All Forum Posts by: Joe Smith

Arthur, I've got you there, what I mean is, if I HAVE 4 commercial loans, and apply for a CONVENTIONAL loan to buy myself a new house, does the conventional U/W count those COMMERCIAL loans towards the 4, if they've been guaranteed by me?

Does this apply even if the property you are buying at this time is a primary residence?

Does it also apply if the existing loans are commercial loans in a business name?

Thanks!!

BTW I know its the wrong section...I clicked wrong..

OK - I have an idea here and want some feedback.

Say my wife and I create a "parent" company, or holding company, a 2-member, 50/50 LLC. Let's call it "Joe's Rentals, LLC" for the sake of this post.

Now, say I buy an apartment building or complex called "ABC Apartments" and the seller/current owner of record is "ABC Apartments, LLC".

Since the apartment has a "name" that is known in the community, can I:

1. Buy the apartment under Joe's Rentals, LLC, but still allow it to be called "ABC Apartments"? Would I have to set up a "DBA" in order to do this??

2. Literally BUY the LLC as well as the apartment complex itself, i.e., I'll buy the complex, but also, the LLC under which it is held? Then, organize that LLC as being owned by my existing LLC? If this were an option, how would it be structured loan-wise? Would the bank/lender still call it a CRE loan, or, would they look at it as if I were getting a loan to acquire the actual "business" entity and all its "contents" (this case likely just the building and perhaps some office and maintenance equipment that goes with it)

3. Create a new LLC that is a single member LLC, with the "member" being Joe's Rental's LLC, and call it something like "ABC Apartments of Akron, LLC", being a slightly different, but recognizeable name for the apartment I am acquiring.

Sorry if these are stupid questions, I've only dealt with small stuff up until this point.

Thanks

Sorry, I'm new at this level, I deal with little stuff up until now.

I keep looking at this and wondering how a positive cashflow is even possible, but, I then have to consider that if I buy an existing property, it (should) have this sort of structure already in place if it's in decent condition and occupied, and my first multifamily would not be a distressed property, it would be something in good shape.

So, I could look at the current financials and see the budget for employees, management, etc., and then go from there, is that a fair way to look at it?

I'm not saying I wouldn't attempt to shave off costs, etc., but seeing what the current owners/managers already do would be a good starting point.

I've been researching commercial financing. I get non-recourse vs. recourse. But what is "non-recourse with carveouts?"

From what I can find, it's a workaround for lenders to have recourse on non-recourse loans, but I'm a cynic.

What does it actually mean, and what other assets can they "go after" in the unfortunate event of default?

I have experience in SFR/2-4 unit and have used property managers. I've looked at some much larger multifamily's on loopnet and elsewhere and have some questions:

Mainly - is a resident manager someone I'd have to employ as my own employee, or, could I hire a management company that could then staff that person in my building/complex as THEIR employee? I'm trying to avoid having to deal with FICA, benefits, W2's, etc, and being someone's boss. My wife is a stay at home mom, and for a moment we briefly thought of the possibility of her handling "employee" issues, but, not quite yet.

Do most owners of this size of apartment generally hire employees directly as managers, or do they contract w/companies?

The reason I ask is I've seen a few cashflow analyses posted on various properties in the 50 - 100 unit range that have line items both for property management AND payroll.

I know a couple property managers (including one I use myself for my duplexes) but they seem to deal only with 2-4 unit and small multifamily under 10 that have no on-site manager, and they weren't much help when I asked.

What about just hiring a current park resident who seems responsible and capable to manage the park for me in exchange for free lot rent or something? If the lots rent for $250/mo (typical in OH), then we can basically say he's working for me 4 hours a week max (probably not that much in most parks)...

If I did this, legally speaking, would I be obligated to pay him a salary and/or FICA, etc?? If I only pay him in "free rent" how do I cover that accountingwise, etc?? Or do I pay him a tiny amount as a 1099?

I wouldn't look for someone who is unemployed, I'd probably opt to find someone with another source of income, preferably a homemaker or retiree or something, but wasn't sure of the legal implication of this from an employer/employee (or 1099 contractor) point of view.

SFR/2-4 unit investor looking to broaden his horizons...and profits!!

I have some questions about mobile home parks. I *might* also try some Lonnie deals, but mainly, I want the parks, not the MH's themselves. But if a property has a few park-owned ones, fine.

1. I work full time. Are there property management companies that do MH parks? What do they charge?

2. Do most institutional commercial lenders do MH park loans under the same general guidelines?

3. Pros/cons of having little or no park-owned homes vs. having a large number.

4. What's the best way to increase occupancy if there is a low occupancy number?

5. What is a min occupancy % for a bank to approve a loan?

6. What is a typical expense ratio presuming no or few park-owned homes?

Johnny, as I think about your reply, I'm presuming you mean most 10 - 30 unit investors you know have margins so thin they can't spare the 5% to 10% for management.

I've always bought right for my 2 unit properties, so I plan to continue doing things that way. In fact, my current property management company does MF as well, so perhaps they can find me for-sale properties that THEY ALREADY MANAGE, so I can get a better representation of true costs, since I know realtor/seller provided cap rates are BS.