Time kills deals... almost (Thanks Dad)

As it turns out now, my last post was very prophetic unbeknownst to me at the time. The very next day (3/14/13) I again went through the motions of prodding my banker to keep the process moving and my real estate agent to get the signed extension in hand. Little did I know that the Seller had been dragging their feet for a reason. It turns out that there had been a second all-cash offer made on the property, and the Seller didn't need to give me that extension after all. They wanted a good reason for giving me another 30 days, and who could blame them, my banker had done nothing in the last 30 days. Bottom line is that a good reason was something that I didn't have and I knew that if I waited for the bank I was going to lose this deal. So how was I going to get $45k in a week so that I could still close?

Luckily, I have a close relationship with my family and was able to ask my dad to pull some money out of his emergency fund in order to close on the property. To be clear, this is a loan with interest and I'll be paying any taxes or other costs that happen for drawing from his money as a part of the arrangement. The plan is to finance the loan for the property after I've closed the deal and to pay my dad back as soon as I get that funding. One of the benefits of closing the deal this way (besides not losing the deal) should be that it will give me more time to truly shop around for the best loan possible instead of just using a family friend (which almost killed the deal by moving too slowly).

I'm still unsure of the exact type of loan that I'll be able to get on the property, but now that technically I have 100% equity in the property I may be able to draw from a home equity line of credit that will carry a lower interest rate than the 5.5% five-year fixed and then adjusting commercial loan that I was forced into before. It is my intent to get as low of a rate as possible and have it fixed over a long period of time yet not have any prepayment penalties in the event that I want to pay it off early. 

However I've also been considering how I'll go about financing any upgrade renovations that I would like to do down the road. In the back of my mind I've always wanted and intended to eventually rehab this building to a more energy efficient and luxury standard. Things on my ideal list of upgrades would be a full spray-foam insulation of the interior side of the exterior walls, re-tuckpointing of the entire exterior with a a clear protective spray, tank-less hot water heaters and PEX plumbing for each unit, central HVAC with a geothermal or solar component, rewire of the electrical with breaker boxes in each unit and with conduits built into the walls for easy running of cables for internet and future gadgets, sound-proofing between units, reconnect the 4th floor space to the 3rd floor and converting the south roof into a balcony for city views, and making the basement usable for laundry and storage by making an opening to the outside through the back. While I think I'll try to utilize the City of Cincinnati's tax credits for LEED certified upgrades and possibly the Cincinnati Development Fund as ways to make those projects happen, I'll need to finance a good amount of this by myself as well. Waiting until I have fully leased up the property before getting my property loan may allow me to get an even higher appraised value and enable me to pull even more money out of the property towards these upgrades. Eventually after these renovations I'd like to form a condo association and sell off each individual condo for more than I paid for the entire building to start. Hopefully by the time I get to this point the area had gotten better around me, the new school next door is open and thriving, and the emptynesters are in full swing moving back to the urban core with money.  

Tomorrow is the next step towards that ideal future vision. I'm scheduled to close at 5:30 pm and the work begins from there. I'll take a bunch of "before" pictures to document my starting point, so that I can see just where I came from at some point down the road. It's not going to be easy, but my hope is that through this whole process I'll not only end up with a great redeveloped building and more money, but that I'll pick up a lot of experience, know-how, and new skills that I can take with me to keep rebuilding Cincinnati further.