All Forum Posts by: Brandon Johnson

@Adam Enamorado

Welcome to BP neighbor.  This is a great place to do exactly what you are looking to do.  I am currently seeking to move into the commercial multifamily space, so I am glad to connect with you.

Be sure to join the RING / Baton Rouge REIA at http://www.meetup.com/the-ring/

We meet once a month on the 2nd Tuesday evening and that is a great venue to build a network with other local investors.

See you at the top!

@Siedda Herbert Wow 57 units this year?  IT IS DEFINITELY ACHIEVABLE, but please share how you plan to go from where you are to 57 in the next six months because I am curious and I might want to copy what you are doing!!!

@Michael Noto all of my commercial loans are the same setup.  I had to sign as personal guarantor on all of them.

@Jake Thomas Major congrats on the success you've created for yourself.  Continue to take massive action.

See you at the top!

@Mike H. you make some great points.  I'm betting my money on Ms. Siedda forgot to put the "-" in her 57 that was intended to be 5-7 units.

And I see 5-7 being totally attainable for you @Siedda Herbert!!!

@Alethea Bell try not to limit yourself by telling yourself that you have no other options as there are always WAY MORE options than you realize.  Do you have a deal you are currently working on?

I spent a lot of time and energy trying to figure out how I was going to be able to come up with my first down payment, but I was committed to figuring it out.  14 months later I have done deals with seller financing, private lending, personal credit lines, HELOCs, and partnerships.  With real estate transactions the possibilities are numerous on how you can creatively fund your acquisitions.

Take massive action and I'll see you at the top!

@Siedda Herbert 57 units this year?  Dang, I'm going to have to kick it into gear before you blow past me!!!

To answer the second part of your question, most portfolio lenders will loan a maximum of 80% of the appraised value.  If it will appraise for $100k and you have $75k all in then you can walk away with an extra $5k to take to your next deal.  

They prefer your place to be rented already at the time you apply for their mortgage.  I would use the recent comps for your appraisal, but if you have access to your friend's appraisal report that could help you both with your bank and your appraiser.  I have used other appraisal reports in the past to support the comps I wanted my appraiser to use and also I have had banks waive the appraisal and use the one we already had that was less than a year old.  These banks are more flexible and able to make their own judgement call sometimes as long as they are within their organizations underwriting guidelines.

Hey @Siedda Herbert, don't let the nomenclature trip you up. I used to think the same thing until I realized it was nothing more than terminology. I have commercial loans on single 2 bedroom townhouses strictly because I obtained the loans through small portfolio lenders and hold title in my LLC. They are known as commercial loans and can be used for financing what you and consider residential real estate. I'll outline several reasons these commercial loan products from small portfolio lenders work better for me in my business.

I do not use conventional government backed mortgages. All of those loans must adhere to the same basic rules from what I understand and here are the ones that keep me from using them in order of importance.

1. 180 days seasoning required. This is the biggest because it says I have to own the property for six months since purchase before I can qualify to refinance it and actually obtain that mortgage. That would have really slowed me down since my credit lines would have been tied up longer and kept me from refinancing and buying more properties.

2. Cash reserves equal to 6 months PITI for the subject property are required at many banks.

3. Higher LTV requirements. You can usually borrow 80% LTV on single family, but in most cases you can only borrow 75% for a duplex and 70% for a fourplex. None of my early multifamily deals had enough equity to make it on that criteria. While I prefer to buy deals with that kind of equity, I did pay more early on in exchange for some creative financing options that I paid up in order to access them.

4. Limit of 4 or 10 loans or whatever the rule is these days. I hear conflicting info on what the limit is, but I didn’t want to be limited. I have two of these loans already; one being my old residence (currently rented) and the other being my current residence which will become a rental one day in the future.

5. If you purchase or own the property in a business entity such as LLC, there aren't many banks that will make a 30 year Fannie/Freddie loan for rental property. That would have to be a commercial loan in most cases.

Small community banks and portfolio lenders do not have to play by these same rules. And while the max loan is usually only 20 years, it is much easier to get those loans and I am building strong relationships with several of these lenders. Now that they are familiar with me and my business it is pretty easy for me to apply and get approved quickly for new loans with a simple email with the details of the deal. Other benefits are that they can be much more flexible. I have refinanced properties without the need for an appraisal, they can often close in as little as two weeks if necessary (show me a conventional lender / big bank that will do that; in fact they sometimes are the reason your closing gets delayed), and once they know you they don’t require you to go through all the same hassle everytime you need a new loan after the first one is established. It’s the relationship you can develop with them that makes it work so well.  The Baton Rouge banking market is full of these type of portfolio lenders.

Take massive action and I'll see you at the top!

@Jim Struthers Keep at it and you will find out how to get what you want.  The possibilities in real estate are endless when you can be creative.

Take massive action and I'll see you at the top!

And I don't think there are many areas in town that you can't find a good place to invest.  It just depends on what you want and what your criteria are.