All Forum Posts by: Calvin Thomas

I'm thinking of taking on a business partner to do out of state investing. The idea would be to have some boots on the ground in the area I'm interested in investing.

For those of you who have formed partnerships...

1. What was that experience like? Did it make real estate investing more easy or hard?

2. How did you meet your business partner?

3. How did you vet your business partner?

4. Any general tips or advice on forming partnerships with out of state investors?

The worst. I fired him and bought out his stake many decades ago. Always have an option to buy out the other partners and make sure you have the controlling share. There can only be one chief. All agreements should be made by competent independent council (if possible these days, not sure).

The only partner you should have is the bank. Don't go into business with friends or family; it's a recipe for disaster.

1 Vote

This sounds like a nightmare scenario. This will never work with you in a unit and at 11%. Do yourself a favor and run.

0 Votes

Stamford, Connecticut

Try your best not to provide support via phone. If it's not in writing, then it never happened. We use text, email and our tenant portal to communicate with the tenants. We switched to this about 4 years ago. No more guessing who said what and why. When you want to end the conversation, you say, this issue has been closed. Have a good day/night.

0 Votes

Quote from @River Sava:

Quote from @Calvin Thomas:

Quote from @Nevin Wilkie:

I just completed my first rehab on a distressed property I have bought. I just completed a cash out refinance on the property but now the bank tells me that I am not able to put the property into an LLC. Are there any work arounds to this? I don't really want to rent this property without having an LLC just in case anything does happen. What should I do?

You don't want a DSCR loan. They will f@ck you on the fees and higher rate. If you are in UNY, you can see if you can get a commercial loan through M & T Bank. They offer LLC financing with you as the PG.

In theory, you can file the paperwork with an attorney) with the county and move it into your LLC. However, you are technically at fault with your loan agreement. It (the loan) can technically be called should they find out. Insurance can be an issue as you would technically have to get it in the LLC's name and then you can have a personal umbrella to cover any overages. So, in theory, you would be covering all bases.

I'm not suggesting anything, but hypothetically, a person can do this.

Hey Calvin - I get what you're saying, but DSCR loans can actually be a great option depending on the situation. Yes, they can have higher rates and fees, but they come with some major advantages too—like not needing personal income verification or DTI requirements, which can be a game-changer if you're looking to scale quickly. It's also easier to keep the property in your LLC from the start, which avoids the hassle of transferring ownership and potential issues with the loan being called due to the change.

Commercial loans can work, but they often have shorter terms, balloon payments, or stricter underwriting. DSCR loans offer more flexibility with long-term fixed rates and less red tape. So, while it might not work for everyone, for many investors, especially those looking to scale, DSCR loans are worth considering.

Commercial loans and conventional loans will always be cheaper than a DSCR. I've been doing this since the 70s and I've had every loan you can imagine. I did a DSCR loan once and was amazed of the BS fees which were charged. I owned the property outright in Connecticut, so I actually pulled out at closing once I saw the fees, I just couldn't continue.

I would advise anyone to use them as a last resort. Subsequently, I went to Peoples United Bank and got a 4.5% commercial loan with a 25 year amortization, 10 year balloon with a one time renewal option. Unless it's an amazing deal, the numbers will not work (for me) with a DSCR. Even more so in today's market. Anything over 2 mil I'd go with a Freddie Mac Small Balance Loan. If I was going to buy something for my company to operate out of (70% of the property), I would then go for a 7A SBA loan.

3 Votes

Upstate New York, New York

Quote from @Nevin Wilkie:

I'm not suggesting anything, but hypothetically, a person can do this.

1 Vote

Upstate New York, New York

Quote from @Steve K.:

This is more common for commercial (5+ units, often lenders in this category want the owner/operator to have experience self managing or hire professional management), and not very common 4 units and under, IME.

This. A building owner across one of my buildings has owned a building since the 80s. Since he's a one person shop (along with a super), he refinanced his 3 million dollar property and the bank required him to hire a property management company. While we do not generally manage properties outside of our own properties, I did him a favor and added his property under our umbrella. Since we are already registered with Fannie and Freddie as a property management company, he was able to get his mortgage. I was happy to help; for a small fee.

1 Vote

No, this is not worth your time for a hundred dollars a month.

2 Votes

Quote from @Yael Maroko:

Hi,

I am an out of state investor, currently rehabbing a property which I plan to rent out and refinance in a few months.

From what I was reading about refinancing requirements - seems like some of them require the property to be managed by a management company.

Can I self manage this property and still get a refinance? (I have boots on the ground in case needed)

Thanks

It depends on the bank. Some banks over a certain amount of money may require third par-y property management for the first year or two.

1 Vote

Quote from @Daniel Sabato:

This is an insanely open ended question but the sum of this is that I'm having trouble getting started in multi-family and apartment buildings. I've done the single family method and it was too slow for me and just ate up too much time, although I learned a ton. I'm struggling to find deals and the numbers just aren't working. I have a few options to either use a cash down payment or tap into my primary home equity, about $400K worth of it. The numbers especially don't work when I go the equity route and factor that into the cashflow. But at the same time, I feel like this chunk of equity is a huge asset I should be tapping into to get moving. Any tips for someone like me?

In Jersey City, I wouldn't risk it. You are handling too much risk with not enough reserves. I own and manage about 70 units JC in Hobo. PM me and I'd be happy to advise a plan of action. Should you do something wrong, it will cost you dearly. Evictions in Hudson County suck, they are worse than Essex. It's best to avoid them; if possible.

0 Votes

Jersey City, New Jersey

Quote from @Anthony Abruzzo:

Hello BiggerPockets community,

I was referred to this community by a local real estate investor in Colorado. I am moving in about 6 months from Colorado Springs to New York for work purposes. I currently own a property in Colorado Springs and I am planning to rent it out as we depart the area. Currently, I am in the phase where I am doing minor fixes to the property and plan to begin looking into property managers. I am still unsure if I truly want to hire a property manager, or if its something I can do myself. I am mostly looking for some advice and lessons learned from others on how leaving their residence and becoming a landlord from across the country went.

Thanks everyone,

Anthony

As person who manages (with a decent sized team) over 400 units in 4 states, I would highly recommend you handing off to a property manager. There is literally nothing you can do when you are on the other side of the country. You are being penny wise and pound foolish. Colorado is a very liberal State. You may not legally be able to manage the property from New York.

0 Votes

All Forum Posts by: Calvin Thomas

Calvin Thomas has started 37 posts and replied 777 times.

Post: What's it like having a business partner?

Post: 6 unit CT multifamily rent roll sheet help

Post: Responding to tenants

Post: Refinanced my first BRRRR but bank will not let me put it into an LLC

Post: Refinanced my first BRRRR but bank will not let me put it into an LLC

Post: When refinancing a rented property does it have to be serviced by a property manager?

Post: What do you consider a "good" cash flow for a property in 2024?

Post: When refinancing a rented property does it have to be serviced by a property manager?

Post: Struggling to get started with my first multi-unit

Post: New member about to be a long distance landlord