All Forum Posts by: Austin V.

We use foremost as well.

I am running into a wall as far as hitting timelines with my current salaried contractor and crew. Our company has about 30 flips, located anywhere from 1-3 hours away from Phoenix and several hundred building lots in these same areas. Most of the land is in shovel ready lots 1:45 from Tucson and 2:30 from Mesa. Things have ramped up quickly recently and we really need to be doing 10-15 new construction starts a month and complete 5 or so flips of various complexities (everything from just lipstick to complete gut jobs) in order to keep up. In short, we are selling them much faster then the limited crew and reasonable subs we have in these more rural areas of the state can get them done.  I would think that some GC would jump at the opportunity to have 30-50 homes going at a time, and while I know many contractors are busy right now, there has to be someone who has some crews in AZ that have the availability we need, will do quality work and would be reasonable on their profit margin (we know what these plans cost to build) I guess the questions would be for the contractors out there, 1. if you are a good quality GC with your own crew or good list of subs you can count on, building and remodeling that many homes at a time, what would you need to make as a GC to do a project that requires some Drive Time and or hotel stays? 2. Where would be a good place to find a group or GC capable of the type of production we are discussing?

I have been doing a significant amount of new construction and rehabs(flips) in the last couple of years and have begun to realize that I probably should have transitioned away from hard money to more of a portfolio lender at some point but haven't yet done it. Currently, I have 2.5M out currently between New construction and flips and my true APR (When points and compounding are included) is in the 13-15%

To complicate matters slightly. We created a new entity 9 months ago and added some partners to the venture, as a result, I don't have much in the way of tax returns to take to a conventional lender. We are just starting to see significant profits on the horizon with this entity several flips we have completed, sold and are now in escrow.

I currently have a pre-sold new construction home that we haven't started yet. I don't have financing locked down at this point and wanted to reach out to the BP community to see who everyone would recommend that has reasonable costs, lends outside of Phoenix in AZ, and that is going to be fairly easy to work with.

I would love to hear of any recommendations that everyone has!

I have a client with which I am working currently who is running into a wall as far as ability to complete construction work on time.

He has about 30 flips, predominately outside of the major metro areas of Arizona and several hundred building lots in these same areas.

Things have ramped up quickly recently and he really needs to be doing 10-15 new starts a month and complete 5 or so flips of various complexities(everything from just lipstick to complete gut jobs) in order to keep up. In short, we are selling them much faster then the limited crew and reasonable subs we have in these more rural areas of the state can get them done. 

I would imagine that some GC would jump at the opportunity to have 50 homes going at a time, However, my guy doesn't want to get raked over the coals and end up paying a huge premium to get the work done and or have quality issues with a bad GC.

If you folks found yourself as a developer in a similar scenario, what would you do?

The general answer to your question is yes. Particularly if there are not a large number of homes in flood zones in your market.

Any traditional lender is going to require you carry flood insurance and any new buyer will have to do the same.  A hard money lender may or may not ask you to carry the insurance, depending on their level of sophistication.

Not only will you have to deal with the stigma but you will have to deal with the increased monthly payment for a buyer  when doing  calculations for whether not they can afford the property. 

Overall you can usually plan on a flood zone property selling for 10 to 20% less then a similar home in a similar neighborhood And being on the market for longer. 

In other words, I would only buy it if it was a phenomenal deal.

I live about 45 minutes away and have worked with clients who have invested in and around the area. Land has very little value and housing is cheap. Industry in the area is non-existent, It’s primarily cheap retirement.

Sell it if you can or plan on holding it for a very long.

I was just curious if anyone had come across a website or a software system that pulls the information from different REO Auction sites to a common place. I am investing in 6 fairly rural Arizona counties and having to go through each of the sites(hubzu, Auction, xome, hudson and Marshall) and search a few times a week for each county. In each county there might be one property going per site at a time. Manually entering each into a common spreadsheet seems so 1998! I would love to hear feedback on what, if anything others are using.

Thanks for the feedback!

Properties are worth about 200k each. My credit score is in the mid 700s.

I only have hard money out on the second property. It is accusing interest and their is no payment required. It’s money from a family member. I purchased the property in February and used the money as a bridge loan to purchase the property and make repairs for the non-profit tenant who was interested in a long term lease. The intent was always to refinance.

The first property had a seller carryback at 7% interest. I purchased it 5 years ago st 165k and I currently owe 125k. I have an upcoming balloon payment and while I’m sure I could talk him into modifying the agreement, he is getting older and I would prefer to cash him out to not be doing business with his estate.

I own two commercial properties in Rural AZ. The info is as follows

Property 1: Rents for $1850 a month on a 9 year lease (7.5 years left) to a Arizona specific non-profit. I owe 125K on a seller carryback at 7% interest with an upcoming ballon payment. I paid 165K 5 years ago. Property is a 1975 constructed home that is on a highway corridor that is zoned and has been converted into commercial office space. 

Property 2: Rents for $1900 a month on a  9 year lease(8.5 years left) to a national non-profit. I owe 105K on a hard money loan(15% interest). It is in an old downtown area but the building has been completely gutted and rebuilt earlier this year.

I have been attempting to refinance both properties to take advantage of low-interest rates in the 4.5-5% range without any luck. I have tried with two smaller lenders(National Bank of Arizona and OneAZ Credit Union) and they have both dragged it out for several months before deciding they wouldn't do the loan for what I perceived to be fairly silly reasons(Management didn't like that the tenant had only been in for 1 year, Management didn't like that the structure used to be a residence, management didn't like that 3 years ago I took a loss in a completely unrelated business etc.)

I am hoping that someone out there has had some success purchasing or refinancing commercial property like this in AZ and can put me in touch with someone who actually completes deals like this. There is a good equity position and stable tenants, I just need access to lower cost of capital for a property like this to make these properties cashflow.

I am willing to do them together or separate or lumped in with another residential property that I currently own that is cash flowing around 550 a month over the mortgage as well.

Thanks in advance!

I know that in many areas distressed Multi-families have become a legend like Bigfoot, but I have found one in an area that I am interested in, As my experience has been limited to less than 4 units. I defer to the experts here.

There is a 24 unit 3/1.5 townhouse project that was repossessed by the note holder before they could sell a single unit. The financing was provided by a non-profit community redevelopment group(who is now the owner), however it is in a suburban area. All parcels in the development are up for sale. It was platted and approved for 24 units total and 8 were completed. The 8 units that have been completed are rented and have been at 90%+ occupancy for the last 2 years, 6 of them are being leased by a major corporation that needs housing for employees in the area. All of the infrastructure was done up front including electrical and plumbing to the area where the other 16 units would be going in.

Here are the numbers

Asking price 900K, (it was previously under contract for 800K)

Monthly Rent Roll is $8050

10% estimating property management

10% Vacancy(it has historically been closer to 6% in this area, but better safe than sorry)

Insurance estimating $350.00 annually per unit

7125.40 Annual property Taxes.

All utilities are separately metered and paid for by the tenants

10% maintenance

5% CAPEX /Reserves- The first 8 units were constructed in early 2010 so I am not too worried about major CAPEX at this point

What else am I missing?

I have done the numbers and I can complete the work on other 16 units at 75K per unit or all in for just under 2M. Which would slightly better than triple the rent roll and expenses.

The Value per unit if I wanted to sell them separately at completion would be 115K per unit. I would prefer to keep it as an income property.

Are there any options out there for financing a project like this? I think the only thing that makes sense is to try and find financing to construct the rest of the units. I have about 150K cash and have some access to some other funds to complete the project but I don't think I would be able to get beyond 250K liquid. Maybe I could ask the motivated seller to carry a second?

I guess the question was if you were in my position how would you structure the deal? Has anybody done anything similar? or know of any lenders that would touch something like this?