All Forum Posts by: Paul Halphen

It's a tough loan for a bank. 2nd position, guarantor wont underwrite, single tenant deal, short lease, cash out deal... I don't think you'll get money from a bank or credit union. 

It is disheartening and frustrating every time a tenant moves out of a renovated property. The property feels like it needs to renovated again. This happens all the time even with good renters. Welcome to landlording.

Your property taxes will go through the roof when you buy this property. Not knowing the address but assuming City of Columbia. Richland 1 is 17200/yr at this price and richland 2 is 21,000/yr

Anyone who is actually licensed in SC as electrician you can find here. 

https://verify.llronline.com/L...

Definitely hold last payment until they have a permit and inspection. You can communicate that and it not be unreasonable. 

But a permit and its inspections doesnt really insure that they will have done a good job. You might have great work, or it might be terrible. Get someone out there to check the work if you dont know what you're looking at. 

 Vi, how is this progressing? Have you found an attorney? Thoughts at this point in time?

Vi, sounds like a difficult situation. Hopefully yall have a lot of this documented. 

I dont have an attorney recommendation, but the folks at Able SC can probably help and/or point you in the right direction for representation. They are an organization focused on accessibility (support services, advocacy, etc) and have a Columbia office. We just worked with them on the design of an ADA compliant entrance on a commercial storefront. 

You need to structure the deal as follows:

700k purchase 

100k construction (deferred maintenace)

800k total acquisition

20% down consisting of two parts... 80k refinancable equity from your condo and a 80k seller note 2nd mortgage (your dad) 

Wrap up those big ticket deferred maintenance items right away. Set yourself up for success the next 30 plus years. 

Your provable income plus the stores income will need to be enough to justify the loan. Your debt payment will be 5k-6k so you are gonna need some quality income to make it work. 

The convenience store should lease to the real estate entity at a 1.2:1 DSC. The bank will want the cstore entity, the real estate entity, and you on the hook. Globally all income will likely need to be 1.4x all of your debt payments. 

If your dad has great financials on the store this will help. Theres some massaging you can do with the down payments and the note from your dad to make the bank happy. You will have to balance their LTV and the cash flow coverage requirements (DSC).

The key is income. You will likely need a good 10k-15k a month of net income between the store and you minimum to qualify. 

From the banks seat this would be an owner occupied deal with some experience, real estate secured, established business so it has a lot going for it as long as the $$$ is right! 

Are you planning on buying another residence in the state of SC this year?  Or will you rent/move?  There are certain things that trigger the assessment switch.

Something seems off here.  Why is the dentist not buying the property? Why does the owner want to sell after all this time?

If you are able to dig into those questions and get good answers...

• For whatever reason it seems a tenant finds it more palatable to passthrough $200 of owner's expenses than have a $200 rent increase. I'd work to get that property to NNN or at least some form of net and you have a much better looking deal.
• $5 net for old medical in a Two Notch like business corridor in Columbia is still under market.  
• I'd work in strong increases y/o/y and try to lock up the dentist until he retires (10 year + lease).
• Know you have tremendous leverage over the dentist with a mtm lease.  He is an idiot putting his business at risk like that. Makes me think he must be older, almost retired.

You need to know who you are renting to.  Right now, you know they have some money, are small liars, and maybe they are big liars.  Maybe they are great, what side are you going to error on?

They can allow you to pull their credit by unfreezing their reports temporarily.  That's where I'd start.  If you can't get that for some reason, you got to get references and previous addresses.  Look them up in the county courts.

The allure of upfront rent is strong, but take it from personal experience... it's not worth it.  I had a PM get all excited (me too) about 9 months of prepaid rent.  Guess how many months they got out of us for free on the backend?  Almost 4 months and an appliance suite.  It took neighbors, an attorney, and the police showing up to court after every imaginable delay to get this person out of the house.