All Forum Posts by: Eric Schleif

We've closed deals in 47 states. I just sent you a PM.

What size deals are in looking at in terms of dollars and number of units? I'm assuming you're looking at multi family assets.

Todd,

I suggest you call a commercial mortgage broker.  Or at the very least call more local/regional banks. You should certainly be able find better pricing. I'd think you should be able to find a local bank to give you something in mid 4's at 20 or 25 year amortization. The 15 year amortization will kill your cash flow. 

The rates on @Conor Freeman Freddie SBL deal was for a top market property. Detroit is in a standard market so you'd have to add 50 - 60 bps to the rate right off the top because of the smaller market. That program uses market sizes in it its pricing. The markets are categorized as very small, small, standard, and top. There's about 3,100 - 3,200 markets in the US and only about 55 - 60 of them are classified as top markets. This program is typically for loans sized between $1MM and $5MM (there is usually some wiggle room for top markets).  But please keep in mind that I'm no expert in this space since my deals usually start in the $2MM and up range.

I'd need more info on what your looking to purchase. How many units, purchase price, NOI, etc.

Todd,

As everyone said rates are fairly fluid. I suggest you contact a local commercial loan officer or mortgage broker where you are looking to acquire multi-family assets. Become friendly with them and then you can give them a quick call or e-mail to see where rates are at the moment you are analyzing a particular deal. Best of luck. 

Carlo C. Most local banks in secondary and tertiary markets will be full recourse at 80% LTV. I don't know any banks that are going to allow you to have a seller second lien on the property. Do you have the liquidity for the down payment, closing costs, etc? If you do you should talk to a commercial mortgage broker or banker who can provide a Freddie SBL loan to you. Without knowing much about this deal other than an approximate loan size of $2.5 MM that is where you will get your best terms. If you don't have the liquidity to take this asset down I don't know what to tell you. Maybe someone has some creative financing ideas. Maybe bring on a partner. As far as your question regarding living trusts and LLCs I'm not an attorney and can't really comment other than we have several high net worth clients who set up LLCs that are wholly owned by the living trust to purchase an asset. Hope this helps.

Dan,

I took a quick look at your analysis. It's a unique asset, so it's difficult to provide valuable feedback with limited details. I will comment from the finance side... I see you are assuming a 60% LTV loan at 5%. You have an un-flagged motel in an upstate NY tertiary market and are assuming 90% occupancy. Have you reached out to any lenders? I don't think it's realistic. Lenders will not underwrite to 90% occupancy for hospitality. Just to put in prospective, a prime luxury flag in mid town NYC won't be underwritten to 90% occupancy. And your answers for trash collection and having a tenant take care of maid service and other day to day motel operations will also be viewed unfavorably. I don't mean to discourage you, but I can't see how this gets financed as you have it planned.

Best of Luck.

Mike Dymski as James Eng said you'd have to satisfy any 2nd liens to get agency debt. I don't really know any lenders that will allow a 2nd lien on an asset in the likely scenarios we are talking about. We do a good amount of deals with mezz debt but I don't think that was what you were asking about. It also really depends on your market as far as 80% financing goes. Freddie/Fannie is great because they are national and can lend pretty much anywhere. But you have to know your markets. We place 80% ltv loans all day in the NYC metro area (and other markets) with 30 year amort and they are rarely with Freddie/Fannie. The local banks have much better terms. In other markets Freddie/Fannie is 100% better in terms. You just need to know the market you're in. Or call me, lol.

Here's an article that came out a couple of days ago. It pretty much validates your thoughts on Class A in the major markets...

http://therealdeal.com/2016/07/27/nyc-rental-marke...

@Carlo C. That's a ridiculous quote...something's off. Feel free to PM to talk through the deal in more detail. 

@Mark Mosch Good strategy with the Freddie supplemental. All you really have to do is pass the refi test, right? I had one blowup because of that a few years back.