All Forum Posts by: Meredith Mihm

Meredith Mihm has started 19 posts and replied 78 times.

what about the commercial loan process did you find easier than a SFH loan process?

Everything! I think I uploaded almost 30 documents to apply for a SFH loan, and this commercial loan was maybe 5 documents. It was so quick and simple that I worried at first that I was missing something.

1 Vote

Investment Info:

Small multi-family (2-4 units) buy & hold investment.

Purchase price: $130,000
Cash invested: $30,199

Property number 3! A duplex, 3 bedrooms down, 1 bedroom up. Close to college and downtown! We are going to furnish the 1 bedroom and rent it to travel nurses. Thanks to Joseph Hammel for helping us find kickass financing for this deal!

What made you interested in investing in this type of deal?

Location-- good deals in Winona are hard to find, since only 30% of each block can be rentals.

How did you find this deal and how did you negotiate it?

FSBO in FB marketplace. No negotiation, we offered asking-- duplexes at this price point are nonexistent around here.

How did you finance this deal?

A commercial loan, 3.5% locked in for 10 years, then ARM amortized over 25 years. 23% down

How did you add value to the deal?

We will renovate both units, renovate and rent the garage,raise rents.

What was the outcome?

We will see!

Lessons learned? Challenges?

Commercial loans are SO EASY! I don't know if I can handle going back.

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

Yes, Shawn Beier at Keller Willaims! He is also in investor.

2 Votes

Quote from @Joseph Hammel:

Oh, Dec deal was on 7 units but it's a 4unit, DP, and sf all touching each other and all on one loan. The special is only 1-4 units but since they were on 3 diff parcels they made it work all on one loan.

So it's officially locked: we have a 25 yr. ARM with 3.5% locked for 10 years, at 77% LTV... local banks for the win (RCU, if anyone is local!) Thanks so much to everyone who helped educate me about commercial loans, and especially Tim Swierczek and Joseph Hammel! Y'all saved me MANY thousands of dollars.

2 Votes

Rochester, Minnesota

Quote from @Joseph Hammel:

Quote from @Meredith Mihm:

Quote from @Joseph Hammel:

Quote from @Meredith Mihm:

Quote from @Joseph Hammel:

Westconsin CU is doing 2.875 locked for 5 years with a 25 AM

RCU is doing 3.25 locked for 10 with a 25 am. Few hundred in bank orig fees. No points.

Wow, that does give me some thinking to do! Thanks!

I hit you up if you want to connect. I've noticed there may be some deals in Winona.

Yes, the 30% rule keeps the rental market in Winona pretty hot. We've missed out on a few deals because we were too scared to dive in. What are you looking for?
Thanks again, I just ran the numbers and I think either of those would be better than my current option, and still cash flow a bit better.

RCU stands for Royal Credit Union, right? I'll check River Bank too.

Yes, Royal Credit Union. https://www.rcu.org/
I was referring to 30 year mortgages not the 30% rule. I usually shoot for a 10 cap.
An example would be a property that makes 30k a year rent minus expense (not debt) would be 300k. 30/300= .1 So a higher cap rate is a better deal.
I use 5% for vacancy and 16% for maint and capx.

We were talking about totally different things, lol. Winona has a rule that no more than 30% of each block (in most places) can be rental properties...

1 Vote

Rochester, Minnesota

Quote from @Joseph Hammel:

Quote from @Meredith Mihm:

Quote from @Joseph Hammel:

Westconsin CU is doing 2.875 locked for 5 years with a 25 AM

RCU is doing 3.25 locked for 10 with a 25 am. Few hundred in bank orig fees. No points.

Wow, that does give me some thinking to do! Thanks!

I hit you up if you want to connect. I've noticed there may be some deals in Winona.

RCU stands for Royal Credit Union, right? I'll check River Bank too.

0 Votes

Rochester, Minnesota

Quote from @Joseph Hammel:

Westconsin CU is doing 2.875 locked for 5 years with a 25 AM

RCU is doing 3.25 locked for 10 with a 25 am. Few hundred in bank orig fees. No points.

Wow, that does give me some thinking to do! Thanks!

2 Votes

Rochester, Minnesota

Quote from @Tim Swierczek:

Quote from @Meredith Mihm:

Quote from @Kurt Pauley:

Don't forget to try a commercial portfolio lender!

Thanks, Kurt, I definitely would have neglected to do that-- any recommendations? I haven't ventured into the commercial side yet.

My wife brokers commercial portfolio loans.

Excellent-- is she part of the team at Celebrity home loans?

0 Votes

Rochester, Minnesota

Quote from @David Mamsa:

@Meredith Mihm

I am also shopping for a loan on a duplex. I got quotes between 5% and 4.375 with 1/4 pt rebate. Rates are fluctuating everyday. Shop around

Thanks, David, I didn't even know a 1/4 point rebate was a thing! Now I'm going to feel like a failure if I don't get a rebate too, 😆. Are those rates with 25% down?

0 Votes

Rochester, Minnesota

Quote from @Tim Swierczek:

Quote from @Meredith Mihm:

We're putting in an offer on a duplex in Winona, MN. Our normal lender just quoted us 4.9%, with 25% down on a 30 year. I'm hoping we can beat that! All help is appreciated!

Most people don't know this but there are over 30 factors that affect the interest rate quoted. Sometimes it's the loan program itself. Occupancy is a big factor, as we all know credit score is a factor, lender fees associated with the rate is a big factor, and how shady lenders mislead consumers. It's free to get a second opinion. I'd do that. In the end, some loan products are better for your situation and those could be more expensive. keep an open mind and check around. The big thing is not to get hung up on rate, when you focus only on the rate you are suspectable to getting a worse deal than when you look at the whole picture.

Thanks for taking the time to explain this-- my husband called Rocket Mortgage today (he doesn't obsess over this stuff like I do), and they quoted him almost 10 grand in closing costs... on a loan that's likely going to be less than 100K. You'll find my application-- I'm excited to hear what your thoughts are! I should have mentioned that the total purchase price is 130K, so I hope that's not too small for you to deal with?
Thanks!

0 Votes

Rochester, Minnesota

Quote from @Joe Splitrock:

@Meredith Mihm the Fed started buying every available mortgage back in March 2020, which had the effect of driving interest rates to all time lows. Since that time, the Fed has grown their mortgage bonds balance sheet to $2.7 trillion dollars. At the end of last year, they announced they would cut back on buying mortgage backed securities and phase out all purchases in the first part of 2022. They started doing that and the market responded with higher rates. Bad news is on top of wind down buying new MBS, they are expected to unload some off their balance sheet in the first half of this year. In addition they are planning 5 prime rate increases, the first in March. These actions are meant to cool the housing market and slow inflation.

Go ahead and shop for a better rate, but odds are very good in six months you will be saying, "I wish someone would lend at 4.9%". w

Sorry for the bad news. This is the consequence of the Feds overly aggressive monetary actions during COVID.

Thanks for the explanation, Joe-- your words "I wish someone would lend at 4.9" keep echoing in my head. I'm also thinking, we refinanced our primary at 2.27 last year, and that might mean that we really are going to stay there forever...
I am going to go and try to get my 4.9 locked in now!

1 Vote

Rochester, Minnesota

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All Forum Posts by: Meredith Mihm

Meredith Mihm has started 19 posts and replied 78 times.

Post: 1 doors to 9 in less than a year

Post: 1 doors to 9 in less than a year

Post: Duplex interest rates

Post: Duplex interest rates

Post: Duplex interest rates

Post: Duplex interest rates

Post: Duplex interest rates

Post: Duplex interest rates

Post: Duplex interest rates

Post: Duplex interest rates