I have a client who is in the export business doing very well. wants to open a
new business purchasing and renovating single level homes for retiring baby boomers and disabled vets who need homes with special features like driveways for wheel chairs, special equipped bathrooms (grab bars, comfort height toilets, special lighting, etc.), kitchen, and other improvements not now found in existing homes. All the research show that baby boomers want to grow old at home, but have made no plans to prepare themselves to do so.
My clients business model is to: Phase 1: where available purchase existing single family homes and renovate and upgrade to achieve the above outcome. These homes will appeal to financially secure candidates and will retail between $750-$1million each in Southern CA.the plan is for 4 homes in this first phase. Phase 2 would be to improve upon the success of Phase 1 and expand accordingly. the estimated total for Phase 1 would be approx $5million.
I have reviewed the various SBA programs and find none that are right on target. I want to know if we can mix and max between programs to get a loan like this through. some SBA folks have spoke of the CDC/504 as the best bet, others of the Capline Builders which few lenders offer, and others 7a or some combination. HELP. thanks.
Based on the model you’ve outlined above it sounds like SBA loans may not be the best route for you to go. SBA loans are typically used for longer-term investments and it sounds like your plan is more to fix-and-flip homes for accessibility. SBA loans can be expensive and time-consuming to secure, so this may not work for shorter-term opportunities that are common in real estate.
If you’re looking for other options, I would strongly suggest you check out some of our fix-and-flip lenders. These lenders tend to fund quickly and have minimal credit requirements to qualify. We have a great article on fix-and-flip lenders that you can check out here: https://fitsmallbusiness.com/fix-and-flip-loans/
One thing you should keep in mind is that most lenders who will finance deals like those you’re discussing will require you to have 20 – 40% equity in the project. Moreover, lenders with minimum equity requirements will typically require that your equity come in first – they’ll just withhold part of the loan for you to draw on for renovation expenses.
Hope this helps. Best of luck with your venture.
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