse! Not that that's your fault, of course. Heck, two years ago you'd have had lenders running after you with fistfuls of dollars in their hands. Well, maybe not.
You saw a great opportunity and you snatched it. You are planning on a big windfall, someday, far down the road. Unfortunately, life hands us surprises. I hope your plans are not derailed by family issues, health problems etc. But that's just a 40+ year old woman talking! Worry, worry worry!
My advice would be to take on as little debt as possible. 100K is just too much in this economy and given your circumstances. Fix the roof and septic. Upgrade the electrical box and install a grounded outlet or two where needed but maybe don't rewire the whole house just yet. Those seem like the things which will destroy your home if not fixed. Our mantra as we tackle our beloved "dump" is to Protect the Structure First. Leave the cosmetic remodeling till later.
Also, contractors are hungry for work right now. Can you find a roofer who will let you make 1400 dollar monthly payments (the amount of your monthly inheritance from gramma)? If you can't get a bank loan, try going directly to the contractors you'll be using. They need the work.
bruno, with the housing downturn there are also many in the construction industry out of work.
With as much room as it seems you have there did you give any consideration to a trade out of work for living space.
Of course this would not be the right situation for everyone but I had a friend that used to do it all the time. He would work his day construction and come home at night and put 2-4 hours in on the house he lived in. The owner let him stay at no cost. When he got that house finished he would find another like it.
Of course it took longer to get everything done but the out of pocket for the owner was very manageable because he only had to supply materials.
You would want to check anyone out really good and this is not the right situation for everyone, just a suggestion.
I bought my first home at the age of 21. I think you are wise to have a "plan". My only advise is that you proceed VERY carefully and BE CERTAIN you will not have difficulty paying the $100,000 note!!!!!
This is CRUCIAL. IF, you feel secure in that area, PLEASE do thorough - and I mean thorough research into the people you hire. You may find MANY surprises which may eat up that money before you get through. Though you are not "flipping" the home try watching some of the shows on TV - this will give you insight into those dreaded surprises. I can't begin to tell you the horror stories - so just BE VERY CAREFUL!!!! and GOOD LUCK!!
thanks for the comments and suggestions, greatly appreciated. only a few MONTHS ago and this (loan) would have been "rubber stamped". i am a firm believer in karma and/or s#!t happens for a reason. however unlike what you (goat) insinuate, the house is not a dump, i am not counting on a "windfall" and HAVEN'T had things handed to me. no pitty party here but after i lost my mom (@ 13) i then moved in with my grandmother and she passed away 3 years later after a year long bout with cancer. i'm doing my best to do this deal MYSELF and definitely NOT looking to turn around and sell it anytime soon. i want to do this right, so i will have a SOLID place to call home... for a LONG time and eventually marry and raise a family in. what i'm looking for is the "old school" american dream... not the "new money/new school" FANTASY! i don't live beyond my means and don't intend on ever doing so. i know what i can handle and will not put myself in a position to lose what i worked so hard to gain.
i know my property is NOT an atm machine, like many FOOLS mistook their "homes" for. even being new to this real estate thing, i've watched very closely what was transpiring over the past few years and realized "investing" in real estate by merely putting a coat of paint on a house and doubling your money could only last for so long before a collapse. moreover... then selling it to people without ANY $ down and/or nothing backing the loan... who's the genius that came up with that SCAM?!? too many self consumed people in this country right now just out for a buck, no matter how dirty or illegal their "methods" are. furthermore why are we (the people) not pursuing these "white collar" CRIMINALS, locking them up and getting back their $'s obtained by unscrupulous means? unfortunately we haven't learned anything... AIG's still sticking it to us AND how about that POS from merill lynch... 3 weeks @ FAILING = a $25 million bonus?
i'm on here trying to pick the brain of the "experts" to see if there are any options i may not of thought of and/or overlooked. mike... i thank you for your suggestion of "bartering" in liu of rent but right now it will not work for me. as far as vocations go, my uncle has all the connections i need for $ wise/quality work... it just that his "buddies" and/or associates have to cover their costs and then alittle for themselves. only the major stuff will be done by specialists... septic system (my uncle), roof (his subcontractor/roofer), electrical (his s/c electrician), relocate well (no connections), etc. all these upgrades, at just above cost, will come very close to the $'s i'm seeking and WILL increase the market value of the property pretty close to $ for $. i did a search of similar properties in the area as well as what the low and high of my house are, in present condition and came out with a low of 280k and a high of 350k, therefore i don't believe i'm looking at a "dud" and/or "money pit" here.
i get it, most on here are nervous about what is going on right now and about putting your neck on the "chopping block", with a bank. your concern is greatly appreciated... i'm just fishing for another solution to my predicament. there are always other (legal) ways of finding the answer. i'm still open to suggestions... honestly UNCONVENTIONAL has worked for me thusfar and wouldn't hesitate to go that route. hope all is well and no one takes offense to anything i may have said. hopefully this will be a better year than last. happy new year everybody... be safe out there.
I bought my first home at the age of 21. I think you are wise to have a "plan". My only advise is that you proceed VERY carefully and BE CERTAIN you will not have difficulty paying the $100,000 note!!!!!
This is CRUCIAL. IF, you feel secure in that area, PLEASE do thorough - and I mean thorough research into the people you hire. You may find MANY surprises which may eat up that money before you get through. Though you are not "flipping" the home try watching some of the shows on TV - this will give you insight into those dreaded surprises. I can't begin to tell you the horror stories - so just BE VERY CAREFUL!!!! and GOOD LUCK!!
mey matt,
thanks for your reply and positive attitude... means a lot! i think you may sense my frustration here. while i GREATLY appreciate everyones' warnings and/or replies... i need answers. anyone can find problems... it's a whole other thing to find solutions!
i've been watching all the flipping shows and have to admit i'm kind of addicted to them. i see alot of mistakes even these "pros" make and their "flubs" become SEARED in my brain. i watch them pretty much for entertainment purposes, but have to admit i've learned some too.
i AM being careful and thank you VERY much for your vote of confidence. hope all is well and you have a happy and SAFE new year.
however unlike what you (goat) insinuate, the house is not a dump, i am not counting on a "windfall" and HAVEN'T had things handed to me. no pitty party here but after i lost my mom (@ 13) i then moved in with my grandmother and she passed away 3 years later after a year long bout with cancer. i'm doing my best to do this deal MYSELF and definitely NOT looking to turn around and sell it anytime soon..
Ouch! Such undeserved vituperation! Guess I should just tuck my little goat tail down tightly and head to the back of the barn....
I didn't say YOUR house was a dump, I said OURS was...and we bought it and we love it and we love breaking our backs working on it. Sounds like we have a lot in common. Don't get hung up on semantics...we're doing the same stuff!
And yes, if you buy a house for 75K and expect it to be worth hundreds of thousands someday, you ARE planning on a windfall. Nothing wrong with that, nor did I say so.
As for having things handed to you...I didn't say that either! Sounds like you're putting an inheritance to good use. Your grandma would be proud, I'm sure.
Sheesh!
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