All Forum Posts by: Danielle D.

I'm currently working with two banks to lower payments on my commercial mortgage. The first is offering to refi our loan at a 75% LTV against an appraisal done a month ago. The second, our existing bank, is offering a loan rate reduction with no out-of-pocket. They only have an appraisal done in May 07, which values our property 12% higher. Against the old appraisal our LTV would be 75% but against the new one (done for the refi) it's 85%. Our current bank has not asked for a new appraisal.

My question is: Is our current bank in violation of any regulations in offering us a rate reduction without a current appraisal? IE., If auditors tag our account as too high an LTV, could we be forced to pay out-of-pocket costs on the rate reduction after the fact?

I can't find ANY info on the web discussing rate resets on commercial mortgages.

Thanks for any insights!
Danielle

Hello all,

I have a couple of questions regarding the analysis in a percentage change of ownership and I'm hoping to get some insights from the group.

I own a commercial, free standing building with a partner. We're 50/50 on the land and building, and she runs the occupying business (we used to own the business together and she bought me out).

The original loan was $1.95m and is now down to $1.84m. I am considering putting in an additional $400k and refinancing to a lower rate. The building has excellent cash flow and a 10 year lease. Here are my questions:

1. How would I calculate my share of the profits post-$400k investment? I've tried both $400/$1.95m and $400k/$1.84m and added those percentages to my original 50% share but that leaves my partner with LESS profit than she would've taken under the old financing structure, so that doesn't seem right. What am I missing?

2. Can we retain our 50/50 "voting/ownership" interests and have the K1s reflect that I would take a larger share of the profits? Not sure of the IRS rules around this.

I know this is more complicated than what I can put in this email, so feel free to ask any questions.

Thanks!
Danielle

Thanks to all for the insights and advice. Now I have some thinking to do. Jon, you verified what I've seen based on the limited listings I've looked at. However, I do still think pulling the equity out is a good move for me. With an effective rate (after tax benefits) of 3.75% on a mortgage, I'm convinced there's an investment out there that can cover that and then some.

As as aside, I see from another post that you've worked/learned from Susan Lyons-Lassiter. I'd love to talk to you off-line about your experience.

Best,
Danielle

I have a good amount of equity in a primary residence and want to pull it out to invest in one or two commercial, multi-family buildings. The trouble is that I can't find anything out there with a cash-on-cash return that approaches my 10% threshold. This is because of the 5% I'd have to pay to pull the equity out of my home.

I've been looking at commercial multi-family for a couple of reasons. A. I want a passive investment (not interested in managing multiple homes myself) and B. Value added to a multi-family through rent increases, cap ex, better management, etc. nets value add immediately (versus SFH which follow the neighborhood appreciation rates).

I would like to build an income portfolio over the next 10 years at which point I'll retire and live on the income.

I'm not married to the idea of multi-family, so any advice on where to seek higher cash-on-cash rtns is appreciated.

Danielle