All Forum Posts by: James Klafehn

Wow a local!!! Hello there!

Yes I do. The assessment office just sent me my notice. I am thinking about fighting it but unfortunately I think it is pretty accurate. I have two houses on the parcel that are worth about $250k - $300K each.

No I haven't posted anywhere except this thread. I thought Id post here first and formulate a plan from there now that its clear that the banking option isn't panning out.

I'm taking it out on you folks? I'm sorry if it seems that way. I appreciate everyone's input. I'm sorry if my text is being misunderstood as being aggressive in some way. I really do need and appreciate the suggestions.

Yes I have done some Googling, I dont see anything quite like what I am doing here. I guess Ill just post it. The property is called Emma's Acres. Feel free to google it and check out my website. 

Its unique and I have received an overwhelming amount of people who want to live here. I wish I could build the apartments faster. I also plan to replicate this model in other "green" college towns that are similar to Ithaca. But I try not to waste too much time thinking about that. For now I need to get this place done. I know everyone thinks that their great idea is the best thing since sliced bread. I am realistic about that. But this model really is the best thing since sliced bread. :)

No I haven't looked into the costs to subdivide. I imagine it would be $2-4k. Not a lot but I didn't think I needed to so I didn't. If that's the option that you all are suggesting I will look into it more.

"Good Luck James! Just remember, every "no" gets you one closer to "Yes!"" - I love it! Thank you!

Thank you for the post. Yes being a landlord is hard. And yes, I know how difficult Cities can be to work with. I also pay for mandatory inspections and reinspections. I had to pay for a $500 key box so the fire department can get into each apartment if there is ever a fire. It was a new rule the city officials decided to enact this year. That was in addition do the mandatory electrical inspections, heating inspections, fire safety inspections and code inspections that are required every 4 years. Ithaca is a hard place to do business but it can be rewarding.

I have been doing this for a while now. I have definitely had more than my fair share of problems but I overcame them all one by one. I pride myself on being good at that. But this issue, with the banks, is especially crappy. I have done my homework, I have adapted, they tell me no for X reason, I solve that, then there happens to be a Y reason, solve that, then there is a Z reason. It so frustrating. Meanwhile I see other large developers come into my area putting up these huge apartment buildings that don't conform to current zoning restrictions. They get approved anyway and then they get huge tax abatements.

I already have, I can partition it off into 5 lots, it would just take time, money and a survey.

So your suggesting that is the best way? I dont see how that would make too much of a difference. I think a single, large commercial loan on the entire property is the best way to go. Which is also what I have been told by other people. 

Subdividing seems like a waste of time and resources when the property isnt being developed to sell off lots.

I have looked for just $210k to complete one more duplex all the way up to $960k to complete 3 more. 

As for collateral, they would be investing in a property that only has a $160k loan on it and is currently appraised at $450k, as it sits right now, before the 3 new duplexes are done. Once the property is completed this will be a $2 million dollar property. I also have 2 other houses and each of those have equity in them but I shouldnt have to tap those.

I definitely have "skin in the game". I purchased the property for a great price with 20% down, that's my skin in the game. The mortgage on the property has a balance of $160k and the property is valued at $450k. I was never denied based on my lack of skin. But thank you for the input. I do appreciate it.

Yes the credit cards look bad. But the banks seem to understand that my scores will immediately improve once I receive their loan and pay them off. I can do it on my own with my profits but I want to grow faster. I don't want to wait a year. The market is there and these apartments are needed NOW. I don't want to wait when someone could copy my business plan in the meantime.

Yes, I am looking for a hard money lender. I know its risky but I have the income to pay it off. I did offer that plan Joe, it didn't take. Id really prefer not to waste the time and money subdividing and I definitely am never going to sell any of the duplexes. My exit strategy is death. I still own the first house I ever purchased. haha Its been printing money for me for 15 years now. When I am making $1400 per apartment there is no reason to sell. Ithaca is a hot rental market and selling has never been a part of my game plan.

So if anyone knows of a private lender or a hard money lender please let me know. I know there is money to be made because I am doing it already. I just want to do it faster.

There is nothing I am hiding. If there was a serious investor considering financing me I would be an open book.

First, Mike, Ill have to briefly tell you about the property. When I bought it there was a single duplex on 10 acres. I am building 4 additional duplexes that are all passive solar. My area is very "green" and the apartments are in high demand. 

The first time I was denied was in 2013. I was denied because I already had a mortgage through a local bank on the entire property. Traditional banks didn't want to give me a construction loan and be in second position on a mortgage. I never subdivided because I never plan on selling and I didn't want to waste the money surveying etc. In hindsight I think subdividing would've helped. It was just a cash intensive process and I was short on cash.

I also did not have quite enough equity yet to clear enough money to complete an additional house. So, immediately after being denied for the first loan, I applied for a commercial loan to have one large loan on the property and it would've given me enough to build the first of the new duplexes. I was denied because my after tax income was too low for their standards. As any real estate investor knows, one of the many benefits of investing in real estate is the tax deductions. Because I am good at using them, my after tax income was too low. I showed them spreadsheets and pointed out that my income was going to be increasing in 2015 (which it did) but they couldn't approve me because they were constrained by their rules. I tried the same thing with 2 other traditional banks and received the same responses.

So I built the first of the 4 new duplexes myself with the help of a builder. I did about 30% of the work myself to save money. In order to finance it I sat down one night and applied for 10 low interest rate credit cards. I know its risky but they have long introductory offers and/or low apr's. I maxed all of them and also used the little cash that I had on hand. Everything is going great! The house was done in June of 2016. It was rented 4 months in advance. I received 6 applications for the apartment in under a week. (I charge for people to apply for my apartments so that says a lot). The rent covers all of the credit card payments and utility bills. Its going very well. 

Unfortunately use of the credit cards has tanked my credit score. I went from 800 to about 610. Now I am getting denied because my credit score is too low and because my DTI is too high, both are solely due to the credit cards. I show the bank all of my figures (I have a very nice proposal that I give banks which I have perfected over the years of hearing "no") and I show them that once I pay them off with the funds they give me, my credit score will go back up and my DTI will go back down.

I know the right thing to do is to wait a year, pay off the credit cards, and look for funds again. But back in 2013 when I had high credit I still couldnt get a loan. I was just getting denied based on other reasons. Its so frustrating. I am making great money, the outlook in my area is outstanding, and my rentals are in huge demand.

I have reached out to everyone I know and I cant find any investors. I need to find a private lender who is willing to loan me the capitol I need. 

um because its making money every month after all the bills are paid. lol

Your link was blocked by BP. Maybe you can pm it to me or post it with spaces.