All Forum Posts by: Jeff Kehl

@Rachel Damaral I'm not sure you're using the term 'bridge lender' correctly. Usually that's a company that loans at higher interest rates for a year or two until you can stabilize a property and then get permanent financing with a bank or other institutional lender.

The fact that you say you have $5k and have a lender for 75% makes me think you are looking for someone to make up the difference between the two. Without knowing the total purchase price it's tough to know exactly how to answer.

If you're buying a $100k single family home and need another $20k my advice would be to find a partner that has the cash.

If you're buying a $1,000,000 apartment building and need another $245k you should probably be looking to syndicate it to investors.

By the way, in either case you will need way more money than that. You need money pre-closing to pay for due diligence expenses like third-party reports and you need money post-closing for reserves and operating costs.

Good luck to you.

@Erin Roy Hi,

I'm a bit familiar with the Dekalb area because I flipped a condo in Decatur that my daughter lived in while going to college. I'm curious what your thoughts are on some of the outlying areas, specifically Lithonia? I ask because I'm looking at a retail center there and I don't know much about it other than I remember driving through the downtown and thinking it was dying a few years ago.

@Tracy L Suttles 2 ways.

1) Fix it. Credit scores can be corrected fairly easily assuming you have some income and the desire to do so. There are companies you hire to do it or you can do it yourself by understanding what goes into a credit score and working on the components.

2) Get a partner with a decent credit score. If you can find deals, go to a rei meetup and find a money partner/borrower to partner up with.

@Ankur M. in Georgia your property taxes would definitely go up because of a sale. You can count on them doubling if you pay double. 

But there is way more important things to look at than that. I'm in learning mode on shopping centers but as suggested above the quality of tenants/leases are the most important thing. If you've got a bunch of internet resistant tenants that complement each other like a sub shop, liquor store nail salon, hang-out coffee shop and ice cream shop with great sales and long-term leases then your good. If instead they are a bunch of tenants with broken business models that the seller stuffed in there just to sell then you should stay away.

The fact that the lease rates are much below close properties makes me suspicious. 

Also, is it on the best street in the area and is it easy to access? Is it old with a lot of deferred maintenance?

I have been looking at a lot of strip centers recently and with any that are selling for a higher market cap/lower price than the market there is always a reason like that.

Is this in the Atlanta area? I'm heading there this weekend to look at a center in Lithonia. If you PM me the address I'll give you my opinion more directly.

@Luka Milicevic I'd agree with most of the comments above. I own quite a bit of office and a little retail. I would like to own more retail but it is hard to find good properties right now.  But i have invested in REITS and private placements and all of them are doing really well. Yes, there are headwinds because of the internet. But that also means that very little new supply is getting built.

Also if you look at what is going on with bigger companies that rent space in better areas you'll see that they are having no problem replacing the tenants that leave with new ones. 

People will not just buy a place to live and stay there and only connect to the outside world only via the internet. Just ask anyone who works from home if they would prefer to sometimes be in a really cool office environment with colleagues. Or listen in on a conference call with several dogs barking/babies crying because everyone is at home.

Commercial real estate is evolving for sure but I think that just means opportunity.

@Andrew Moullin it won't work as a house-hack but I'm selling off some of my property in Rome, GA. It's about an hour from either Atlanta or Chattanooga and one of the 'secondary markets' in the above posts. If you're interested in discussing further PM me.

@Diana Ag just to answer your question about CCIM, go to their website CCIM.COM and go to the 'find a CCIM' menu item and you can search in any city. Every CCIM I have known has been very knowledgeable and ethical so I think that's a good way to start.

Also, just to echo a few of the comments above, you will find great help from some of the big brokers like JLL, Colliers, CBRE,  Cushman & Wakefield, Marcus & Millichap. Usually that's where you'll find many of the CCIM designees as well. They all have good websites just google them, don't waste time with us :)

Also, someone above mentioned trying out being a limited partner in someone else's hotel. I think that is excellent advice. Take 1 percent of your capital and put it into 10 deals as a limited partner and you will learn a lot without having to commit all of your capital.

@Chris Templer all great advice above. One additional thing I would suggest is to take a particular property you are thinking of doing this with and go down to the city planning office and ask them about what you're trying to do. You'll find out all kinds of interesting things. Mostly they really want to help especially if you're young and just learning.

I see you're in Nashville. I know it has been on a tear and is probably a great area to switch a residential to commercial use but... you can run into a buzzsaw of local opposition especially in older, cooler neighborhoods where they tend to be just against change. 

So one other thing I would recommend is just put the property under contract with a longer than average due diligence say 3 or 6 months and add condition that closing is dependent on your zoning application. If it fails then you back out no harm no foul.

That may seem unfair to the seller, but it might also result in them being able to sell for a higher price than they could have otherwise. Just be clear with them about what you're attempting to do and ask them to send their friends to support your zoning application :)

@Aj Khan the best way to think about an llc is that it is a different legal person. Just one that you happen to own and control. So, no you really should not co-mingle your personal funds with those belonging to your llc. But, why not move the other properties into the LLC? That is really better anyway to protect you personally from liability. And it is pretty easy to do using a quit claim deed.

@Felicia Hamilton you will find with commercial loans that lenders will offer all sorts of different offerings depending on how much they are wanting to lend on a particular product type. So, you just have to shop around and select products that work for you.

One other thing I suspect is going on is that your option B is a conventional Fannie/Freddie loan product not a commercial loan. The reason I say that is because it's 30 year ammortization and I've never seen that on a commercial bank product.

Those loans are like gold because as another poster suggested above your cash flow will be much better with a 30 year amm. You're only allowed to have 10 of them though so I always suggest investors get 10 of those before using commercial. But it does depend on your goals. 15% down is also very attractive and I've never had a bank offer me anything lower than 20%.