All Forum Posts by: Chadd Naugle

@Benjamin Cowles I suggested a Real Estate Attorney for the simple fact that you were doing seller financing and I would want an attorney to draw up that paperwork, sure you can buy a boiler plate mortgage agreement but would you trust it? Not me...Most people only use a title co, because that is all they need. 

In your original post you mentioned many things, and lot of scenarios, so if you are concerned about contingencies, protecting your interests, drawing up 1st or 2cd mortgages, etc.....that is why I suggested an attorney.

How many units is it?

@Justin Bell what you need to consider here is the difference between a commercial loan, vs a residential mortgage. Most commercial lending is done on a "commercial" deal, meaning 5 units or more. This is why they don't really like loaning for SFH. Once there is portfolio established, then you can apply for portfolio loans, or blanket loans etc.

Also commercial loans are more deal specific, then borrower specific when it comes to funding. Commercial loans are concerned about DSCR, NOI, Cap rate, etc of the deal first, then the borrower second...because this is what the value is based on.... On 4 units or less, the value is based on comps, which in turn is dependent on the current market. Not so with commercial real estate.

Clear as mud?

Just an FYI my local credit union will do residential 2 to 4 units at 20% down, and 5% amortized over 25 years, on a 10 year term (commercial loan)....So you may want to look into local good credit unions, and talk with their commercial loan department, not the mortgage department.

Seems like a no brainier, to me....Even at 50% for expenses you are clearing over 500 month... Most people shoot for 100 to 200 a door, which you are above, and your DSCR is 3 to 1.

I would do it, provided there is no drastic repairs needed, roof furnace etc.

@Cresundo Whitaker I would go to 123flip.com.... This is J.Scott's website, get on the e-mail list....he has some bonuses on there, one of which is an Analysis tool to help you evaluate a deal....you simply put in the purchase price, down%, monthly rent and expenses and it will calculate everything for you.  After you get the tool, go on realtor.com do a search for multifamilys and then call the realtors to get the financials (rent and expenses), and start practicing analysing deals....

@Benjamin Cowles I would find yourself a good Real Estate Attorney.  They should be able to handle everything for you, including... Title, escrow, 1st and second mortgages for the seller financing,  Also I always use my attorney....Typically it is buyer's discretion, and I have not had any pushback yet.

Try and get a referral from someone that is using one, if not, pick up the phone and start calling RE Attorneys.  They are going to be a long term partner, so treat it as though you are interviewing an employee for your company.

You could also do another post in Bigger Pockets, that is not quite so long ;) that simply says....Hey anyone know a good RE Attorney in {insert your area}?

@Payton Gonzales Figure 50% for expensense no matter what the seller reports...When you institute this rule of thumb, you can't go wrong.  I always use 50% even if the seller reports a 30 to 40 expense ratio.  At the very least the difference can go into reserves for repairs, which are usually not reported or under-reported.  

This is what I do..I take the gross rent, factor in the vacancy, then take 1/2 of that number as my NOI....then I look for a 10% cap rate and DSCR of 2 to 1.... This is a good deal in my opinion, and the banks like it, you'll like it, and you will make money.

How much money are we talking about? Do you have a company, or is it just you personally trying to do the deal? The reason I ask is if you have a LLC you could get a line of credit as SBA7 loan or something of the sort to carry you though. Doesn't sound like the tenant can close though, so that is another consideration, because you may need to secure longer term financing if you plan on selling it to them on lease option.

@Ryan York

Curious, Why did you chose 2, 3 and 4 units? and  Why do you need any certification/designation? 

@Marc Maxey - Just my two cents - Who is to say that he won't sell as for sale by owner down the road in which case there is no realtor's commission.  Also I would point out that he gets appreciation from this point forward...what is the value of that?  This should more than make up his sales commission depending on how long he holds it.

Stick to your guns, and don't do the buy out until you get the price you think is fair.  Your "partner" has to realize that he is gaining and appreciating asset with equity....sell him on that fact....if he can't see that....then sell the asset.