All Forum Posts by: Charles Carillo

@Joseph Pagan

A bridge loan is a senior loan or 1st position loan. A gap loan is similar to mezzanine capital and covers the gap between the debt and the equity (it is a hybrid layer of capital). For example; you purchase a property and need $10mm (for the property and repairs). You receive a bridge loan for $7mm, but you only have $2mm in cash to put down. You acquire mezzanine capital or a gap loan for the last $1mm of the capital stack. This type of capital is much more expensive because it is subordinated to the repayment of the senior loan (it is second position) BUT it ranks above repayments to equity holders (you).

@Joe Chin

I cannot speak to the difference between the US and other countries but in the US the property management company is able to handle as much or as little as you need. Some managers will handle just collecting rent, some handle just the service calls and nothing financial or some will handle everything and just reach out to the owner on large problems or major repairs that are needed.

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@Matthew John

I would suggest going back to the seller with owner financing; with a 24 month term, no prepayment penalty and interest only loan (4%+). Honestly, if you cannot get it financed, probably most other buyers can't either. I would also start reaching out to commercial brokers.

@Armand P.

It really depends on the type of property; 1-4 units or 5+ units. For 5+ units it is not a deciding factor but they will sometimes look at it. The smaller the property the more DTI becomes important.

@Richard Lutz

There are banks still lending for purchases and refinances. I would start calling all banks and credit unions within 1 hour drive of the property or you could find a broker that will do the leg work for you.

@Kelly Beasley

I would not invest all of my money into one deal. What is the experience of the other partner in regards to self-storage? This deal has a cash-on-cash return of 24%? Who is getting approved for the loan? Who is managing the property etc. Just a few things I would bring up. If you decide to move forward, I would try to go in with less money and bring in another partner.

@Jonathan Pechmajou

Are you just using those websites for your comps? I would start utilizing the agents to pull you actual comps for closed properties in your immediate area. Single family properties are not calculated with a cap rate and for commercial properties I would not rule out properties (before seeing them) because of cap rate. There are so many possible issues with underwriting or the property itself that could sway the cap rate one way or another. I would pick neighborhoods that you like and focus on those. Once you have some properties, you can then expand from there.

@Mike Sullivan

The areas mentioned are growing areas and are becoming expensive to buy in. The 1% rule is a good tool for a quick valuation but there are a number of other factors you should incorporate into your underwriting. Also, where are you reviewing deals from? Loopnet and nationwide brokers? These sources usually have some of the highest valuations since they have a much more extensive buyers list. A small broker in Central Florida does not have the buyers list of a national commercial brokerage (you can usually get a higher price if you have more potential buyers (out-of state)).

@John Zellner

Check out this article: https://www.daveramsey.com/blo...