All Forum Posts by: Joshua Fulenwider

I'm a big fan of TRI Property Management in Greeley.  I don't think they are using Buildium.  I think they use Appfolio and I'm not sure if they integrate or not as I am not familiar with Buildium.  TRI has managed my properties for years.

Greeley has cleaned up a lot over the past 10 years.  When I moved here 15 years ago, you didn't even cross over to the east side of the tracks.  I lived off 6th ave and crime was horrible because I was so close to the tracks.  Today I wouldn't hesitate to buy property or even live over there again.

Kelley Farms is a nice neighborhood.  

Colorado Landlords I encourage you to read up on HB19-1118.  Your State Representatives will soon be voting on this.  This will significantly increase the amount of time it takes to evict a problem tenant.  please reach out to your Representatives. https://leg.colorado.gov/bills/hb19-1118

My experience as a lender would be utilize a draw down construction line.  The first draw would be to pay off the existing lender and subsequent draws would be for the actual build out.  Are you super committed to the bank that has the first loan?  

If you are okay with a bank paying off the first they then should be able to do a construction loan based upon an "as-completed" value.  This will require plans and a budget for an appraiser to complete.  Typically I see banks funding 75% of the lesser of hard costs (cost of building + construction costs) or the appraised value.  In that case they would take your $350k acquisition +$250k for construction for a total of $600k.  Then They would typically only be willing to lend $450k.

Keep in mind rates and terms can vary from bank to bank.

Sounds like a neat project.  Good luck.

I get really wary of getting cash back after the deal from the seller.  It echos the mortgage fraud that happened pre-2008.

To lower your down payment creatively and legally there are a few things you can do.  Close early in the month (2nd-5th) you are entitled to almost a month of rent as the new buyer and it will be credited to you at closing.  Then ask the seller for deferred maintenance credits.  You may need your lenders blessing on this but theoretically if you negotiate cash back at closing due to deferred maintenance it will lower your out-of-pocket down payment expense.  I think there are other strategies out there too but these are the only ones I've used.  

I don't think it would qualify for SBA.  There are also much easier loans to get with better terms.

I would probably still do construction financing for the initial phase on the whole property and the reason being is that it is interest only for that time.  This will help with your cash flow until you put the property into operation.  Once you start generating revenue you can refinance into term debt and better afford the higher payment of principal & interest each month.

On a different note, the property sounds like it serves a couple of purposes (home and business) you may be able to mix and match some financing options at various stages to achieve the best result.  This would depend on the structure of the property itself but you should talk to a couple of local bankers to get their opinions.

Banks dislike undeveloped land.  It is extremely risky for a variety of reasons.  However, if the land already has utilities it become much more valuable and you may be able to get better terms.  My experience is that you are likely to get better terms on the loan if you are willing to build immediately.  A construction loan can include the purchase of the land and down payment drops to 15%-20% of the whole project.

Given the current economic conditions 50% does seem high.  Keep calling around to banks in your area.  Different banks extend different terms.

Are you going to operate it?  If so you should be able to talk to a lender that has experience with construction-to-permanent financing.  Specifically those that deal with SBA would probably be best.  If you are staying in Indiana and going to operate remotely this could get difficult.

Can you move into it for a year or two?  

Can you wholesale it to an end buyer that will pay you the $148k?  You could make a nice spread on the flip there if it doesn't need any work.

Can you combine the two and move in short-term while you list it with a broker?

Just make sure you don't do anything fraudulent.