All Forum Posts by: Nicholas Weckstein

Chris Mason thank you ! That’s what I was missing. So when I’m refinancing I would tell them I’m using the money to pay off that loan. Gotcha. 1 at a time works for me !

if thats the case then how could one expect to refinance out of a hard money loan? 

If you borrow from a hard money lender. Use the funds to buy and rehab a multi family property. Rent it out and then approach a bank for a cash out refi to pay the HML, won’t the loan that you have with HML show up and effect your DTI. Which could mess up your refi and kill the whole strategy?

Stephanie Potter hey thank you for your response. So I guess more so of what I’m wondering is the process on the hard money side, for instance, just like any bank they’re going to want to know the properties right? They’re going to want to make sure the ARV is accurate. Sooo to do this in essence I’d have to find 3 separate properties that meet my and the HMLs criteria. Get them under contract and then approach the HML to fund the deal. Then close on them all. I’m going to speak to some HMLs and some commercial loan companies to try to iron that part of the equation out. Best to start at the end then move my way back.

Hey everyone, In a never ending quest to add more properties to my portfolio, i concocted an idea and Id like to throw it out their to possibly have some people poke holes in it so I can see things I may be missing. Here it goes: Hard money loan- Thinking of taking 60k getting a 300k hard money loan to purchase 4 multi family properties that may need some work. Do the rehab for the value add. So I crunched the rough numbers in my investment location and see it working like this 4 triplexes bought and fixed up for 300k at whatever rate. Not even sure what the terms would be on the hard money but that’s why I’m here lol. So estimated gross monthly rents would come out to $6900.00. Using that income shortly down the line to qualify for some type of commercial refinance on the lot of them to go into a bit longer term debt. I see it working this way, need to pay back the 240k borrowed from HML. Gross rents from the 4 properties should be enough to qualify for a commercial refinance or even just a line of credit. Use that money to pay back HML and then would be in better debt at a more favorable rate with 4 cash flowing assets. I have never really gone the hard money route nor have I really spoke to any to see what the process is like. But does this seem do-able?

If the value add works then I would say go for it. As long as the debt is covered with enough to put some aside and be self sustaining and you are able to get that value up then it would be a great deal.

Raising *

But I suppose that if your correct in saying you can get the NOI to 52k then this could actually be a great deal. But I’d be absolutely sure you can make it happen. Passing on utilities may get your operating costs down but will it raise your vacancy/turn over rate ? Will raisin rents have the same effect ? I’d say if your sure that you can get that 52k NOI and a 7% cap then try to get it for as low as possible. Counter offer again and negotiate it down as much as u can.

In my opinion it seems like the seller/agent valued and did the “underwriting” wrong. You said at a 7% cap would be roughly 385k? What are cap rates in the area ? Seems to me like that 500k price you have it under contract for is way to high. I underwrite properties like this Gross rental income -all expenses (utilities, lawn care, insurance etc) -10% vacancy -10% cap ex -10% management fee ———————————- = NOI Seems that the seller didn’t value properly. At the sale price your talking about roughly a 5% cap rate. That’s not to great nor worth the hassle. Unless the place will go up in value. So again you have to say what type of return would be the least I would accept. Find that number and that’s the most you should pay.

3 colleges, a casino, an airport, big medical center....crime rate is a little high but coming from New York it doesn’t feel bad. Theirs a lot of development plans in the works. Recently a 6 million dollar grant was just given to help with revitalization. Cap rates are high. Usually can exit at an 11% cap rate. Can buy even higher. It’s a stabilized area that historically haven’t seen much appreciation but has great cash flow and I believe the potential.