Financing in 19061>Question Details

SBrazill, Home Buyer in 19076

We have an offer in on a barn which we'd like to convert to a home, but we're having trouble getting the property to qualify for a loan.

Asked by SBrazill, 19076 Thu Oct 22, 2009

PLEASE HELP! The property is zoned residential, and has all of the utilities brought to the structure. However, because it's a barn, it has never had a Certificate of Occupancy. Some places say that it won't qualify for a rehabilitation loan because it's never had a C/O. Others say that it won't qualify for a construction loan because it's not raw land. We've been told 1000 different stories, and can't seem to find the right loan for the project. Any and all help is appreciated! Thanks much!

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SBrazill’s answer
We've been trying to get a loan on our own, so we haven't spoken to the owner about those options yet.
I don't think that there is a mortgage on just the property that we wish to purchase, as it has been subdivided from another property, and they had originally been purchased together.

That's just the thing; for a construction loan, they either want it to be raw land, or they would require us to tear down the existing structure. We've been exploring the options of small banks and reaching out to ones that may listen to our story. We've had zero luck with large banks. We've seen other barn conversions in the county, and there is an old farmhouse renovation right next to it that is on the market for about twice what the purchase/reno of the the barn would cost. It's a great project, we just have to find someone who'll listen to us long enough to find out what a great project it is!

Thank you both for your insight.
0 votes Thank Flag Link Fri Oct 23, 2009
Can the owner/seller offer you short term financing until you get enough of the work done to qualify for an occupancy certificate and get a loan from a lender?

Does the current owner have a mortage on the property? Who wrote that loan? Might it be assumable?
0 votes Thank Flag Link Thu Oct 22, 2009
I don't understand about the construction loan because if a person owns a house and they want to tear it down and rebuild it, it doesn't have to be on raw land. So, I'd tell you to go to a community bank or credit union and tell them that you want to restructure the barn for living conditions. It's not going to be easy because there is nothing like it to allow the bank to know if they can sell it if you default. You may have to find another barn conversion to show them the value of the home after it's done. Is the area condusive to barn homes? That's what they'll ask.
0 votes Thank Flag Link Thu Oct 22, 2009
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