All Forum Posts by: Account Closed

Are you looking for short term acquisition money or permanent financing? Short term, a HML is probably your best bet, especially if timing is an issue. If you are looking for permanent financing, not sure how deep the market is for 90% LTV investor loans, but you might find something. If you can reposition the asset (repair, raise rent), you might get closer to that goal. In that case, look for flexible interim financing that will allow you to pay off without penalty and then rely on the increased value to lower your equity requirement when you refi.

Trevor, you can start by contacting area HMLs to get a feel for what they are charging.  As far as what documents are needed, that question is best answered by a local attorney.  Regarding proximity, keep in mind you, or someone you hire (and trust) will need to inspect the properties prior to closing and along the way as repair draws are made.

Personally, I would keep them separate.  Without seeing a plat, I don't know why there are four on three lots, but in theory, keeping them separate will give you more flexibility if you ever need to sell less than all of them.  You can always market them together...

Engage an attorney to review the loan documents.  What is the reason for the increase in mortgage payment?  Is this an adjustable rate mortgage?  Is it matured?  A lender can't just arbitrarily change the required payment.  If the loan documents don't set forth a process for the payments to adjust, then I would recommend continuing to make payments at the normal amount until you get it resolved.

If they are participating in the profits and not charging interest, they will be more like a limited partner than a lender.  If you set it up as a partnership, normally, the limited partners (those who bring the money) would receive their money back and a preferred return on investment of 8-10%.  After that, remaining proceeds would be split between the general partner (you) and the limited partners.  This could be anywhere from 50/50 to 80/20 (80% to the LP's).

Using a lender in the same general area as the property will usually work better for you.  They know and understand the market better.  Keep in mind, if you are looking to fix and flip, traditional lenders may not be your best bet.  In that case, a hard money lender or private lender will likely be able to provide more flexibility.

@Cory S, what was your property appraised for in 1999?  I agree RE taxes in the State are obnoxious, but to say your taxes increased from $363 in 1999 to over $5,000 in 2018 only tells one side of the story.  Sounds like you are sitting on an asset that has appreciated considerably.  Depending on where your property is located, you can expect real estate taxes to be around 3% of the county's assessed value.  ($100K assessed value will equate to around $3,000 in taxes).  Tax rates can be lower, around 2.5%, but they can also be higher.  As others mentioned, there are no state income taxes here.  Also, can't the RE taxes be deducted when calculating your taxable income?  This will slightly reduce the impact...

Emily, those are all viable options. The partner option may work better if the two of you can reach agreement on the terms. Based on him putting in $45K and you putting in $80K, the straight percentage would be 36%/64%. Cleanest form would be to create an LLC or LP and let the entity be the borrower. Each of you would be liable for the loan. If only one of you is able to guaranty the loan, there should be an adjustment in the splits for that. Likewise, if he is providing on-going maintenance, there needs to be compensation for that as well.

If you bring in passive investors, you could set it up where the equity gets a base return (say 10%) before splitting profits, then you, as sponsor, would take 40% of the remaining profit and the investors take the other 60% (in addition to their return of investment and preferred return).

Depending on Oregon law, you may find an LLC to be better than an LP (or some other structure). I would settle on the business terms first, then engage an attorney to help you decide the best legal structure.

Jon, there should be no shortage of lenders who would be willing to bank you as long as your story is verifiable.

Bruce, the first number is the loan term.  The second is the amortization schedule that will apply, so yes, there will be a balance due at maturity.  This is a fairly typical structure for commercial deals.  Being able to refinance is not a given, but assuming no huge market corrections, you should be able to.  Make sure the loan is prepayable at any time without penalty.  Bank loans are usually structured this way, but conduit loans can prohibit early payoffs.  This gives you flexibility to sell or refinance when market conditions are favorable.  You can also try to negotiate one or two extension options in the loan (you will typcially have to pay an extension fee and meet certain requirements to be able to exercise the option)