All Forum Posts by: Jesse Waters

@Lisa Gass Greetings from Aiken.  

It depends on the property type.  Hard money lenders, friends, family, 401k loans, partners, seller financing etc.

When it comes to financing a property you have lots of options but it also depends on your goals and strategy.

If you pass on some more details I'm sure you will get a more specific answer.

Congrats on your first deal.  If you have the time & talent, flipping, even just a property or two can be a great way to raise money for more buy & hold investments.  I have always been very interested in it, however, I don't have the background for it.  But it sounds like y'all do.

Getting into property management could be a great way both learn the game & make lots of contacts in your local market.  As a property manager you would grow relationships with owners & get a good idea of who wants to sell & if they would want to off load a property, perhaps on seller financing.

I run all my properties through my LLC, mainly because I have a business partner. Depending on your local laws, you might not be granted as many protections through the LLC as husband & wife, generally those are treated as sole proprietorships. Your lawyer should be able to give you the details on your state.

Also, getting funding strictly to the LLC will be much harder. The best thing to do, if you don't want a bunch of properties on your credit, would be to go ahead an purchase them on your credit or via seller financing etc. Then roll them into a blanket loan, which most lenders will require to be funded to a LLC. From there, your credit will be cleared again & all properties under the LLC.

Hope this answered some of your questions.  

Sorry this one didn't work out for you.  Dust yourself off, learn from it & the next deal will be along shortly.

8.5% or higher seems to the the spot for me where the numbers really start to look good. When I run the numbers I like to see what it would look like fully financed, say at 6% for 30 years, get a DCR for the whole purchase price and go from there. Even if I have to come up with a creative strategy for the down payment a higher purchase CAP will help when it comes to re-fi. If a property has a NOI of $50k, a 10 CAP gives it a value of $500k, my lender generally assigns a CAP around 6-7%. So a 7% CAP on the same NOI is a value of $714k. Using that method I can re-fi out after a year still at 75% LTV (for the original purchase price) & pull my cash back out of the deal.

@Anna Shaver That is one of the questions that I did address.  The lender told me that they have no restrictions on the source of the down payment.  So, you could arrange for seller second or carry back, 401k loan, crowdfunding, line of credit or what ever other means that you can come up with.  However, before you start cashing in all your credit cards for a down payment, be sure that you can afford to service all the debt.

I looked at the Freddie Mac program.  It looked like it was for higher priced properties, starting at $1mil if I remember correctly.

It is quite possible that the seller got a better offer.  It sounds like your offer was reasonable, I would think that a seller would be more inclined to go with a cash buyer since the questions of banks & financing is removed from the equation.  Generally, when I make an offer, I give the seller 48 hours to respond.  By giving them 7 days you allowed them to wait for other offers to come in & pick the best one.  If you had gone with a shorter term, you force them to give you an answer (reject or counter) without the luxury of waiting a week for other offers to come in.

When I put an offer on a property I like to give myself a few exit's, I know some on here don't agree, but if something doesn't work out I like to have the option.  

If you went through a buyers agent have them call the sellers agent to find out what the deal is.

Hope that helps.

JW

Depends on which side of the table you are on.

@Katie Neason I sent you a PM.  I'll should have a name & number to you tomorrow.

In my county we have the luxury of online records.  If you don't have that, you can always try taking a trip to your county office, having the property address or the tax ID number should help.  

@Anna Shaver I just talked with the guys doing our commercial mortgage, and it seems that I passed on some bad information. My apologies to all on this thread. At least this particular lender does have some additional requirements as far as far as the down payment goes. True, they will finance 75% LTV OR 75% of the purchase price, which ever is less. It seems that I had misunderstood this and passed it on that they would finance up to 75% LTV regardless of the purchase price and potentially require little or no down payment. The did tell me that they will re-fi after a year to 75% LTV with a new appraisal.

Again, to all on this thread, you have my most sincere apologies for passing off bad information.  I am still working to find out if they have restrictions of down payment funding sources, and how they factor or account for that.

I am also trying to find out if I tie up a property under seller financing, if they will count a year of that as seasoning for a re-fi under their LTV & seasoning requirements. I'll update once I know.