Balloon Mortgage Refinance Question

Here is the situation. I have a 4 unit (2 res, 2 comm) that is ballooning in Sept. (appoximately 100K). I am currently in the process of renovating the building and have been for quite some time. It will be 50% occupied and 50% renovated by Sept. The problem is, I have concerns that this building will be difficult to refinance, especially given the current environment. I am assuming this will be partially due to the fact that 50% occupancy basically just covers the mortgage. My personal credit has been dinged up a bit since the orginal purchase, but should be back up to around 700 by then. However, this property is held and financed under an LLC and has been for the duration of the loan.



What are my options? Is getting an extension a possiblity? I have 5 years of perfect payment history. This is a very small loan (100K), at a large regional bank. If I cannot get the refi by Sept, how long does a commercial lender typically take to foreclose?



Thanks for the advice.

Comments(12)

  • cjmazur14th May, 2009

    local banks
    credit union
    SBA financing/ CAPline
    Private money

    are some things to check out.

  • bargain7614th May, 2009

    If I were you, I would FOCUS on an extension from the original Lender.

    A 3rd party Lender is so afraid of liens and other possible encumbrances etc., that they usually deny loans to properties under construction.

    Good Luck.
    [addsig]

  • NewKidInTown314th May, 2009

    Sounds like you have a commercial loan that is about to balloon. What may really be happening is that the loan will be reviewed and if the lender feels the loan risk is acceptable, then your loan will be extended for another year.

    If the lender feels that your loan is now at higher risk than it was when first originated, then the lender will let the loan balloon. You need to get the property renovated and tenant occupied as quickly as you can. Make the property generate enough income to support the loan so the lender will approve an extension.

    If the numbers look really good, you may get a three or five year extension rather than a one year extension.

  • maverickstar2nd December, 2009

    It is now past September, what were your results??

    I have a client in the same predictament and I too was wondering what to do.

    I am suggesting a hard money lender at least until the renovation is complete..
    [ Edited by maverickstar on Date 12/02/2009 ]

  • hunter9992nd December, 2009

    The bank ended up giving me an extension of 1 year; same payment, slightly lower interest rate. Cost me $250. Apparently they would rather extend the loan than eat the property, which is good thinking.

    When it comes due in Oct 2010, they will re-evaluate and see what needs to be done next, but I plan on having the property cash flowing and refinanced with a small local bank by then.

  • ITBInvestor4th December, 2009

    Talk to the (I assume commercial) lender you are planning to use (I am assuming you are securing financing... if not, ignore this post) to fund your apartment complex. They may have a contact for resources that you can use.

  • bargain7620th December, 2009

    Yes...Funding has dried up from large lenders.

    Perhaps a local Bank would consider your loan request. Your "bad credit" will certainly hurt you in your quest for funds.
    [addsig]

  • performproperties17th November, 2009

    Give us more informationon this property you are looking at. and let us know what your plan is?

  • joel2nd May, 2005

    I would like to see the spreadsheet. If it is any good, we can share it with the rest of the community.


    If you would like to share it with the rest of the TCI community, please feel free to add it into the Freebies area.

    http://www.thecreativeinvestor.com/Downloads-index.html

  • cjmazur3rd May, 2005

    I have found iterative calculationtion like this very difficult to do w/o a programming language.

  • cjmazur18th May, 2008

    you can look at some modelling tool that have this stepping built in.

  • jamesrk23rd February, 2010

    Check out ProAPOD Real Estate Investment Software. It is an excel-based software program that automatically computes the rates of return and creates the reports. So it can save you hours of having to reinvent the wheel. www,proapod.com

    Good Luck.

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