All Forum Posts by: Steve Wilmers

Hi @Craig Ts-

Great question!

Short answer: There's not much of a difference unless you have a separate entity holding the properties.

Longer answer: There is some additional flexibility in how to structure a commercial line of credit.  For example, the commercial line could list a business entity as the borrower instead of yourself.  If the entity is strong enough on its own (good cash flow, and the properties you hold have a significant amount of equity), you (personally) may not need to be attached to the loan at all.  However, more often than not the bank will want to add you (personally) as a guarantor to the note.  In my experience, smaller/local banks and credit unions are a better bet if you'd like to try going this route.

Hi @Khanh Tran

If it were me I would wait until the HELOC is settled. Typically before you close on the HELOC the bank will have you sign a statement saying something along the lines of 'your credit status hasn't significantly changed and you have not applied for new credit since the HELOC application was submitted'.

If you have applied for another loan, then your HELOC application would likely go back to underwriting and delay the closing as a result. I've heard stories where someone opened a simple credit card prior to closing on their mortgage and it delayed the process.

This may be different if you're using the same lending institution for both the HELOC and the refinance, just make sure if the loans are going through two different departments that everyone is on the same page.

Best of luck!

Hi @Stacy C.-

I was in a familiar situation a little over a year ago.  I ended up going with the appraisal, cost between $300-$400, which gave the higher appraised value that I was expecting.  

My house is located in more of an urban area, so there were multiple comparable sales, and I was tracking the comparable sales myself using sites such as Zillow to estimate an appraised value of my house.  

If I were you, I'd wait until I found some comparable sales in the area myself before hiring out the appraisal.  In addition, see if the bank will use the same appraiser as the one that originally appraised the property.  They will be the only one (outside of you) that will be able to recognize the before/after difference in appearance of the property.

Realized I was typing my thought process and not the direct answer to the question.  I haven't seen a direct acquisition loan structured based on the value.

Hi @Charles Kennedy,

I've seen a few deals done that way, but mostly as a cash-out refi using a commercial loan after the borrower had already acquired the property using another source of financing or cash (even though no improvements were made to warrant the increased loan amount). 

Hi @Daniel L.,

I've used Simplisafe for my personal residence and it has worked well.  User friendly and easy to set up.

Hi @Thomas Utley

Welcome to BP! 

Curious as to if you have looked at opportunities closer to home?  I grew up not far from Attica but haven't spent much time looking into that market for opportunities, it's just always in the back of my mind because of the lower price points on properties.

Hi @James Brown,

To answer your first question, yes, new construction commercial loans are generally based on the rents the units will generate as well as the underlying value of the completed project.  Larger developments are riskier from a lending perspective because potential cost overruns and delays are magnified with the size of the project.  For this reason, they'll take into account your experience with this size of a development.

For what it's worth, I'd recommend splitting your project into multiple phases.  Start smaller with one or two buildings and get those leased up, and expand gradually.  Even if the bank knows you have a larger plan for the development, they are generally more comfortable with this approach. 

Best of Luck! 

@Michael Diggle

Regarding the credit report question, I wouldn't plan on this thing simply aging off of your report.  If the balance is still out there, even if there's no action on it for many years, it could still pop up on your report down the road because the money is still owed. 

Even if the current financial institution isn't reporting it, they could sell it to another collector and then that collector could begin reporting it to the credit bureaus.

Hi Josh - I'm going to take the neutral "Switzerland" role on this one, but leaning towards agreeing with you.

A good credit score seems to be the best way to get the lowest rate, especially if its your personal residence because the process is quite efficient.  On the other end, a low enough score may knock someone out of consideration altogether.

However, even individuals with good credit scores can have enough debt to weigh down the Debt/Income ratio to a point where they are no eligible for traditional financing. 

Long story short, there's a reason that both are used.