Real Estate Broker · San Diego, CA · Member since 2014 · 22 posts · 17 votes
I'm looking at a few 6-15 unit apartment deals in San Diego County. I've talked directly to bankers at Chase, Wells, and somebody experienced at Cushman Wakefield who is a loan broker. All of them say under 750k loan amount the rate can be a bit higher, although this is counterintuitive I'm hearing the same thing over and over. The properties I'm looking at are around 1.5-1.8m and can support a loan amount of 900k approx based on bank underwriting. I want to put 950k-1,050,000 down and have a smaller loan, less risk, and more cash flow. Any ideas on who is the best bank / lender to run this deal type though for a coastal San Diego asset? So far I have around 4-4.2% 10 year loan amortized over 30. I'm also looking at 15 year fully amortized over 15 so it's paid in full in 15. Gross cash flows are around 120k on the 8 unit I like best with NOI at 72k around a 40% expense ratio which seems right for recently remodeled units.
I'm looking at a few 6-15 unit apartment deals in San Diego County. I've talked directly to bankers at Chase, Wells, and somebody experienced at Cushman Wakefield who is a loan broker. All of them say under 750k loan amount the rate can be a bit higher, although this is counterintuitive I'm hearing the same thing over and over. The properties I'm looking at are around 1.5-1.8m and can support a loan amount of 900k approx based on bank underwriting. I want to put 950k-1,050,000 down and have a smaller loan, less risk, and more cash flow. Any ideas on who is the best bank / lender to run this deal type though for a coastal San Diego asset? So far I have around 4-4.2% 10 year loan amortized over 30. I'm also looking at 15 year fully amortized over 15 so it's paid in full in 15. Gross cash flows are around 120k on the 8 unit I like best with NOI at 72k around a 40% expense ratio which seems right for recently remodeled units.
Rob
So you have a few good options. If you're getting low 4's, 10 year fixed, 30 year am that's better than I'm getting with my relationship banks that I do many millions in loans with. My most recent was 4.75%, 20 year am, 5 year fixed.
I'm looking at a few 6-15 unit apartment deals in San Diego County. I've talked directly to bankers at Chase, Wells, and somebody experienced at Cushman Wakefield who is a loan broker. All of them say under 750k loan amount the rate can be a bit higher, although this is counterintuitive I'm hearing the same thing over and over. The properties I'm looking at are around 1.5-1.8m and can support a loan amount of 900k approx based on bank underwriting. I want to put 950k-1,050,000 down and have a smaller loan, less risk, and more cash flow. Any ideas on who is the best bank / lender to run this deal type though for a coastal San Diego asset? So far I have around 4-4.2% 10 year loan amortized over 30. I'm also looking at 15 year fully amortized over 15 so it's paid in full in 15. Gross cash flows are around 120k on the 8 unit I like best with NOI at 72k around a 40% expense ratio which seems right for recently remodeled units.
Rob
So you have a few good options. If you're getting low 4's, 10 year fixed, 30 year am that's better than I'm getting with my relationship banks that I do many millions in loans with. My most recent was 4.75%, 20 year am, 5 year fixed.
Lender · Morrisville, NC · Member since 2015 · 610 posts · 131 votes
9y
@Rob Brown Based on the numbers you are saying you may be able to qualify for a full term interest only loan. That should help you out with cash flow. It's not a very common product only a few lenders carry it.
Real Estate Broker · San Diego, CA · Member since 2014 · 22 posts · 17 votes
9y
I don't want to do IO I want it paid off as quickly as possible so I can save up and buy the next one. I'm kind of old school that way. I would pay cash but I need small interest write off so there isn't a taxable income after depreciation and expenses so I'm doing this 500-550k loan amount to get the appropriate interest write off. I don't know what the market is going to do next year or 3 years from now this far into the cycle...but I know long term rents will go up in IB and they aren't building any more ocean. If I didn't have the exchange I'd prob just stack cash for the next down turn. @Nathan Click
Lender · Morrisville, NC · Member since 2015 · 610 posts · 131 votes
9y
@Rob Brown I understand, I mentioned it only because you mentioned cash flow and wanted to put in larger down payment. Generally maximizing your leverage will increase your buying power and often your return and keeping the payments low helps with cash flow; however many investors prefer to be more conservative with leverage. A 10/30 4.2% loan is pretty good. 4.5% to 5.5% is the current norm.
Investor · Solana Beach, CA · Member since 2016 · 25 posts · 17 votes
9y
Cody L. Rob Brown :
Cody, you and I chatted about month ago....would you guys be interested in starting up a San Diego REIA? I've gotten some traction from some other SD locals.
Rental Property Investor · San Diego, CA · Member since 2013 · 3k+ posts · 4k+ votes
9y
Sure I would. So long as it's not far (I'm in mission hills). As much as I love my tesla, and even though it drives me, I still like to stay close to home base
Real Estate Broker · San Diego, CA · Member since 2009 · 119 posts · 54 votes
9y
What's up Rob...
I'm refinancing one of my buildings through mission fed and if you give me a call I'll give you my contact person.
My recommendation is to start a relationship with a local bank but overall if your loan is less than 750 your rate will be higher.
An option is to use whatever leverage you can get so you get the best rate and put the additional money you were wanting to put down into a safe and liquid investment in case you need to draw on it.
This will accomplish what you are trying to do as long as you won't touch the money while giving you the best rates possible.
Also I don't know of any lenders that offer 15 year amortizations but I'm sure they would make an exception.
Good luck