All Forum Posts by: Benjamin Serven

Hey BP fam!

Working on making the transition to commercial loans/properties, and considering a group sfh in a long distance market. I've got a few questions, but also I'm curious if anyone else has done this successfully. I'm sure there are some of you on here! Planning to manage these myself - while I'm not a PM, I work in a PM operations related software professionally, so I'm confident I can handle the work, with the help of some vendors. 

Context:
Group of 7 units(5 properties) being offered together as a single package. 
The intent is to purchase using a small amount of my own money, and cash from an investor to fund the remainder of the down payment.
Already have a small portfolio of 2 sfh, and 1 duplex, one of which was traditionally financed as a personal residence and is now a rental, and the other two were purchased with a partner under an LLC, though we were personally guaranteeing the loan.

Here are the questions: 
1. If I'm purchasing a "commercial lot", can my commercial loan still be to my personal name? Or, do I need to set up an LLC?
2. If a commercial loan, is it possible for me to assume the note personally, or would this have to be a note assumed by an LLC?
3. My understanding is that for packages of this type, it's typically 20-25% down, is that correct?

Hi Chase! I'm working on a similar goal, just shooting for 40k, also looking to owner occupy a 4plex For now, I'm putting my money in a "high" interest savings account with AmericanExpress. It's like .04% return, but it is a better return than most banks. A comparable option would be Betterment which has a .03% if I recall correctly. Not ideal, but it at least is keeping up with inflation during the savings period. Curious to hear from anyone else a bit farther down the road! 

Hello Aiman! Stessa is a simple and free option for managing tenants, check that out! :) 

Regarding screening, there are lots of ways tools, but you can use something simple like MySmartMove.com. In addition to that, you can require that the tenant provide rental references, proof of income, and many other details depending on your local state laws. I'd suggest you connect with a local property manager company, they should be able to provide resources on what is legal in your area. 

Hi Rafael! As long as it's 4 units or less, you'll be able to qualify for traditional funding. Commercial funding will only be required if you're purchasing 5 units or more. Typically on a traditionally funded property that you won't be living in will need a minimum of 5% down, though depending on the lender it may be more. The main thing will be to shop for lenders that provide the pricing you need!

Hi Dylan! Sounds super cool, congratulations on the find! If you've got a commercial property you're checking out, the first thing would be to quantify how profitable it currently is(if at all), and then what the future value of the property may be. Property values for a commercial property are based on NOI, so I'd encourage you to learn about NOI and this will help you evaluate this property and future properties as well!

Hey Dustin! Not sure, but I'd suggest checking with a property manager in the area of your purchase, they will likely have the most actionable information. If you're looking for ideas of who to contact, I'd try some of the major franchises in the area. You could look for a Keyrenter, RPM, or PMI franchise, they are all typically reputable companies.

Hard pass. I'd be curious to find out what happens with the property though. 

Hey Aiman, congrats on your new property! Screening tenants is definitely tricky, bit I can offer you a few ideas:

Check current credit score
Contact previous landlords for rental history
Income verification(get a copy of their w2 or 1099 depending on source of income)

There is lots more that you can do here, but that's a start. The most important thing I'd mention is - don't be afraid to hold to a high standard, especially if you have a nice home to rent out. It's far better to wait a bit longer to find a great tenant then to take the first person who is interested. The market is pretty hot right now, so you will more than likely find a very qualified tenant in a short period of time. 

Yes, and yes. A local attorney will have insight on the state laws that someone out of state will not. Additionally, they'll be licensed to serve as an attorney in that area. :) 

Very hard to say for sure, it would have to be a calculated risk based on possible ARV. If you were buying it for better than 50% of retail value(or better), you'll probably be able to make money.