All Forum Posts by: Callum K.

Hello,

I am trying to find out whether or not Fannie/Freddie accept K1's from MLP's in my stock portfolio account.  I'm aware that K1's are usually accepted and viewed as ordinary income with 2-years returns, however I'm struggling to find a lender that can decipher the difference between a private investment that issues a K1 and a publicly traded stock such as Enterprise Products, Williams, or Energy Transfer Partners.  I have qualified dividend income from several of these and the legislation I've seen effectively say that 'income from a K1 is viewed as qualified income'.  It does not discriminate between privately funded K1's or publicly traded K1's.  The lenders I've spoken with start asking for documentation "to validate the financial viability of the business" even though there's clearly more publicly available information from these companies than any kind of private investment.  Any insight, guidance, legislative references, or even lender recommendations would be very much appreciated.

Thanks!

Callum

@Kevin DeVargas both businesses have employees.  One business has been directly affected by the pandemic and this has been a helpful bailout, while the other business has actually done a lot better in the past month so the loan is basically a bonus. Fortunately, we were funded early and have stayed on top of it and didn't make the mistake of going through a large bank.  I've helped a couple contractors of mine submit their files, but I feel they waited too long and now they are stuck in the grey area of uncertainty until congress gets things flowing again.  Personally, I think you have to be foolish to have not jumped on this opportunity. It's either free money, or its an insanely low interest loan with minimal recourse. 

@Kevin DeVargas we received two PPP loans and both have minimum interest prepayment penalties.  It's not much, but it's definitely in our documentation.  I know there's a lot of room for interpretation from bank to bank so perhaps our lender is interpreting it differently than others.

Any specific type of real estate you are interested in?

We've got several Storages that size and Several are in secondary and tertiary markets. Applying a 35% expense calc on that revenue gets you about $77k in expenses. That gets you a a $143k NOI. Acquisition prices typically range between a 6% and 8% cap rate. So $143k/0.08=$1785,000 to $143k/0.06= $2,383,000.

Call that a baseline then discount and add value from there. Discount Uhaul because it will require additional labor to manage, if occupancy is high then if there’s expansion, that’s potential value to be added. Quality of the property also will affect it as you’ll want to look at deferred maintenance. Lastly location is critical. Supply if competition and demand in the area will be needed to look at. Best of luck

In my experience, OK is a cash flow market. Higher rent to acquisition prices and pretty stable. We don’t have tons of appreciation like places like LA or Phoenix so from a flipping standpoint, I think it’s harder. I agree with Alyssa. I’d keep an eye out because we are about to get hit by weakness from COVID-19 plus an Oil and Gas heavy state as well as an aerospace heavy state. Best of luck

We’ve applied for the SBA loans For several businesses and have been approved. To me it’s a no brainer. Free money if used, then a low interest loan if unused. At min, take that low interest loan if you have money left after the forgiveness period and apply it to a credit card balance or something. I haven’t seen if there are prepayment penalties but I’ve gotta believe the government won’t be forcing you into prepayment penalty

In Oklahoma, I often make sure to get a lien release from the lender and get that filed ASAP

Hi there. I’m also looking for rental properties to acquire and am waiting for the fallout of the oil and gas market to disrupt the real estate market. Lots of layoffs are coming which is unfortunate but it might be a good time to buy in the next 6-18 months. Coronavirus only compounds the issue with our dependence on aerospace. I keep an eye on the HUDHomestore and have a handful of realtors I work with. Best of luck!

We use First Oklahoma on a portfolio we have. No issues there and they’ve been really good at working with us