All Forum Posts by: Steve L.

Maybe in your situation these items are similar to your "manage other people's money" comment.  

Hard Money Lender

Syndicator

I think it's pretty hard to "flop" a rental.  Unless you estimate rent off by 20-40% or more.  A good exit strategy would be to buy it with enough margin that you could sell it at a gain if you couldn't find a satisfactory tenant.    

Usually wholesaling/retailing your issue would be you overestimated the ARV or underestimated the rehab.

It is easy.  FirstTuesday is good training.

Do classes online and take as many mock exams as you can.  I took a weekend crash course and passed easily the first time.

Trevor, there are pros and cons about being in Southern California.

SoCal has are hundreds of thousands of opportunities (houses and commercial properties) for investors to buy.  We also have tons of professional flippers and investors.  Banks and hard money lenders are easy to find and very aggressive.  Lastly, SoCal offers some of the best low cost training available.  I think @Ellis San Jose runs a FIBI in Westlake Village area?

As far as rentals, you might need to venture west or north to find properties that will produce cash flow.  I would suggest you don't buy anything that has a 0.5% rent to cost ratio.  

You can also look at some of the challenges of SoCal as benefits.  If you find a great deal, there is likely going to be a bidding war from investors who would pay you a premium for it.  If you find a good rental, lots of people want to live in this area so it should be easy to find tenants.  You probably won't have to winterize a house or shovel snow.  California is a tenant friendly state, so maybe there will be some distressed Sellers who would rather allow you to handle the eviction and sell you their house at a discount because you can take care of this?  

To me it sounds like the bank is doing their math wrong.  What are your actual expenses on the property?

Let's say your expenses are 50%, just for easy math.

$1,050 for debt service with a 1.3 coverage. Let's say the bank loans you money at 5% amortized over 25 years. They should loan you 138,000 @ 5% with a monthly payment of $806.73. Most banks allow 1.25 DSCR and some do 30 year amortization, so this would make your loan higher.

To me it seems like they think your cash flow for debt service is about $569.97.  If that is the case on a free and clear investment of $200k-$300k you probably should sell it and look for something better.  

Call a title company.  They have types/zoning of commercial.  Each county/title company might have different information available.

LA County has the following from a list I got:

Phase 1's in California are $2,500 or so.  ESRs (I think it's called) are $300-500.  On a small apartment I have never had a bank require a Phase 1.  Not sure what zoning is?  

Jerri, I don't think you can do this.  Most banks don't want to see it listed for 3-6 months to do a refinance. 

Most commercial lenders (big or small) have their own requirements. Go with whatever is best.

Typically a DSCR of 1.25 is required by everyone. Phase 1 and environmental reports can vary. Some lenders do a cheap environmental report.

I would not address it and it wouldn't make me mad.