All Forum Posts by: Eric Schleif

I'm a little confused by your post. When you mention you are finding deals at 60% ARV it sounds like you are looking for acquisition financing and not a refi. So are you looking for a lender to offer 75% of the appraised value on an acquisition or on a recently acquired property with little to no seasoning? Also what size assets and loan amounts are we talking about here?

@Jonathan Blandino

I work mainly as a commercial underwriter for a large national firm and do some brokering on the side through my company. The only experience I have with a residential mortgage broker is when I purchased my house. From what I know it's mostly a sales position where you would have to find clients. I would look into job openings at bank branches or mortgage brokerage shops and go from there. When I was graduating college I interviewed at Wells Fargo for a mortgage broker position. From what I remember I would have worked at a local branch and solicited the banks clients for loans. There are also a lot of residential mortgage brokers on BP. They would offer much better advice on how to start out than me. Best of Luck.

@Jonathan Blandino 

I'm assuming you are looking into becoming a residential mortgage broker and not a commercial mortgage broker (big difference). As you are already aware, you have to be licensed to be a residential mortgage broker NJ. You don't need a $50K net worth. That's only if you are forming your own residential brokerage company and are therefore required to get bonded. To get bonded you need a minimum net worth of $50K among other things. I believe what you are looking for a Individual Residential Mortgage Broker License. There are background checks, classes, tests, etc. that are required to get your individual license. Net worth is not one of them. 

I think the bigger issue is that you're looking for 100% financing with virtually no skin in the game. Not sure whose doing that and I would be leery of anyone who says they can, especially if they require fees upfront. 

And you an also try reaching out the Community Preservation Corporation (CPC). Their website is www.communityp.com They are one of the largest private not for profit affordable housing lenders in the country. I actually began my career with them. Can't believe I forgot to mention them in my original post.

Joshua, There are several lending and tax abatement programs available for affordable housing development in NYC. Most are run through the New York City Department of Housing Preservation and Development (HPD). This is a complex topic to try and cover in a forum post because the programs and their requirements all vary significantly and I would need a lot more information on the project to be able to give any meaningful feedback. It sounds like this might be your first time looking at developing an affordable multi-family deal. If that's the case, any of the subsidy lenders or agencies are going to require you partner up with an experienced affordable housing developer. Going the LIHTC route is also very complex. Your competing for the tax credits with other developers. There are only so many credits allocated per state and they are awarded based on a project's bid or application score. I've seen not for profit developers who only do LIHTC deals with tons of experience not get awarded credits quite often. I think you should reach out to HPD and see if they can give some advice or some contacts for affordable housing developers and go from there. Good luck.

I would say this is a definite pass. Industrial assets are very complicated. All of the buildings, regardless of condition, are obsolete if they have been vacant for 20 years. There is no way they will meet tenant demands for floor loads, ceiling heights, loading docks, etc. As others have pointed out you have to be careful about environmental issues. Changing the use from industrial to office could also be difficult. You have to be aware of the zoning. If the site isn't zoned for office you'll have to get a variance from the municipality. I'm working on financing a deal in CT that was industrial and will be repositioned into multi family apartments. It took my client 2 years and several hundred thousand dollars to get the zoning changed and plans approved. He's been developing real estate for 20 years with a great track record and has substantial net worth. It's been very difficult to get a bank to commit to financing the project. Deals like you have described are very tricky on many levels and you have to careful.

Joel's post hit the nail on the head. Will the loan amount be over $1 million? Anything under $2 million is generally considered small for commercial deals. Also be sure to get an arrears report. Just because all the units are occupied doesn't mean everyone is paying.

You will certainly find better cap rates in Arizona when compared the NYC metro area. On the finance side, I've been fairly active in AZ. A few months ago we were working on a retail mall in Phoenix and I'm currently working on a large multi-family acquisition. I'm not sure who your NY banking relationships are with, but there a few NY banks we place a lot business with who are aggressively lending in AZ. If you have any questions on underwriting or need any assistance in obtaining financing let me know. 

What do mean by comps are all over the place? Are you looking at the comps on a $ psf basis? 

Focus on units that are similar in size. Smaller units will pay more psf than larger units. When was the last time a business occupied the vacant and what were they paying? 

You also want to find comps in similar buildings and locations. You don't want to compare a retail store front on a mid-block building with no parking to a store in an anchored strip mall.

We closed two smaller multi-family deals in East Orange this year. None of them had retail so I'm not much help getting actual comps. I see you are a residential real estate agent. Do you have any local contacts who are commercial real estate agents? I'd imagine they can tell you pretty quickly what the comps are.