Financing SRO
My husband and I are very interested in purchasing a townhouse with a C of O that is single-room occupancy. The cert. of non-harassment is pending. The current owner has been living in the lower duplex for the past 10 years and renting the upper duplex. The house doesn’t need any renovations as it is…
My husband and I are very interested in purchasing a townhouse with a C of O that is single-room occupancy. The cert. of non-harassment is pending. The current owner has been living in the lower duplex for the past 10 years and renting the upper duplex. The house doesn’t need any renovations as it is already set up as a 2-family.
I see several threads re: SROs but I’m wondering if anyone has been successful in getting financed without any need for renovations?
I’ve gotten an SRO or two done conventionaly but in those cases they had been used as a Single Family for years and never completed the paperwork. The city was already taxing them as a 2 fam and the lender did not require to see the C of O. The only reason I took the file was because neither the borrower or their RE agent decided to tell me. I only found out when the appraiser sent me the report back. That appraisal didn’t come in at sales price so the borrower’s tried another lender and that appraiser didn’t say anything about the SRO status and the lender didn’t question it.
The big issue you will have is opening permits. The city won’t let you do any work without the Cert of Non-Harrassment, so even if you get the loan you can’t do anything to the house.
“The cert. of non-harassment is pending.”
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of course it is
You won’t get conventional financing without it, as pig three said it would be commercial (and so is the tax rate i.e. a 4-5 family etc).
Highly advise to not purchase without an certificate of no harassment in-hand unless you really know what you’re doing.
You are buying to be an SRO landlord until proven otherwise. Even if the tenant doesn’t consider themselves an SRO tenant, they get smart rather speedily when they realize what kind of payday is at stake.
If seller could deliver it empty (hint hint), it would be fine to buy if you’re OK with no renovations done for 5 years in a worst case scenario (3 yr wait, 1 yr review, 1 yr construction reno).
If current owner has done more than “repairs and maintenance†to a “B” unit (Check HPD and DOB websites) it might be impossible for him/her to convert, and perhaps even difficult to impossible for you to convert w/o 1) bringing it up to current code as an SRO first, clear violations, and then reapply for the certificate. Essentially 2 renos.
You may try to see if a local broker will be able to find a lender willing to lend as a two family. you could try Universal Mortgage and WCS Lending.
as an sro, its a commercial loan I think. minimum 30% down. …and as jock points out, the work needs to be legalized. think the days of this passing through are over.
It sounds like you will need to legalize the work that was done and make sure that the proper fire rated separations were created.