All Forum Posts by: Josh Anderson

@James Kats @Justin Thiesse @Jason Orr morning Guys. I’m a commercial lender at MetaBank in Sioux Falls. The interest rate you’re going to get is typically based on if it’s an operating or a real estate loan. We focus primarily on real estate lending and most banks are going to price their loans at a spread over the 5yr or 10 yr treasury. That spread has recently been 2.30-3.00% depending on the bank and strength of the deal. Shoot me a pm with your contact info if you want me to look at anything.

@Chris Policicchio thanks Chris. I think I'm in the same boat as you, I don't want to give my price because I don't want it to be higher than they are willing to take and potentially pay more than I need to for a property.

I am doing direct mail marketing in my area and had a general psychology question about offers. I am looking for other's opinions or experience in making offers/buying off market properties. The few properties I've looked at so far have been single family and duplexes.

When talking with a property owner is it best practice to offer your price first or get the property owner to set their initial asking price and negotiate from there?

I prefer Getty for closings, they are easy to work with and typically pretty fast. As far as ARV and cost/appraised value goes when working with a bank. the bank will use the lesser of cost and appraised value if a new purchase but will typically use the appraised value for refinances.

@joe splitrock The best advice I can give for getting the bank to use close to ARV is providing them a list of repairs to be done to the property to give to the appraiser. The appraiser should use these number to provide both an "as is" and "as completed" value for the property. And most banks should use the "as completed" value (also called ARV) to lend against. But will may require you to use draw requests through a title company to pay for the updates as it helps the bank protect from getting mechanics liens filed on the property. Which supersede mortgage position, so the bank is going to protect their first position.

Just for reference i am a commercial lender at MetaBank.

@Jessica I have a 20 unit facility and have been close to purchasing a 48unit if I can get the seller to commit. I also work in commercial lending so I can provide some appraisal and lending insight if that is what you are looking for. PM me if you want to talk more

@Jessica Gettle

@Michael Anderson As far as tax implications, I would suggest working with a CPA on how to minimize your tax implications.

I work in commercial lending in Sioux Falls and I have a customer that uses a HELOC on their primary residence to buy properties, fix them up, and then refinance them to get their cash out again and repeat. (BRRRR strategy) If you don't want to wait I would suggest you start with that approach, but make sure keep your lender in the loop on what you want to do. Don't want to be stuck with all your equity in one house and no lender to refinance. PM me if you want to get together and discuss some lending options

John,

I am a commercial credit analyst in South Dakota, and if I were you I would try to find a lender who has experience working the the SBA. Their 504 loan program is now available for storage facility purchases/refinances. I was actually just talking to one of our lenders about it this morning and I believe the SBA will go as low as 15% down and their rates are fixed for 20 yrs. This does depend on your financial strength but could be a good option if the current owner doesn't want to do a carry back. Best of luck with your purchase and pass some of that luck this way I've had a hell of a time trying to get a second facility in my portfolio.

Regards,

Josh Anderson

Tyler,

My suggestion is to begin saving now while you research your area. You should know where all the facilities in are located in the market you are looking to purchase, along with what average rents are, and what the average vacancy rate is for the facilities. GoogleMaps and Streetview are great tools to quickly locate a large number of facilities at home, but once you find them drive to the ones that interest you to check them out and talk to the office manager if the property has one. While your out driving, take down the contact numbers for the facilities because I know in my area storage facilities listed for sale are few and far between so the best way to get your hands on one is to call the owners/managers directly and ask them if they are interested in selling.

A tool I also use in my property search is my county GIS system. It shows the parcel boundries, owner, site size, and other items, depending on the county, for all properties in the county. I would Google your county's name with GIS at the end to see if your county has one available. I use it to see if an existing facility has an excess land with it, and if the area I am searching in is under supplied, I use the GIS system to find the owners of vacant land parcels in good locations for a facility.

As far as how much you need to save, that all depends on the size of the facility you are buying. I'm sure since you are on BiggerPockets you know that the value of the property is a function of it's cash flow, but a traditional lender will typically lend at 75% of the appraised value which is typically based on the income approach (ie the cash flow) so you'll likely need to save 25% of the value. The same is true if you plan to build a new facility, but you must have a good grasp on your construction numbers and the income approach valuation. Just because a facility costs $500k to building (including land cost) does not mean the property is worth $500k.

Best of luck in your search

In response to Shawn's concern about power being an issue, the RV facility that I am currently looking at purchasing has a single 15 amp outlet in each unit with the power set up on a timer so the most it can be running continuously is 30 mins before it shuts off. This prevents tenants from accidentally leaving things running 24 hrs a day while still allowing for some minor electrical needs.

I am interested in meeting as well. There use to be a group that met at Keller Williams Realty once a month, but it was put on hold for the summer months due to minimal attendance. Speakers were brought in which were usually informative but there was minimal discussion between members. Everyone talked in generalities, most likely due to people not wanting to give up their perceived competetive advantage in the market.