All Forum Posts by: Henry Clark

Missed the might move part in 3-5 years.  

a.  Talk with your banker about selling your house in the future.  Is he okay holding the proceeds in escrow until you find a new house, that will be used for collateral.

b.  For the multiple deals, let your banker know up front.  That way he can write the loan up in a way to cover all three purchases, without having to re-do the loan.  They will appreciate you telling them.  This might help from having to do multiple appraisals on your home at $x,xxx; each time you do a new investment.  Also see if they can they a short term construction loan to the primary loan document.  That way you don't have to liquidate your funds temporarily to cover any repairs.

1.  Interest rates are so low, you don't need to do a home equity loan to get great rates.  Normally Home equity loan rates are lower, since you are tied to the house.  

2.  Magnitude question.  Don't tie up your collateral.  How much collateral or cash do you need for the investment your looking at.  Example:  a.  You need $50,000 for your deal.  You take a loan on your home for $50,000; although you have $300,000 of equity in your house.  Up comes a Second deal and you need another $100,000; and you want to get it from your home.  Unless this deal's loan is with the same bank; a new bank won't want to take a Second Mortgage position on your home.  Your Equity in your home is tied up, and not usable.;  b.  You don't take a home equity loan out, but use your house for Collateral.  Same issue.

3.  In 2 above you could take as big of a loan out as possible and keep the Excess cash around.  I hate cash though.  That's what my bankers are for.

4.  Make sure your Bank has a high enough "Loan Cap Rate" so your collateral doesn't get tied up with them, if you have to get your next loan with a different bank.

5. Personal decision on using the house. Potential financial gain versus risk of having a place to live. Most loans require a personal guarantee, so your home even though not listed, is still at risk. Even if the business is an LLC, since you did a personal guarantee. To me this is more of a discussion of to what extent do your want to do leverage.

Attached is a picture of the signs next to each entry way.  Again this covers 80 acres and the lots are 2 to 20 acres.  Lot 5 which is not showing is our house and acres we are keeping.

Farm House on the property being finished.  Caretaker family just moved in yesterday.  This will be a mansion for them. This place originally was a work shed.  Then it was "Porkies" a bar.   They have a welding shop about a mile away, so it will be closer for his work and also cuts the distance to the kids school by about 2/3.  Most kids walk rain or shine to school.  They will also be able to rent their current house out for more income.  With the Covid lockdown, they can go in the yard and go swimming in the river.  They have been waiting for this move big time.

Below is a picture of the work crew, with one of the Son's that will live in the house.  Actually paying them $33 BZD per hour which is about $16 USD per hour.  This covers two carpenters and 2 laborers in total.  They have a furniture manufacturing shop about 2 miles down the road.  Due to Covid all of the business is dried up.  The pay is actually good for them and also they would be out of work right now.

Dirt contractors have been offsite for about 3 weeks.  This has helped since we had changes to get through the engineer.  Got those resolved Thursday.  He will send through City again for review.

Ended up grading the remainder of the hillside with my skid steer versus waiting on the dirt contractors.  Able to put down more grass seeding and start the next project of putting in a retaining wall.  Cleared the face along the hill.  Wall will be about 4 to 5 feet high.  Contractors are coming on Monday to install this and some other smaller walls.

Also below is the Construction entrance.  Originally had a small plastic tube in place, but the dirt was to high and would have eroded with all of the heavy trucks.  Got an old steel tube, I had and moved to a shallower area in the drainage so it doesn't sit so high.

Last picture below, you can see some of the earlier seeding we did.  We've been lucky with rain.  The oats sprouted real easy.  The Brome grass has taken off.  We should have a healthy stand by this fall.  Can't get a good shot of the Turkeys.  They come down during the day to feed on any of our oats that are still on the surface.  Even driving the skid steer they come within about 100 feet.  They are used to people since there is an apartment complex right next to us.

To build:

Land. $225 per your info

Buildings- rough $250,000

Infrastructure- concrete roads $200,000????; storm drains, no fence, storm retention pond needed?, check with city if you can build on the vacant land

Units is off.  Can’t put 92 units on .35 acres.  Missing something.  Setbacks, roads, etc

Ton of other questions.  Look at my storage startup checklist 101 post

The parking lot extra land is great.

Subject to market

Do a construction loan with a bank who does storage or apartment complexes. Ask for interest only.  Build out the rest of the land. At 65% or 18 months switch to SBA 504 or 7 to take advantage of longterm fixed rates and low 10 to 15% collateral.  This is probably going to put you at $100,000 to $150,000 cash or collateral input. 

Your cap rate process is probably off because of the vacant land value but not adding much revenue. 

Make a one week offer based on what works for you. Subject to due diligence. Even if it’s half price.  Then walk away.  Always be prepared to walk away. 

Forgot a big one.  Storm retention pond consideration. 

@daryl lesson

I didn’t spend all this time making notes for nothing. Attach some pictures of the next seafood meal or boil you have.  You can get tired of prime rib after a while up in the Midwest.     Thanks. Ha

@daryl lesson

I didn’t spend all this time making notes for nothing. Attach some pictures of the next seafood meal or boil you have.  You can get tired of prime rib after a while up in the Midwest.     Thanks. 

@pete Harper.   Forgot the tax sales.  This is actually pretty good.  My brother has purchased two subdivision lots and two 6 acre lots in a town for around $5,000 each.  He passed on a two hundred acre property

He said the secret is find out where all of the bidders have coffee or breakfast before the auction.   Talk with them and let them know which property you want and to stay away from The properties they want.   Small town USA.