All Forum Posts by: Lauren Daly

My commercial division mortgage advisor at my credit union tells me that after the 5 year period on my balloon loan they will ask for new financials, and we can refinance my balloon loan with no refinancing fees attached, and the rate will just change subject to whatever happens with market rates. Basically he explained an ARM where they get to pull my financials every 5 years. Does that sound right?

Backstory: I have a contract on a condo I found on the MLS. I typically work through the residential loan department at my credit union to get a 15 year fixed rate mortgage. However, our portfolio has a lot of equity tied up in it, so I wanted to get a RLOC (that's what my CU calls it) so I can have more flexibility when it comes to renovations, purchasing, etc. in the upcoming months. RLOC's go through the commercial division. So I can get the RLOC and still go through the residential loan department but... I thought it would be easier to get it all done with 1 advisor (maybe I should check rates against residential and commercial?). Anyway, my realtor didn't realize we were using the commercial person this time, sent the residential advisor the contract, and she said that condos are having a hard time getting fixed rate financing like I'm used to and prefer, due to the condo collapses in Florida... she can only offer me a balloon product. So then I call the commercial guy and he's like 'oh yeah, we only do balloon loans' (not what he said the first time). So, both residential mortgage and commercial mortgage are only able to do a balloon on this property. It's one of those properties that just carries so much upside it will work in a lot of situations, so thankful that I found one of those so that I can learn this whole balloon system with a lot of room for error.

If any of that sounds not quite right to you, let me know. I've not done the commercial/balloon loan and I don't know anyone that has a commercial/balloon loan that can advise me through this. Any help is appreciated!

We (husband and I) knew we wanted rentals and were ready to step away from renting so we decided to buy a place that we could use an FHA loan and then rent out a few years later. But we liked that apartment life (didn't really want a yard) so we got a condo that was in a lot of financial trouble due to lawsuits and some construction issues. We moved out 2 years later when we wanted a yard and we have had really good tenants. It was undervalued when we bought it and our loan has an assumable rate so now it's worth more than twice as much about 8 years later and I think we could even eek a bit out because we have a ridiculously low interest rate. But for now we are still holding it, and it cash flows pretty well.

A couple of things come to mind, all depends on what you’re trying to do with it. First, stage of development, like does it have road access, electricity and water. Amount of road frontage, easements. Second, you need to look at city zoning and Future city development like are they building a highway through it, colleges and shopping nearby. 

Looking at buying a townhome in a HOA community with a community building and private streets. I know both of those things can be expensive in addition to the roofs, lawn maintenance, etc. In the minutes from the last HOA meeting I learned that they do have some substantial road repairs (estimate TBD), 2 units that failed inspection for a new roof, flashing that needs to be fixed around chimneys and an AC that needs to be replaced in the community building. There are probably another 6 adjoining units that need new roofs. On hand they have $15,000 in cash, and 44 units paying $100 per month with monthly recurring expenses around $2,100. Last thing, it looks like there may have been a group of residents that were disgruntled because the whole board resigned, and a new group took over. Aside from the HOA, the property looks profitable. Does anyone have any insight as to HOA balance sheets and can tell me whether they think that they'll have enough cash on hand for these repairs this year?

Looking at buying a townhome in a HOA community with a community building and private streets. I know both of those things can be expensive in addition to the roofs, lawn maintenance, etc. In the minutes from the last HOA meeting I learned that they do have some substantial road repairs (estimate TBD), 2 units that failed inspection for a new roof, flashing that needs to be fixed around chimneys and an AC that needs to be replaced in the community building. There are probably another 6 adjoining units that need new roofs. On hand they have $15,000 in cash, and 44 units paying $100 per month with monthly recurring expenses around $2,100. Last thing, it looks like there may have been a group of residents that were disgruntled because the whole board resigned, and a new group took over. Aside from the HOA, the property looks profitable. Does anyone have any insight as to HOA balance sheets and can tell me whether they think that they'll have enough cash on hand for these repairs this year?

We have a tenant who has a background in construction who moved in to our A class property about a month ago. He discovered a problem with the light fixture in the entry way and has offered to replace it with a similar light fixture that he found for $50 at Home Depot. We will go make sure it gets installed correctly, etc. but he asked us if he could reduce next months rent by the amount of the light fixture. 

Is reducing rent when the tenant covers expenses OK, or do I need to get him to pay the full amount and then write him a check for the light fixture?

Great news, we sent her a friendly text to let her know we noticed and she replied that she simply forgot. Her payment posted the next banking day.

Our tenant pays us via Chase Quick pay every month, and her rent is due by the third of every month. Today is the 4th and her payment hasn't shown up yet. Does anyone have some standard language that they use for late payments?

Has anyone run the numbers on converting a hotel into a condo? There is a 115,000 sq ft, 15 story + basement, dilapidated hotel 1 block away from the town square in my 100k+ person city. It's selling for under $500,000. It comes with a parking garage with 126 spaces and a rooftop pool. The old hotel had 200 rooms, and it's been bought and sold several times and is now county property. The last owner wanted to renovate it into a 125 room hotel. I am not sure that area is ready for a hotel of that scale. My town has just gotten 3 new 125+ room hotels on the south side of town, close to hospitals, oil and gas companies, and strip mall shopping. Instead of building out a new hotel, I think the area suits condo living well. There are a couple of bars, restaurants, coffee houses & boutique shops in walking distance. Also a food truck park will be opening up next year, and the town holds several festivals and parades in this area annually. I think the building could turn into ~70 condos. However, the lower floors of the hotel were meeting space. Where I'm from (Dallas) the mixed use space with restaurants and shops in lower levels has been hugely successful. I was thinking something like a Trader Joe's (small footprint grocery that people will travel to shop at) and maybe another coffee shop or restaurant. This town is like a mini dallas, and I think a mixed use main floor could be really successful. The closest thing I can think of for a comparable is a luxury high rise community (3 buildings) with about 80 units. These were new construction (poorly constructed and are in a several million dollar lawsuit to recover the poor construction damages) and are part of a country club. Presale 3 bedroom units sold for $300k, 2 bedrooms sold for $250k. Now after the lawsuit, 3 bedrooms sell for $220k, 2 bedrooms sell for $170k. These prices (~$125/sq ft) are elevated for the area-- a an older home that has been remodeled sells pretty strictly for $100/sq foot. At that rate the 3 bedrooms should be $170k, 2 bedrooms should be $140k. Assuming we sell 70 units that are 1,200 sq ft in the top 14 floors, we could sell for anywhere between $8.4-10.5M on sale, plus rent out the first floor and basement levels. The question I have is how much does a complete gut of a 16 story building cost? Is there any chance for profit?

Hi Adrian! I also am investing in East Texas, I live in Tyler. We just did a full remodel on our home, and hired all of the contractors individually. I have a good Tile guy and drywall guy and trim guy (3 different people) plus a plumbing company that I can recommend. Let me know if that's work you need done!