All Forum Posts by: Eric Schleif

Congrats Brian. You must have liked that appraisal when it came in.

There are lenders who will offer I/O on these types of assets, but the deal sizes you are looking will likely not qualify. They are too small in my experience. The last full term I/O deal we placed was a CMBS deal over $10MM in Florida. CMBS spreads are pretty crazy right now and not many people are going that route. To answer your other questions, lenders will usually increase rates slightly for an I/O loan and they will be for less leverage (less than 65%LTV). Being out of state doesn't help your situation, but you can work around it.

There are other aspects that play into this such as your financial strength, real estate experience, asset condition, tenancy, asset class, etc.

Chris D. I'm working on a few of these syndicated deals right now. I'm no expert on the structuring the syndication but as far as financing is concerned You can get proceeds up to 80% LTV. But as Kit England said the managing member and or general partner would have to show at least a net worth equal to the loan amount and liquidity equal to 1 year of P&I payments after taking into account the down payment and closing costs. They would also have to show tax returns and have good credit. It also helps if the managing member or general partner have real estate experience and portfolio of other cash flowing assets. Hope this helps.

Jay Hinrichs very true. In my case, the borrowers were all coming off CMBS loans and were experienced enough to know better. Your example in the original post gave me a few laughs. I especially like the requirement that you need to be willing to pay the loan back. It's sad that people new to real estate will sometimes fall for scams like this. I do see a lot of people posting on bigger pockets asking about these scams so hopefully fewer people will lose money with them. Be well.

Some brokers are pulling fast ones too. We lost three deals this quarter to brokers promising rates 75 to 100 bps lower than the market. We tell them that it's unrealistic but the client is confident because they have some sort of a non-binding LOI. A month or so later the client gets retraded at commitment and are too far down the road to do much about it.

We see these unsold share coop and fractured condo deals every so often. The LTV and 25 year amortization sounds about right. The banks don't seem to eager to go high leverage on these deals. Do you think your portfolio will appraise for over $2.14MM? The rate and bank fee seem a bit high, but that might be the market in FL. I'm assuming the 5.25% is a floor rate. What's the spread on the rate reset?

Just compare what you are paying now against the new payments and additional cash. If you're comfortable with the cash flow after the new payments and have enough cash to meet your new capital needs then it sounds like a good deal.

@Scott W. We've placed several non-recourse commercial deals in Ohio over the past few months. It's much easier to do at 65% LTV and gets tricky, but not impossible, at 75% LTV. PM me if want to go over this in more detail.

Are you looking to finance 1-4 family houses or multi-family buildings?

Towne properties is a good regional property manager with experience in larger complexes.

These assets have been trading at very low cap rates in the city. I'm not sure you'll be able to find any at a price to meet your yield requirements.