All Forum Posts by: Eric Schleif

@Chris Pochari I'm not the right guy to answer that. I underwrite/broker/place commercial loans with a minimum loan amount of about $2MM and an average deal size closer to $12MM. Borrowers on deals this size are being reviewed financially on liquidity, net worth, and Real Estate Owned (REO) schedules, not so much on salary and DTI ratios.

Sub $500K loans are not something I can provide valuable insight on.

@Mike Dymski already pointed out the Freddie and Fannie Small Loan Program guidelines for a Borrower's net worth and liquidity. I will note these are guidelines and not set in stone. You can get a waiver from them under certain circumstances. We've done that a few times this year alone. These programs are for loans in the $1MM to $5MM range. I've found that the smaller local lenders defer to something similar in underwriting their deals, but each market is different. Also you need to keep in mind that underwriting a borrower for $400K multi-family loan and a $10 million multi-family loan are 2 totally different things.

I also agree with @Jay Hinrichs. I think a lot of people get caught up in exactly what lenders will require in terms of liquidity and net worth numbers when underwriting the Borrower. What lenders really care about is:

Do you have enough money for the down payment? 

Do you have enough cash in reserve (after your down payment) to carry the building in case a problem arises that constricts cash flow?

Do you have experience with the type of asset you are purchasing?

Is the rest of your real estate portfolio performing and cash flowing?

How's your credit look? Do you have any bankruptcies? Do you have any judgements? Any ongoing lawsuits or criminal proceedings? Any foreclosures? 

The questions go on but you get the idea. And don't think that you have to fit perfectly in a bank's underwriting box for them to be able to lend to you. It's just a matter of the lender understanding who their borrower is and getting comfortable from a risk and credit standpoint. Case in point, we just scheduled a closing next week on a great bank deal for a client who had a foreclosure a few years ago.

Best of Luck.

Not to sound biased, but I think your best bet to is to find a good commercial mortgage broker in Ohio. They will add a ton of value providing some solutions to your current situation and getting you some decent loan terms.   

Keith Rorer what's the purchase price?

@Michael Wolffs yes you're correct that the loan metrics such as LTV and DCR must support the loan. In my experience banks don't like large refi cash outs within the first 2 years. Their view is you have no equity or skin in the game if the asset stops performing and you're more likely to walk away and hand them the keys.

But we're talking about a potential loan of approximately $600k and my area of expertise is for loans starting at $1 million and above. Maybe smaller local banks don't mind a large cash out refi.

Best of luck.

Ok. But how much in rehab did you spend? I'm guessing it's a lot less than $375k. You're big hurdle is going to be getting a lender comfortable giving you a big cash out in the short time you owned it.

How long have you owned the building and what was your purchase price?

James Wise us bank under 7?? I got quoted 3.25% by us bank and got retraded. Bad news.

Where specifically in Ohio? I find the lenders change in Cincinnati vs Cleveland areas. As Joel said, your deal is probably too small for a broker to get involved with. 

But to answer your question, Spring Valley Bank, Talmer Bank, Guardian Savings Bank, and Valley Central Bank are good local banks. 

Can you provide a little more detail on what your looking for? What size and $$ amounts are the properties you are looking for? It's a completely different answer if you're looking at 1-4 family sub $500k or 20+ units over $1 million.