All Forum Posts by: John Morelli

Hello,

I am currently under contract to purchase a 4-plex in CT (3 residential units and 1 store front). The property also has a large parking lot across the street from a big employer and generates income from it. 

I haven’t been able to find a lender because after doing a title search it seems that the property is grandfathered in to legally have those residential units since it’s zoned commercial. Lenders have fear that if the property were to ever burn down or get destroyed that the zoning would not allow it to be rebuilt as it currently is. 

Anyone know if a lender who can make a 20% down DSCR loan work on this or have any advice?

Hi John, I think you've misread the post. I am not the lender in this scenario, I would be the borrower. 

You also mention that I am too far in the weeds and that I should shy away from private lending becase it is "more complex than people understand". However, the entire point of my post is to get a better understanding of how the private lending process works.

Appreciate the response though!

Hi All,

I am looking to fund some RE investments via private financing and had some general questions I was hoping the community could give me some feedback on.

Obviously, the terms around a private loan could be structured many different ways and ultimately be decided between both parties in the transaction. That being said, are there any guidelines that need to be followed? IRS reporting requirements? Minimum interest rates or maximum borrowing thresholds?

I was looking to borrow approximately $150,000. I've structured an agreement with the other party to allow me to borrow this via an unsecured promissory note. Interest would be paid monthly to the other party for 6 months until the loan would be "due" where I would then pay the original principal back in full in a lump-sum payment.

My questions are as follows:

1. Do I need to have a minimum interest % applied to the loan? I've seen some mentions about applying the "applicable federal rate" established monthly by the IRS to the loan. The other party has verbally agreed to a lessor rate but we want to make sure we are being compliant. https://www.irs.gov/applicable...

2. Is there a proper channel that the money should be "disbursed"? Could this be sent as a wire to a checking account or business account? I want to make sure this does not raise any "red flags" even though the funds are legit and sourceable.

3. Does this need to be recorded anywhere? For example, does this need to be made public and will impact by DTI as it appears to lenders or could this be strictly structured "offline" between me and the other party?

4. Any other details I should know about going with this method of financing?

Thanks in advance for the feedback!

 Thanks. I would have kicked myself for pulling the trigger on that.

I have 2 commercial properties that I’m looking at Cash Out refinances for within 6 months after owning them for over a year. 

What’s the risk if I pursue my own commercial appraisal vs waiting on the bank to order it?

Almost all of my 7 commercial closing dates have been pushed due to waiting on appraisals. I think I’d rather have it in hand and be able to shop the refi around vs having the bank order it while they underwrite. I know this isn’t as common but I think it should give me more control. 

I understand I’ll need to front the cash for it but is there a time frame that they would expire? 
Is there anything else that I may be missing? 

Hi everyone, 

I am just starting my real estate journey and purchased my first investment property (duplex) in May 2022 in Buffalo New York. It was a complete rehab! 

First lesson learned: RUN YOUR NUMBERS!!!!

ugh I did not do my due diligence on this one. I trusted my "investor friendly" agent when he told me that this would be a good deal. He is one recommended here on BP and I was so eager to get started that I jumped in without doing my homework properly. 

Here are the number:

purchase price- $114

Rehab- $115

ARV: $260

Does anybody have any recommendations for lenders that will do 80% LTV fixed for 30 years (is that possible?) ?

I called one DSCR lender but they said they could only do 70% LTV.

any guidance would be appreciated.