Realestatequ…, Home Seller in San Francisco, CA

Will banks finance a loan for a condo in a 2-unit bldg if other unit is tenant-occupied?

Asked by Realestatequestion, San Francisco, CA Tue Jun 29, 2010

I am trying to sell my condo in a 2-unit building. The other unit is tenant-occupied and not owned by me. I am being told banks may not be willing to finance a loan for any potential buyer of my unit b/c the building is "50% tenant occupied." Is this true? What are my options?

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Answers

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You are not getting very good advice here because no one here understands that what you are speaking of is a non-warrantable condo. It will be tough to find financing on it for a potential borrower with both FHA and conventional financing. Your site will have to fit into one of the following classes for conventional or FHA financing to be available.

CLASS I

1. Developers control of the homeowners association has been turned over to the condo owners
2. Project is not subject to additional phasing or add-ons which have not yet been completed
3. All common elements and amenities must be fully installed, completed and in operation
4. 70% of all units in the entire development must have been sold and or legally obligated to close
5. 70% of all units in the entire development must have been sold to owner occupants

CLASS II

1. Recent or current condominium conversions (from apartments)
2. Homeowners association has been controlled by the unit owners (other than the developer) for less than two years
3. Project is not subject to phasing or add-ons which have not yet been completed
4. All common elements and amenities are fully installed, completed and in operation
5. 70% of the units in the entire development must have been sold and/or legally obligated to close
6. 70% of the units in the entire development must have been sold to owner occupants
7. No more than 15% of the current unit owners are more than one month delinquent in payment of homeowners dues or assessments

CLASS III

1. Homeowners Association has been controlled by unit owners (other than developer) for at least one year
2. Project is not subject to phasing or add-ons
3. All common amenities are fully installed, completed, and in operation
4. 90% of the units have been sold (owner-occupancy of at least 60%)

Consult an actual, experienced mortgage broker for more information, Realtors are not the best source of information regarding financing options.
Web Reference: http://WeFixRates.Com
1 vote Thank Flag Link Tue Jun 29, 2010
I'm I don't have an answer, but I wanted to know if you were able to resolve this situation as I am trying purchase a home which looks like a duplex, but is listed as a condo,townhouse, cluster home. The home is a two unit such as yours and the other unit is owner occupied and we are experiencing the same problem in South Euclid, Ohio.
0 votes Thank Flag Link Wed Mar 23, 2011
I have been referred to First Republic Bank in the past for situations like that.
0 votes Thank Flag Link Mon Jul 5, 2010
Thanks to all of you for your replies. I appreciate your time and professional opinions. I will consult with my agent and with mortgage brokers as next steps.
0 votes Thank Flag Link Wed Jun 30, 2010
Evening,

The last time I came across this many lenders had recognized that this equation often doesn't work in buildings with 4 or less units.

We work with several lenders who may be able to help. If you send me an email (address below) we can send referrals.
Best Regards,

Lance King/Owner-Managing Broker
lance@fixedrateproperties.com
415.722.5549
DRE# 01384425
0 votes Thank Flag Link Tue Jun 29, 2010
You are correct, many lenders don't want to touch it, but some lenders have niche markets and may not care.
If I were you, have your listing agent be proactive and ask around and find out what lenders will give loans on a 2 unit building.

I had a listing on Natoma about a year and a half ago, maybe two years ago and it got financed by Countrywide, I believe. Have your agent talk with Band Of America.

Actually, If I were you, have your listing agent be proactive and ask around and find out what lenders will give loans on a 2 unit building.

By the way, who is your lender? Also, ask the other owner in the building who did their loan. That may be the way to go.

Good luck,

Tap
0 votes Thank Flag Link Tue Jun 29, 2010
For accurate information, why not consider consulting with any local loan officer(s), he/she can best advise as to options the potential buyers may have.
0 votes Thank Flag Link Tue Jun 29, 2010
Hi

As long as one unit will be owner-occupied, most lenders will be able to loan to potential buyers with no problems. Let me know if you would like a list of lending professionals to speak with or if you have any further questions.

Best,

Oggi Kashi,
Broker Associate - DRE 1844627
Web Reference: http://www.oggikashi.com/
0 votes Thank Flag Link Tue Jun 29, 2010
This could be true...you may only have the option of a cash sale at this time, condo financing is very difficult and banks generally don't want to see that high of an owner occupancy to tenant occupancy ratio but I have never dealt with just a 2 unit building so things may be different does this fall under condo or is it a townhome? You may just want to consult with a knowledgable lender in your area and see what they have to say on the situation. You may also consider seller financing if you own the unit outright to give buyers better terms.
Good luck in the sale
Kent Gagon
0 votes Thank Flag Link Tue Jun 29, 2010
This could be a problem for some programs. being a 2 unit condo they will review your condo docs, budget for common expenses both long term like roof replacement and short term like lawn care and snow removal and your master insurance policy for the building and how it is paid.

It may not quailify for some loans like fha but some banks do have similar mortgages that it may quailify for depending on the strength of the buyer.

good luck with your sale
Web Reference: http://www.ScottSellsNH.com
0 votes Thank Flag Link Tue Jun 29, 2010
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