All Forum Posts by: Don-Carlos Moniz

@Luke Tetreault, I don't mind looking at your numbers - send me a DM.

When you say it's your biggest deal to date, do you have other multifamilies? If you plan to place debt on the property, the lenders will want to see that you (or someone on your team) have experience with this size property. If you already have a 20+ unit property, then you should be good, and none of this information is new to you.

You will also need to meet the net worth and liquidity requirements.

Your relationship with the lender matters as well. I am shopping some loans now, and several regional banks have passed on the deals since there is no preexisting relationship with the borrower. There is plenty of groups willing to lend, but they are taking a harder look at the asset and/or the borrower.

@Miguel Norena, I am in the Fayetteville area, and it is a good market, but like the rest of the Southeast, prices have pushed up over the last few years.

One thing I would make sure you take into consideration with any of the coastal locations is insurance. Rates have been climbing, and now some companies won't cover coastal properties (or entire states in some cases).

My focus is the commercial side, and I have seen insurance become a deal breaker.

If you have any questions feel free to shoot me a DM.

@Kristi Miller, an 8.25% rate sounds high. I have been shopping loans, most regional banks have been in the low 7s (if they are taking on new clients), and agency debt is running in the upper-5 to low-6 range. All of the above advice is good, and the post from @Ian Stuart is gold.

I would encourage you to talk to one or two commercial mortgage brokers. You should be able to get them to underwrite the deal and your ability to qualify. You will probably find that the rate and terms they can help you secure will be worth their fee - if not, you will still walk away with an idea of where the market is and what you need to do to secure financing.

Good luck, and let us know where you land on financing.

@Seth Nightengale, I think your concerns are valid. As @Kyle Spearin said, it's about your risk tolerance and investing goals. The potential cash flow from STRs is great, but I would encourage you to run the numbers as a traditional long-term rental in case the short-term option doesn't work out.

Are you planning to do another house-hack on the new property, or will it be exclusively a STR? In the case of the latter, it may be difficult to secure a low downpayment loan because it will be viewed as an investment, not a primary residence. Now take what I say with a grain of salt - markets are in flux, and my expertise is on the commercial side, so I am sure someone can provide more insight on that side of the debt market.

Midterm rentals seem to be gaining popularity, so maybe reach out to corporate groups and hospital staffing departments/agencies to try and get some longer-term bookings. There was a recent podcast with an investor that is focused on mid-term rentals that was doing really well (I think it was on the main BP podcast).

@Tatiana Yurshevich,

Welcome to the forum. North Carolina is an attorney state, so you will have to retain the services of a lawyer to close.

I would encourage you to use a local (to your deal) attorney that specializes in real estate. Most of the attorneys have one (or more) title companies they routinely work with, but you don't have to use one of their preferred title companies.

I can recommend a couple of attorneys in the Fayetteville and Raleigh area. When looking for an attorney, make sure you ask if they will work a wholesale deal. Like a lot of states, wholesaling in NC is getting a lot of attention. It's not illegal, but some attorneys won't handle wholesale closings.

If you have any more questions, don't hesitate to ask.

@Jeffrey Stasz,

You are spot on about the disconnect in the market. We are seeing movement in the rates, but not what I would expect, given current conditions.

I think there is still too much liquidity in the market, and interest rates need to stay higher longer. I would prefer to see a contraction/recession rather than a more significant financial event.

On the commercial mortgage side, I just got off a group call - we are seeing some cracks in select regional and smaller lenders across national markets, but nothing like the rumors running across social media.

I could go on, but I don't want to hijack a post.

@John McKee, as you know, there is a lot that a lender looks at when underwriting. In many markets, I see DSCR as the constraint for most loans.

CAP rates get all the attention, but they only play a small part in a valuation.

My primary market has a market cap rate of just over 5%. We closed multiple properties under 5%, and the buyers are doing just fine.

If I represent a seller, I need to get them the best terms possible, usually the highest price. As a buyer's agent, I also need to get them the best terms possible, which generally means the lowest price.

We put our packets together like @Trevor Richardson, with multiple scenarios.

Stick to your numbers, but don't be afraid to review your underwriting assumptions with a broker.

Donivan,

Welcome to BP.  This is a great place to build a network and find answers to your questions.  If you haven't already found them, there are a couple of meetups in the Fayetteville area.  If you have any questions, don't hesitate to ask.

Don

@Catherine Scott,

I will echo what @Matthew McKee said.  Find a local investor or team of investors and bring something of value.

Local meet-ups are a great place to network, ask questions, and learn from others.  Another option is to try and find a job working in the industry.  There are many ways to break into real estate; you just have to find one that works for you.

Don 

@James York,

If you are talking about multifamily - it is not much different than residential.  I use CoStar for a lot of my initial research, but it is not the only tool available.  I don't think there is a perfect tool, so you have to find what works for you.

Don't get stuck on any one metric.  Spend a little time understanding the pros and cons of different market and asset measures.  A lot of folks fixate on cap rates and end up ruling out good investments.  Others will focus solely on current cash flow without consideration of future value.  I could go on, but I am sure you get the idea.

When you see a property come to market, reach out to the listing broker and get the financials.  Most will require you to sign a confidentiality agreement before they release the information.  

Don't hesitate to reach out to commercial brokers in your research area.  Good ones will have no problem jumping on a quick call and answering some questions.  If you offer to buy them a cup of coffee, you can probably get an hour of their time.  Just don't waste their time - have some questions ready.  I am always looking for an excuse to drink a free cup of coffee and talk real estate.

Don