All Forum Posts by: Henry Clark

Your in the greatest State ever for Sheriff or tax sales.  You need to only ask this question to people in Texas, it is totally different than almost all other states.

First learn the rules.

House- How long do you have to wait to take possession?

House- How much do they have to pay in year 1 or year 2, along with the taxes?

What is the bidding process?

Which Counties are the best counties?

Off list listings?  How much can you offer?

"Land only" same questions as above.

Keep it local:

a.  "lower set up fees"- this is a one time event.  How much are you saving?  Who do you plan to have as your registered agent to file annually or biennial?  Don't trust yourself.

b. "Lower taxes"- your going to pay taxes in the State of the investment, regardless of where your LLC is formed.

c.  "Faster legal turnaround issues"- Where does your attorney live?  Where will the legal issue go through court? To me these are more important than the speed by State, which you don't get to pick where it gets handled, since it will be in the State of the investment.

d.  "More experienced"- same as "c" above.

Congrats for starting down the path.

Recommend you put a Checklist together, then prioritize where the major issues will arise.  Example: Roof, foundation, HVAC, Windows, Tenant history, etc. etc.  Take bite sizes and keep a list to keep adding to as you gain experience.

With regard to the LLC, put a list of people or professions you need together. This will be your team.

Congrats for jumping in.

Your asking the obvious question about the eviction.  That isn't the learning point though.  What else did you miss.

Develop a checklist when evaluating a property.  Have other people you know and on BP challenge the list and change and expand on it.  I still miss things, but they are getting smaller and smaller part of the overall project.

There is every reason to fail, they are just one more step to success.  Keep on, Keeping on.

Break the discussion down: 

a.  How long would it take for you to build and bring to market?

b.  Can you find the Contractors to build?

c.  What is your Existing structure versus new structure value difference?

d.  Financing- assume the same, then what do you project as the difference in interest rates between now with and existing and in what time frame in the future for a built?

e.  What is your projection for material cost and availability over your build cycle?

f.  In your market are you able to do a Home inspection prior to buying and how old of homes are you talking about buying?

Go to your local City or County Attorney's office and ask.  That way you get State specific info.  Based on their info.  Then take a ton of pictures inside and out.  Then call a tow company, don't try to auction.  Check with your commercial insurance carrier on your coverage for disposing of abandoned RV's.

You need to check local and also have the current bank put a package together.  Ask them what their Loan Cap rate is, see if that is the issue.  

We are in Iowa and I have noticed the market is different by state.  We can do 25% down conventional LTC loan to cost, 5 year with 20 year amort, Interest rate x.xx%.

Helping out on a deal in Texas.  They won't do a construction loan.  Won't do SBA.  Want to wait till 70% occupancy.  Three banks want 40% LTC, 5 year with 20 year amort.  Didn't discuss interest %.  Since this doesn't work for us.

Your market looks tight already and sounds like you won't have an existing banking relationship to work from.  You will have to check locally.  Each person will be different based on years in that RE class, personal wealth statement and existing Storage cash flow.

Back to refi out of an SBA loan. The only reasons to refi out are: A. You want to use the property for collateral on another Non-SBA type project, B. Your needing short term personal cash flow. If you move to a Conventional Loan, you have to pay in more LTV and/or LTC; higher interest rate; no 20 to 25 year fixed term loan; and you have to pay in new mortgage costs (appraisals) and effort. If you took Covid relief SBA 6 month funding, you will probably need to repay that.

We are just closing on an SBA loan for one of our Storage locations and filing for two other locations.  I'm interested, what is your justification?  If its just to pull out Personal money, I don't need to know the situation.

Talk with the original bank that sponsored the SBA loan.  They are familiar with the deal and should give you terms.  Let us know what those terms are.

Teaching the boys how to put scaffold together.   They only nearly killed themselves twice. 

With July 4th here I want to say thank you to all of you out there. Without the rule of law the real estate industry does not exist or all you built can be gone with the snap of someones fingers.  It’s hard to imagine that without going to a third world country .  

Pause and enjoy your success. 

@Tyler Hallman

Congrats they are into positive cash flow. If this happened in 12 months then you have even greater demand. 

Start culling your bad customers.  At 90% by size start raising the rate for that size for new customers

Family businesses are tough.  Different objectives and views on life. 

Recommend you don’t do the following, but if your seeing the value of expanding.  Let them know what you are doing.

1.  Get an appraisal done. If it cost them $1.5 and they are 70% full it will probably appraise for around $2.4mm 

2.  Decide how you want to finance the next project   Assuming you can’t expand at the current site   Recommend you do SBA   Talk with a banker and your in laws   See if they/you can use the existing location for collateral.   Let’s say you do another $2mm location  SBA will need $200k investment from you.  Either on your own or a loan against your in laws equity come up with the $200k  

Recommend you do through their banker   A different bank won’t want to take a second lien position against there property  

Tell them congrats.  

Went to the local farmers market to buy some things.  Gave me a chance to think further.

1.  Buy the gravel pit and do a house development.  Great location.

2.  Buy 40 acres with roads all around and do a development.

3.  Take all of the thoughts mentioned thus far and go to all of the larger cities near you and replicate.

4.  Do a trailer park like down the road.

Your in an unbelievable RE location.

Develop a Business plan:

a.  Get to know your city and county zoning and rules.

b.  Get to know the planned zoning.

c.  Develop a plan, don't worry about specific land available.

d.  Come back to this group and you want to find folks who have done this type of development.  Have access to about $20mm.  Need an on the grounds point person (you).

You want to take this and make into Bite sizes. Everyone is looking for the next SFH/MFH deal and battling for it. Your sitting on tons of RE viable projects.