All Forum Posts by: Craig Lessler

I am considering doing a cashout refinance on a property (a bundle of more than 10 condominiums in a complex) I own in North Phoenix, AZ and use those funds to buy another multi unit property for cash.

My criteria for the financing are:

1. $1.1M to $1.2M cash out refinance loan.

2. 70% or 75% LTV.

3. 30 Year Amortization.

4. Fixed Interest Rate for 10 Years.

5. Loan Term of 20, 25 or 30 years.

6. DSCR is 1.50x to 1.80x

7. 100% occupancy.

8. Very competitive interest rate.

9. No Points.

10. No Prepayment Penalty.

11. Low loan closing costs.

12. Possible Interest only for 2 or 3 years.

13. Non-Recourse, subject to standard bad actor carve outs preferred.

14. Rate Lock availability.

15. Prefer to get financing from a local bank for best terms.

16. Excellent credit score.

17. Property is professionally managed.

18. Property has been owned slightly over 1 year.

Questions:

1. Which lenders can lend with the above criteria and the terms for the financing?

2. How difficult is it to get loan approval?  What does the lender look at to approve the loan?

3. How long does it take to get a pre-approval?

4. Would it make more sense to take out separate loans on each condominium unit instead of taking out 1 commercial loan?  

5. Best places to shop the loan and get the best terms.

I would appreciate any guidance on getting commercial financing with the above criteria and any answers to my questions.

I am just looking for information at this point.

Thanks.

Craig

I am doing a 1031 exchange.  Can you send me details on the properties including photos, property condition, info on lease terms and expenses on each of the properties?

Does anyone know any reputable and quality apartment syndicators who take 1031 exchange money and are not structured as a Delaware Statutory Trust?

I would start by using the rental property calculators on Bigger Pockets.  You should be able to get a good handle on the rental value from comparable condo units which have rented in other developments nearby.  You should also put in an expense for property management equal to 8% of the rent even if you will be managing the property yourself as well as some expense for capital expenses and repairs even though this will be a new unit.  Once you plug in all the numbers in the Bigger Pockets rental property calculator, you can keep adjusting the purchase price to arrive at the price will yield $400 per month positive cash flow after all expenses.

I have a property manager in Gilbert whom I am using to manage 16 properties.  If you like, I can give you the name and number of the company.  They are reasonable.

If you are looking for a large tax shelter, you can invest in oil drilling projects.  You can an immediate tax deduction of approximately 85% of the money you invested in the first year.  However, it is too late to get a deduction for 2015.

Tat, your goal is very achievable.  However,  you need to be selective.  The numbers do not work in a majority of the deals.  One thing I did was I purchased a portfolio of 16 properties for $1.1M cash which will  be generating $90,000 to $100,000 per year cash flow (with hiring a property manager).  There are deals out there where you can purchase a portfolio of properties.  The location and quality of the property are crucial to achieving long term appreciation, retaining long term tenants and attracting quality tenants.  

If I can help you in anyway, please do not hesitate to contact me.

I wish you luck and I know you will succeed.

Th original contact price was $937,500 and the appraisal came in at $904,000.  The appraisal was thorough and based upon the comps and basically said the comps did not support the $937,500 price.

I agree.  An appraisal saved me $33,500 off the contract purchase pric of my primary residence which I bought with no financing contingency, but with an appraisal contingency.

The house was in a nice neighborhood where few homes go on the market.  After the contact wears executed and during the due diligence period, the appraisal came in at $33,500 less than he contract price.  I threatened to walk away from the deal if the price was not lowered to the appraised value.  Eventually, the seller agreed.

Has it not been for the appraisal, I would have overpaid for my dream home.

Very simply, I would look at the CAP rate on your property with your current rent and expenses with the property valued at $310,000. If your CAP rate is low, i.e. Under 7 %, then, I would sell the property and do a 1031 tax deferred exchange into another good quality income property with a higher CAP rate. However, you need to add in the cost of a property manager, vacancy and capital expenditures when you do your calculations. The goal is to have your equity work harder for you.