All Forum Posts by: Michael Le

Tell him a random guy on the internet disagrees. And similar to him I also will not provide any data to back up my claims :)

Also consider that they could get a supplemental loan instead of full refinance, which would mitigate pre-payment penalties. Or if they got a step-down pre-payment then by Year 5 it might only be 3% or so, which is manageable.

I don't think historically IO was that much. In the last few years it's grown from just 1-2 years, to 3-4 years, to even 5-7 years. The cynical side of me says it's because that's how the banks keep the party going that late in the cycle.

Is the loan term 5-years, where they have to get a new loan after that time or is that just their plan to refinance a 7/10/12 year term during year 5? With a 10/12-year laon term, IO of 36 months is not aggressive. Depending on the deal it can even be 60-months and I've seen nearly all of the loan be IO but that's rare. That being said, the lending market is in a weird place right now and I have no idea what the IO terms being handed out right now look like but most deals are getting killed due to the debt service escrows that are being required by the lenders.

And yes, refinance of a deal does make the numbers look better but that does not mean they are doing it to just juice the numbers for the sake of juicing it. It's a legit strategy that has pros/cons and you have to decide if you want to invest in a deal with that strategy.

Get your GC to walk the property and provide you hard quotes.

@Greg Dickerson already stated what I think and you already responded your disagreement. But what you propose still sounds like a pipe dream for Sellers who are still trying to sell with 2019 prices and terms.

I would use a VA to prepare my analysis for me. What I mean is, normally I get rent rolls or T12 P&L in PDF or some other weird format I don't like. I have to manually manipulate that data so I can look at it the way I like. I would get a VA to do this. Then I would have to manually input that data into my analysis spreadsheet. That's something I could pass on to the VA too.

Think of it as being a chef and having someone prep all the food before hand. They cut the onions, measure out the sauces and spices, and hand over the kitchen to you to cook. Then you go in there and do your magic.

If I manage to get out of this averaging 95% of my pre-COVID collections for the next 6-12 months I will be absolutely jumping for joy. We're in an absolute, never happened like this before recession and I'm looking to just survive. If I not only survive but continue to make money (and if you aren't making money at 95% then you have other issues) then that is such a good scenario I'm not sure why this is even a question.

I would underwrite it appropriately and offer a price that works for you. 80% of the asking price doesn't mean it's a good deal, if the it's overpriced.

@Brian Alfaro, Let's jump on a call and I'll give you some feedback