All Forum Posts by: Adam Sanders

A lot of banks top out at 70% LTV for a refi even with seasoning. You may have better luck with a portfolio lender (a bank that originates and holds their own loans) but they are fairly rare. You will need to call around to a lot of banks before you find one in most places. Smaller banks and credit unions tend to be better options for loans that don't fit typical lending standards.

A few thoughts on your questions:

1. If you have 25% to put down why are you going after a hard money loan? You may be able to get traditional financing. You plan on raising rent, lowering expenses, and making improvements simultaneously which is pretty ambitious. These are all theoretical so you want to make sure your number still work even if you are not able to make this happen. 
2. 70% is often the absolute maximum you can refi for and it depends on your credit worthiness, the property, and prevailing market conditions. I wouldn't say it is always easy.
3. If you can't refinance you would have to sell the property or your lender would foreclose on you. Having significant equity in the property can give you some other financing options.
4. What is your strategy here. Are you looking to buy and hold long-term or make short-term profits?
5. Owner financing is worth discussing as you may be able to get preferential terms. It really depends on what the seller needs/wants.

How you should approach this really depends on the numbers for the deal and your investment strategy. If the investment would be profitable enough for you, you can finance the deal, and you want to be an out of town investor it might make sense. There really is no way to tell what you should do without knowing more.

If you are in a large city you can often find information on vacancy rates online or pay to get that data. If you are in smaller markets you can do your own research to roughly gauge the demand as well as the by: 

• Looking at the inventory that is currently on the market online
• Calling around to the larger multi-family complexes to get a feel for their vacancy 
• Analyze population and economic trends in your area. If the population and economy are growing at a decent rate it is likely so will housing demand
• Look at rental patterns, if rents are going up it is likely because of demand. If rents are decreasing there may be excess supply
• Check with your local government and look at the data they have around new construction that is starting up or in progress
• Talk to other people in your area who own apartments to get their thoughts (check out your local real estate investors clubs to start)

It is still a bit early for September leases so I wouldn't worry TOO much at this point. Ideally, you would be able to rent the entire apartment instead of splitting it up into 6 bedrooms (that is a very different situation). Try mixing up your advertising a bit and see if the local university has a way to list properties for students.

Contractually I believe it is up to you. Personally, I'm in the habit of enforcing the lease that I agree on with my tenant. In this situation, you tried to work with her and she chose to vacate the property early. If you are able to move up your sales timeline I would consider refunding her a portion of the rent. If you are stuck waiting due to a previous request by her I would politely decline her request. 

If the numbers work, you trust your agent, and you build in a margin of safety you may have found a good deal. It is hard to give more specific advice without knowing more about the deal and what you have already done.

Ignoring the 12% cap rate which may or may not be realistic your proposal would be that the property owner does the following:

• Allows your to purchase the property with no money down
• Trains you to run the property
• Charges a significantly below market interest rate over a period of 3 years (10% over a period of 3 years)

Unless you are paying significantly over value or there are other big hidden costs not listed I don't see why a property owner would agree to this. It is extremely favorable to you and I don't really see a benefit to the property owner at all aside from offloading the property.

One month is standard but it really depends on your area. There can be local regulations the govern this so you should look into those as well.

It sounds like you are going to the wrong type of lender. Most big banks are really only interested in cookie cutter mortgages that they can resell. You need to find a portfolio lender (they hold mortgages they originate) or a commercial lender. Call around to all the lenders in your area, especially those that are not national banks. It can take some work to find the right lender and rates may be higher but there are banks out there who are more flexible with their terms.