Port Chester, NY · Member since 2016 · 210 posts · 157 votes
We purchased a 8 unit building in Stamford, CT last year a few months prior to the lock-down. Regretfully, we have two out of the eight tenants paying sparingly and they've also wrecked their units. Atty says we cannot evict due to the moratorium and the tenants refuse to apply for aid. These are the only people in the world that claim to contentiously catch COVID, but were "fired" due to the pandemic and "do not work". They also cannot produce one COVID results test.
Anyway, we received an offer to purchase the building, in cash and verified funds $140k over original purchase price. We would have a 5% pre-pay penalty fee from the bank, but the bank (M & T Bank) also holdings about 2 million in notes on our other properties. If we sell the building, does anyone think they'd be pissed off enough to cease doing business with us and call the other four notes they have on our properties?
As a lender, no, I don't. The pre-pay penalty is enough to satisfy the early payoff. Secondly, there isn't anything to be pissed about when you're making a business decision that is right for you. Personally, I appreciate when a good customer makes a proactive decision before it turns into something we need to have a difficult conversation about. I wouldn't be very concerned.
As a lender, no, I don't. The pre-pay penalty is enough to satisfy the early payoff. Secondly, there isn't anything to be pissed about when you're making a business decision that is right for you. Personally, I appreciate when a good customer makes a proactive decision before it turns into something we need to have a difficult conversation about. I wouldn't be very concerned.
Investor · Shelton, WA · Member since 2017 · 6k+ posts · 6k+ votes
5y
@Mike A. banks today are run by computers, they make the decisions and people merely carry them out. You will be satisfying the computer by paying the penalty. Good luck with the sale!
@Mike Adams They'd be a lot more pissed if you were asking for a short sale. Is the buyer aware of the tenant situation?
Yes. They own 100+ units in lower Fairfield county. Gave them the tenant records and such. We're still making a positive cash flow, but if we have the option to build up our reserves, that would be better for us.
Rental Property Investor · Bloomington, MN · Member since 2019 · 404 posts · 542 votes
5y
@Mike Adams most bankers would happily collect a 5% prepay penalty!!! That said, check to make sure it still applies if you’re selling to an outside third party.
I don’t think the lender will be upset at all. They’ll collect the prepayment penalty to cover funding costs and that will be that. I sold a building 2 years in the banker continued other business with me.
Property Manager · Windsor Locks, CT · Member since 2016 · 1k+ posts · 1k+ votes
5y
Hey @Mike A., I can't comment about them calling the notes because I don't know the details of course, but I'd be surprised if they did that.
As to pissing them off and them ceasing doing business with you, I'd ask myself if I really wanted to do business with a lender that is that emotional in the first place. I feel inclined to say no unless the rates are really worth the potential hassle.
I hear M&T Bank is buying up all of the people's united banks in CT and MA. Can't wait to have to deal with them...