All Forum Posts by: Charles Carillo

@Edi Mari

Usually the red flags with lenders are when they ask for funds upfront (some HML will ask for ~$250 AT THE TIME of a site inspection which is normal). A great way of finding lenders is by referral. I would contact local investors in that market and see who they use.

@Charlie Anne

It really depends on your strategy for the property and your return requirements. The potential problems I see are what happens when someone does not pay and gets evicted, then the unit is made ready and it is then down for months. Years of returns are gone. If you are purchasing to sell for appreciation in years, that could be a route to pursue, but is really a gamble. If you are looking for cashflow, this might not be the best use of your capital. Maybe you flip it and invest your capital and profits into a better rental?

@Candace Garcia

Specific tips would be dependent on your investment strategy and property type but I would say to get the term as long as possible (5+ years). In this market you are not sure how easy it will be to refinance (or the LTV) in 1, 2 or 3 years and you want to make sure you have enough equity to do so.

@Kevin Davis

When I have gotten commercial bank loans they have requested the last 2 years of financials. Not sure if they calculated the DSCR from years before or just the T-12 (trailing 12 months). I think you need a little more seasoning on this property before applying for refinancing. You want at least a solid T-6; preferably a solid T-12. If you push for refinancing too early, they are not going to give you the valuation you want which will not yield the funds you are looking for.

@Kyle John

Currently we are seeing for commercial bank refinancing LTV requirements of 65%-70%. If you are putting in the work of obtaining seller financing I would recommend you take it out as long as possible (preferably at least 5 years). You have to expect that your rents will not increase in one year and you will need to come up with the difference between the down payment you are making to the seller and the LTV on the refinancing plus you will need to show post closing liquidity which is traditionally 10% of the loan amount. For example; you purchase a $100k complex, you put down 15% and then when you refinance, you will need to come up with ~20% (if no increase in NOI) and show the bank that you have 10%+ ($6,500+) of the loan amount in another account that is liquid.

@Brad Stein

When purchasing rental properties you should always have a reserve to cover several months of debt payments and the occasional CAPEX expense that came up sooner than later. In COVID or not, the reserve is always required and I would not purchase any property without one.

In regards to collections during COVID, it is important to verify these amounts throughout the contract process. We have been adding new language into our purchase sale agreements to make sure collections are maintained. I would speak to your attorney about adding this.

@April C.

Here are my favorite books on RE investing:

Multifamily Millions by Dave Lindahl

The ABCs of Real Estate Investing by Ken McElroy

The Complete Guide to Buying and Selling Apartment Buildings by Steve Berges

Commercial Real Estate Investing by Dolf De Roos

Trump: The Best Real Estate Advice I Ever Received by Donald Trump

Tax Free Wealth by Tom Wheelwright

Commercial Real Estate 101: How Small Investors Can Get Started and Make It Big by David Lindahl

Raising Private Capital: Building Your Real Estate Empire Using Other People’s Money by Matt Faircloth

The Definitive Guide to Apartment Marketing by Josh Grillo

Investing in Apartment Building by Matthew Martinez

Crushing It in Apartments and Commercial Real Estate by Brian H Murray

The 7 Secrets to Successful Apartment Leasing by Eric Cumley

2 Years to a Million in Real Estate by Matthew Martinez

Burn Zones: Playing Life’s Bad Hands by Jorge Newbery

Commercial Mortgages 101: Everything You Need to Know to Create a Winning Loan Request by Michael Reinhard

It’s a Whole New Business!: The how-to book of syndicated investment real estate by Gene Trowbridge

@Andres Courtois

Finding a seasoned mentor at a local real estate meetup is a great way except that this is not currently possible. Mentors that are actually working full-time in the business might be interested in partnering with you if you are able to bring something to the table to help them as well. I would start developing a list of what value you can provide before reaching out. 

The interest rate is the annual cost of the loan to the borrower. The APR is really the true cost of the loan since it includes all of the lender's (junk) fees. It is a more accurate measure of the cost of borrowing. It allows you to compared apples to apples when shopping.

@Perry Livingston

Do you have someone in your crew (or yourself) interested in moving in until closing? It is a pain but it is an inexpensive option.