Financing your ADU deals
Acquisition: Certain lending or conventus. Israel at certain and Brenda at conventus are both fantastic.
Additional construction financing for solar mini grid: PACE financing via Ygrene energy fund
Keys to remember
- If you’re getting construction funds, you’ll need a commercial appraisal, which takes a month. Budget that into your close of escrow period.
- Don’t worry about rate on acquisition since these deals take about a year.
- On refinance, make sure your lender calculates debt service coverage ratio based on actual interest only payment and not the fully amortizing payment. This will help you maximize your refinance loan-to-value percentage and therefore maximize the cash you can pull out of your deal at refinance so you can pull 100% if your initially invested equity out and redeploy in a new deal
- You’ll probably it start at 70% LTV on acquisition for your first few deals but should be able to push higher if you do 2 or 3 deals with the particular lender
- Spend time with the appraiser giving them all the info they need to come up with your finished value. The details around how many adus you can add, how quickly you can get permits, how you don’t necessarily need to add parking spots, and the rents you will get are generally foreign to appraisers
Text me at 520–409–8628 if you have questions and I’ll try to help