All Forum Posts by: Daniel Schiller

Originally posted by @Matt S.:

@Daniel Schiller would you mind expanding on how portfolio loans are the same as cash (from the seller's perspective)? I'm new to this and learning about portfolio loans, but I haven't seen anything on how they work (more about when you need them and how to find them). Once it's approved, are you drawing down funds like a line of credit?

sure.  they are viewed the same as cash by any seller when you don't check the 3rd Party Contingent box; and generally can close immediately following your EM / inspection period.   some of the other commenters are saying cash-only, but from their perspective it doesn't matter and they wont know where your funds are coming from unless you go with a conforming loan.    It's no different than drawing margin on a brokerage account, then doing a traditional refi 30 days after closing.   

regarding how they work, you stick to regional banks and only provide your personal balance sheet, LLC info and minor items for the loan... but it will be with a personal guarantee until you build a large enough relationship.

so you make that relationship, find your deal, work the numbers, send them to your banker with a brief pitch and overview, and that's it.  I haven't been turned down once.    That said, I did buy my first MF property with a loan against stocks, then did a refi via portfolio loan.   proving you have the cash and collateral makes the process of building banking relationship much easier.   

1) they need to personally own investment properties 2) they must bring off-market deals 3) 1+2= lots of hustle.

If you have the cash to consider this, you should just go to a regional bank and get a portfolio loan / non-confirming / in-house. Then you are signing the deal non-contingent on 3rd Party financing and it’s the same as cash from the sellers perspective, which will put your offer in a more favorable light.

I’m always happy to work deals in TX. Shoot me a message with more details.

Montrose (South of Dallas St.), Midtown, Upper Kirby were the main intown neighborhoods that did not flood at all.    

The Katy/CR area will be interesting as few of those homes had flood insurance.   There might be decent deals at bank debt if you have your own team and internalize renovation costs.   I'm dubious at best on that area... but I imagine a lot of people will want to walk away free and clear.   

I'm a Katrina refugee who just rode out Harvey and managed to stay dry; I've lived around the Gulf Coast most of my life.   

The biggest issue you will have investing in the flood zone is managing your costs.  Following Katrina anyone who could lift a hammer was making $15/hr and it only went to the stratosphere for skilled labourers like plumbers and electricians.   

Per a previous comment above, if you don't have an existing team on the ground and extensive experience dealing with insurance firms, I would suggest avoiding the flood zones.   This is the 3rd major flood in the Houston area in 3 years.   

South Florida might be a little more interesting if it gets hit hard, but I doubt it.  That market is largely foreign money tucked under a mattress, so I don't see much distressed opportunity anywhere you would want to own regardless of the outcome.  I'm more concerned that UM just cancelled their game vs Arkansas St.    

Regarding ethics... its mostly contractors that screw people in times of crisis; which will directly affect you as a potential investor.    A lot of people will happily hand you their keys to avoid bankruptcy.   Question is what are YOU going to do with those properties?   

The numbers feel off at first glance.  The vacancy rate says "deferred maintenance", and you said the deposit will stretch you thin.   

Regarding the set-up you described - 5, 4-unit buildings - in 2012 I was able to get the same thing treated non-commercial via a regional lender in TX.   

The on-site house is interesting to repurpose.  What's the current management company charging?  

Just to clarify - you are already up on your cards and require and additional $40-50k to renovate the 4-plex... if you go at it from a construction / HELOC / HEL that still only gets you to 55% LTV at your listed ARV, which is more than acceptable for most lenders.

Instead of refinancing the duplex, then the 4-plex, and potentially your primary residence, it might be worth considering combining the investment properties into one new loan if possible.  I've had mixed success doing so in TX.   Regardless, you should attempt to do all these deals with the same lender. 

You didn't mention whether your existing mortgages are conforming or portfolio.  If portfolio, just go to your lender and pitch them how much they don't wan't the properties.   If not, start looking into your regional banks and see what they offer for old-school lending - its a lot less paper work and you will get to know your lender while building a partnership.  Generally they need a personal balance sheet, last 3 years tax returns, and no outstanding litigation.    

You mentioned PA.  PNC has a lot of useful information on their website:  https://www.pnc.com/en/corporate-and-institutional...

Regarding your final question, handle the financing and get these properties on the market asap!   

Best luck.    

Look forward to seeing y'all there!