All Forum Posts by: Doug Smith

If you're purchasing an investment property, self-employment doesn't matter with many programs. Even with conventional loans, unless you've been self-employed less than two years or don't report your income, it's the same as someone with W-2 employment We lenders just cash-flow you differently. Just use a lender that actually knows what they're talking about when it comes to investment property. 

I wouldn't seek legal advice like this on here. A mentor once told me "pay your attorneys and the IRS." He was right. That being said, if you do plan on financing the property, I would talk to an experience, knowledgable lender. Lenders won't lend on properties owned by some types of trusts. Also, do you own anything on the subject property? You'll want to have you or your attorney broach the subject with that lender. The transfer of title could trigger negative covenants in the loan (eg: Due on Sale Clause). You wouldn't want that to happen. Good luck to you. 

I'm struggling to understand the part in the post that says "guarantor would be non-recourse to the loan". By definition, recourse is where a lender has "recourse" against a party or guarantor on a loan. I'm not sure that's correct. I was not aware that Freddie allowed non-recourse deals. Recourse busts your IRA. Who is your Third Party Administrator. I would run this specific scenario by them, but based on the limited info above, I would say no.

This is a rant...not really a question. I just saw a post that asked for extremely detailed financial analysis simply because they didn't want to pay a pro to help them.  I'm reading more and more posts like that lately. Instead of "Does anyone know a good real estate attorney in St. Louis?" or "I'm thinking of getting my real estate license. What's a good RE school in Dallas?", I'm seeing a lot of "Please tell me how to do this complex legal thing so I don't have to pay an attorney to do it." That's a lot like saying, "I have a lump in my breast. I think I'll let WebMD diagnose it." This is a great forum, but don't be surprised when Joe from Ohio, who read a Carlton Sheets book in 1988, tells you how to set up a depreciation schedule for your portfolio only to have it bite you in the butt simply because you didn't want to pay your CPA. Also, please don't use people. There are a lot of great licensed and experienced pros on this site that are happy to answer basic questions, but don't turn to an estate planning attorney on here and ask them to prepare your will for free in the DMs. Thank you for listening to my rant. I was raised to be a "giver", but that has caused me to allow others to use me periodically. I am just seeing a lot more "takers" and less "givers" recently. End of rant...thank you for listening. 

We're seeing stuff sit a bit in Tampa. It's an odd market right now. We're got a couple of really, really nice houses that aren't moving. In the past, I've had success with pulling such properties from the market, renting them for a year to see how the market changes, and then making the decision at the lease termination as to relist or not. DSCR rates are in the 7's right now. It might not hurt to consider playing long-ball with them for now.

We're not as deep as we were in NPLs, but Nathaniel Turner that throws that shin-dig is a top-notch guy. I really did want to attend...just to see a lot of great people I've gotten to know over the years, but couldn't make it work. 

 I'm with you Chris. Many years ago, we had NPLs in NY and the bureacracy and red tape was staggering. We won't do business of any kind there any more. I'm happy to leave more NY deals to the rest of you. 

The market is weird right now. We've got a couple of great houses sitting right now (a bit to the North in the Tampa Bay area). They'll move. Rotunda is also really close to the water where the last hurricane hit, so the market there in general might be a bit odd right now coming into another hurricane season. What are your boots on the ground telling you?

We've ingored "the 70% rule" from day one (over 15 years now). We back into the "strike price", meaning the maximum price we're willing to pay for a property, by starting with a conservative ARV and then backing off our required profit, the rehab cost, the time value of money (carrying costs and interest), and a contingency reserve for unexpected expenses. We then stick to that math and we don't get emotional about property. Regarding calculating ARV, we also own a mortgage company and a real estate company, we we do a CMA using the MLS. If you build a good relationship with a local realtor, they can assist. Contrary to what everyone seems to be saying these days, a good agent is worth their weight in gold. Good luck to you.

We do tons of urban infill, ground-up spec construction, and residential development, but they key is having someone in the ownership group with a wee bit of experience. If you've not done it before, you'll want a partner that does or even have your GC as a partner until you get a couple under your belt. Other than that, we usually do 80%-85% of the cost (lot + soft costs + build cost) up to 70% of the As Completed Value. We'll usually go up to $5 million per unit and we can phase the development up to about $20M (sometimes more) at a time. Its actually a pretty straight forward process, but that experience is key.