All Forum Posts by: Mark H. Porter

Blaine, I am not affiliated in any way with this company but contact Arbor Realty Trust, an SBA loan provider.  I have talked with Brian at 617-960-1507.

If you're including projected, subjective, expenditures such as vacancy and CAPEX then you should also include the appreciation as well as the mortgage principal being paid off.

This really is not a rule, its more how you want to cover yourself. Most sellers would never list CAPEX when calculating expenses, leaving the buyer to make sure it's accounted for.

I'll take it this is an older property as you have a total of 8% to maintain the operation.  $75M is not much appreciation when you consider the transactional costs to get at it (sellers costs - 6% commission, etc...).  I would wait, keep raising rents to market rates, keep reducing your expenses by optimizing where you can.

@Mike Hoover Mike, I sent you a message with some banking suggestions

Make sure you do your homework in 1031’s now, before you get any further!

I live in Vermont and invest here and South Carolina.  I’m also looking now at investments in North Carolina and Georgia.  No issues at all with me being away as long as you have the infrastructure in place of a handyman/plumber/heating person.

I think you’re off on the term.  The most I’m seeing is 25 years and in 95% of the cases I’m seeing 20 years.

Plus, if you're using a 5/30 73% LTV at (I'm guessing) 4.5% (as you'll be buying as a non-personal entity) your ROE 7.52%. with a 25 year term you'll be at 5.93% ROE.

Unless you love CVS, and don’t care that Amazon just started a pharmacy, you can probably do better.

Why pay cash when you can make more a greater return in borrowed money than it costs you?

I’ve had many section 8 tenants over the years.  You can charge market rent, you get part of the rent early in the month, housing authorities will be your advocate with a bad tenant, and it will be more management intensive.

@Justin Gottuso well, of course. Everyone has different goals but cash flow should always be one of them even if not tops.  I have never, ever done the math and found equal cash flow across 5 properties using the same amount of equity.  

For instance, assume a $1.5MM property with 0% down. Your NOI Is equal to your cash flow, say, $105,000 (7% cap).

Now assume you have 5 of these properties exactly the same and you’re going to put $300M down on each one and finance the $1.2MM at 25y and 3.37%.

Your after leverage cash flow totals, for all five properties, is $169,551 - a huge increase in cash flow with the same equity.   This because you are making more money than the cost of the leverage and your ROE is 11.3% on each of the five rather than 7% on the all-cash deal.

Dee jay, others will ask also, why are you in LLC's when you only have two properties. The cost of leverage is higher and harder to get as well as a much cheaper umbrella insurance policy would cover your liability.

I know you can do a mortgages right now so cheaply I would take a standard mortgage if possible.

Justin lee at CCNB in Myrtle Beach handles NC, SC, and GA.  I’ve dealt with him before and enjoy his candidness.

 not where I live.  I can file the small claims and get the sheriff involved in finding her.