Investment mortgage advice needed, NJ
Question: We need to find financing for an unusual situation. In order to avoid a partition sale, we want to buy out a 1/3 owner, using both the 1/3 being bought and the 1/3 we have as collateral, but still leaving us with only a 2/3 ownership. The property is commercial, in New Jersey, and is currently rented. The purchase price is approximately 20% less than 1/3 the appraised price, so it’s a good deal for us – almost certainly better than the results of a forced partition sale. The propery is an inheritance, and neither of us actually live in NJ.
My initial contact with Fleet indicated that they don’t do investment mortgages. So now I’m wondering where to go – how to find a reputable mortgage broker to deal with this?
Many thanks,
Answer: Look at this from the bank’s perspective. They want colateral that can easily be turned into cash if you default on the loan and the ability to make the monthly payments.
I realize you are being intentionally vague, but you don’t present any facts that the business could be readily sold for cash. Worse, they don’t even have clear title as the other 1/3 of the business belongs to someone else. Foreclosing on the business could be a real mess if the other owner overvalues his/her 1/3 and threatens to sue if not properly compensated.
You haven’t mentioned any great cash flow that will easily repay the loan. Many businesses are just scraping by. Heck, the bank would give me money to buy General Motors tomorrow if I could convince them that I could make the loan payments. That is all they care about.
Can you get the 3rd owner to co-sign the loan? Bribery usually helps. Or threaten a scorched earth (partition sale) strategy if he won’t. In any event get a credible story together before contacting a lender. The fact that you have a money problem doesn’t mean anything to them.
Good Luck,
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