All Forum Posts by: Joshua Fulenwider

• 30 year amortization just means the payments are structured as if they were planned to be paid back over 30 years. 
• 5+5 should mean 5 years fixed rate followed by another 5 years at the next fixed rate following an adjustment to current market levels.  7+5 then would mean fixed for the first 7 years before an adjustment in rate and then another 5 years at the next rate.  
• 10 year term means that even though payments may be planned out over 30 years (amortized) there will be a balloon payment in year 10 (remaining balance due)

Be sure to ask what sort of down payment is expected with these also and what it takes to qualify for the best terms.

Check out ICOR (investment Community of the Rockies).  One of their monthly meetings is in Loveland once a month and the founders are from Fort Collins.

@Chris Ruoff I have seen some pretty strange properties with conventional financing. I'm not a conventional lender so I can't say for certain that they are available. However, an issue I have seen with a residential appraisal on a property like yours is that appraisers don;t give much credit for outbuildings and additional features. So if that is where a good chunk of the value is at you may have a high down payment to overcome in order to get to an LTV that the bank is comfortable based on the house alone.

I have not tried it, but you should check and see if any of the USDA home loan programs would work for the property.  If the boats can be fishing boats or the property is rural you may get a good loan through them.

@Stephanie Windemuth I'm not an accountant, however LLCs are typically considered "pass through" entities.  Meaning you don't pay tax at the business level and all the profit or loss is eventually reported on your personal return anyway.  You will have to report them as distributions but their is a difference between distributions and profits.

You will have some record keeping issues to deal with in order to make sure you are not co-mingling funds or some other no-no that would pierce the corporate veil.  

Look someplace you want to travel to.  It's great if you've got family or friends there already.  Every trip to see them becomes a tax write off if you are checking on your property too.  Also, your family/friends may be able to plug you into a network of investors/agents/lenders/etc in the area.  You also get a better feel for the area when you are doing your due diligence.

@Hunter Thompson most lenders look at all the partners on the deal that are willing to sign on the promissory note or guarantee the loan.  So if one of your partners with cash also has a large net worth and cash flow to cover the deal should things go poorly you can give the a little bit bigger piece of the pie if they will sign on the loan as well.

Also, when looking at a any sort of partnership, LLC, or other structure a lot of lenders require anyone with over 10% of the deal to sign on the loan documents and any one with over 20% of it they want to see financial documentation on.

Hope this helps.  PM me if you've got any other questions.

@Carson Wilcox Financing vacant multi-unit rentals is difficult because it is hard for lenders to determine the actual cash flow.  When you go to sell it with less than about 12 months of  income and expense history you will be limiting yourself to buyers that have access to more cash and/or better financing.  These people should know that the property may be difficult to finance and will most likely drive for a better deal.

As far as financing the flip you can seek a commercial construction loan for the purchase and rehab. However, they will also want to see a plan to get it rented.  Hard money lenders may also want this but it is difficult to say as they tend to make a lot of their own rules.

@Kyle Z. my experience with HELOCs is that most don't charge loan fees but you may have appraisal, title, and miscellaneous fees. So you may have some costs going into it no matter how much borrowing power you get. Given that information I would go for as large of a HELOC as you can qualify for. In the future you may want to borrow more and if you didn't get everything you could the first time you may have additional costs in refinancing it into another HELOC.

All the lenders I have dealt with only count current borrowings into their calculations. The ability to borrow a lot on a HELOC may come up but it is difficult to quantify. Once you start using it they may look at the historical average balance on it but even that is probably a long shot.

Also, talk to your lender about adding your wife.  They may be able to run two scenarios for you (with and without her).  Even though she has a lot of debt it may qualify you for more.

@Dror Engel you can ask for anything you want at any point.  However, one ten unit deal with a lender is probably only one loan to them.  The more loans (and loan size) and deposits you bring to a lender the more excited they get.  Also, the better put together your loan package is and the easier you are to work with the more likely a lender will want to work with you.

Also, the deal has to be good for a lender to be willing to cut rates and fees.  Good lenders price based on perceived risk.  If they see your deal as risky they will be less likely to negotiate on terms.

Smaller institutions may be more willing to negotiate than big ones.

@Carol Labbe what are you getting from these consultants?  Are you getting good advice?  Are they preparing loan packages on your behalf and submitting them to banks (like a broker would)?  Are they helping you repair credit?

If you feel they are earning their fees then they are providing value to you.  However, you more than likely can get the same information by speaking directly with a banker.  It may take time to find a good banker that is willing to work with you however a banker only gets paid when they originate a loan.  Everything up until that point they do for free.

In my experience a lot of consultants tell you enough to earn a fee but try to keep you ignorant of a lot of a lot of things so that you are dependent upon them.  There are some honest ones out there but I have limited experience with them.