All Forum Posts by: Brandon Plombon

Hi @Jarrod Hannon We also have one the first Tuesday of every month in Mankato at the Mankato Brewery from 7-9pm. I'd love to connect with you.

Hi @Joshua Aden I'd be interested in contacts for MN.

Hey Calvin - Where is the property located?

Hi @Aaron Hunt. I am a commercial lender and the answer to your answer to who will have to provide financials; is it depends. It depends on the bank and who they will require to submit financials based on the deal, the guarantors and what they bring to the table, and ultimately their lending policy. If someone owns 1% minority stake, it might not make sense for a bank to require to get all their financials and as long as they have the main players involved they are comfortable. Personal guarantees are another thing not mentioned here but should be considered. Sometimes the main players will be compensated by other members for having to sign personal guarantees (depends on operating agreements/bylaws/ect). All owners over 20% will have to at least complete beneficial ownership paperwork. Lastly - if the loan is in the LLC the LLC shouldn't be reporting to individual credit reports as it is a separate entity but it will depend on the bank and their internal policies. Sometimes mistakes happen and it can get reported to individual credit reports thus adversely affecting their DTI.

Welcome @Cierra Aamodt to the BP Family. I am a commercial lender in Minnesota it's so great to meet you!

COC return is infinity.

As Joe also stated you are missing a lot of info on expenses to accurately calculate cashflow. What is the amortization? Based on your figured I would have to assume it is at 30 years. After the 5 year balloon you'll have ~60k in equity simply due to paydown. Not accounting for any appreciation the property would experience. I assume the seller would want to be paid off at this time in 5 years from now with more traditional financing. At this time you can always look at refinancing now that you have a 5 year track record with the property proven on tax returns which a bank will want to see; however, you may have to bring additional cash in the amount of up to 90k to the table as you would only be at 90% LTV (assuming to appreciation) Most banks will want to see 75% LTV.

Hi @John K. I grew up in the twin cities and live about an hour south currently. Bloomington is definitely right in the middle of everything within the Twin Cities. The location is great.The airport is right there and many many businesses. Bloomington is more of a blue collar/workforce city that can't generate the same amount in rents as neighboring cities. A quick glance at what is listed currently this property is the lowest priced 2 bed condo in the city- there are apartments in similar sqft and 2 beds listed for $1,250-$1,400/month in rent. They may not offer all of the perks this condo does and you probably can demand a higher price due to that reason. I feel the rent might be slightly higher than markets as others in that range are much nicer on the inside and have been sitting for 20+ days. Lastly, a 4.4% cash on cash return does not interest me at all as you can nearly get 3% on treasuries currently. I personally would pass on this deal. I hope my insights help - let me know if you have any questions!

Most people get caught up over having people pull their personal credit. They worry about having perfect 850 score constantly instead of 770 which is good enough to get the approval for the loan. As long as the properties are cashflowing and you are making your monthly payments, there isn't a lot to worry about. Most banks give people with credit scores in the 740-760+ their best rates. The extra 90 points mean very little in any credit making decision. I'm going to treat a borrower with 850 and 770 the exact same; both of which are great credit scores.

That is awesome! They look great and would love to see updates when you get there!

You need to develop relationships with them. Most bankers are looking for entire relationships not just a transaction. It's a lot more profitable to have the deposit accounts, all loans, ect with one than always shopping for the best rate and terms. Financially yes, that makes the most sense on paper but a lot of people would go with another bank that offers a slightly cheaper rate than their main bank to save on costs but they are giving up the opportunity costs of having their entire global relationship with someone that they are familiar with and know and trust. Is having a banker that will drop everything to take care of you worth it, even if you are paying $50 more per month on your loans? Is it worth it? I would argue yes but I am biased as a banker. 

I would also make sure that your banker understands real estate and your goals. Not all banks do and not all own real estate or are investors like yourself. Constantly showing losses on paper can appear to be a bad business for the inexperienced banker while experienced bankers will say yes you are showing paper losses but add back in the interest expense, depreciation, amortization and you are making money. I am a banker in southern Minnesota and would love to connect with you.