All Forum Posts by: Richard Helppie-Schmieder

Hey! I am usually pretty good at creativity (check out this story https://www.biggerpockets.com/...) and have also done some other crazy things, but I am now looking for some solutions from all the brilliant people here at BP for a case specific scenario. 

I own a specific property at 50% equity with a partner and we carry a note on the property as well. Each of our equity interests is about $30,000 as the property sits (if we sold it today we would each walk away with $30k). I cannot go through a cash-out refinance as our debt-service coverage wouldn't meet the banks terms, but I do want to grab about 15k of the equity out in some way. I was thinking to possibly have someone loan against the property at a fixed interest in second position, but I really want their interests in equity to be aligned with how the property performs without being on the mortgage or on title. 

Does anyone out there have creative ideas to do this? Maybe some sort of ninja Sub2 deal without taking over title or a completely new agreement that bases their interest off of how the property performs over the next 3 years. Please share any crazy things you have done in the past or any crazy ideas whether you think they can be reasonably done or not.

@Michael Clark From my experience when I was calling banks was to make sure I was talking to the right person and asking about their portfolio lending rather than just talking to whoever picks up. I have found 75% LTV all day with commercial products (no Fannie or Freddie), but alot of bankers just aren't interested in a one-off deal so it takes a lot of phone calls. Here is how mine used to go down....

"Hi there [insert bank name] does your bank do portfolio lending or commercial lending for investment real estate?" "Can I set up a quick 15 minute call later this week with [insert bankers name] to discuss?"

On my first deal I called 45 banks, 5 did portfolio lending, 2 offered to finance the deal and the one that was chosen was negotiated at a 10% down rather than 20% like the other bank wanted. Hope this helps encourage you to start making those phones ring at the banks!

@Heather Reed We don't usually ask too many questions, but we have this great pre-qualifications document before we show a house to save us some time in vetting. Two things that I particularly love about it is that we have the right, but not obligation to disqualify a tenant for using profanity around us or showing up late to the viewing. We have had success with this docs and even is a huge time saver to see who is serious about renting the properties. If they don't sign the doc ahead of time, we don't show the property. This eliminates all the wasteful showings and time from people who just want to see the property before we have even shared our criteria for renting with them. 

@Jonathan Paul Shortt That is a bit outside of where we operate our construction crews, but I have a friend who is an investor out there specifically and can connect yall. He can probably refer a GC or even purchase it from you at a better price than most seeing it is his market. Currently has over 20 in that area. 

@Jonathan Paul Shortt which town are you in? Without knowing too much, I would recommend finishing the home.

1.) A finished home can be refinanced or sold to a much larger buyer pool

2.) A finished home can be rented

3.) Coming in mid-rehab with red tags is a nightmare for an investor behind you and you couldn't command the value that you put in anyway

Chalk it up as a lesson learned and get the product to market!

@Brian Lookabaugh what city is it in?

@Wale Lawal I see you are from Houston. If your client is an experienced investor, I think one of our banks we have used in the past actually operates in Houston as well as DFW where I am from and can share his contact if you send me a PM. They just need to see that this is not the first investment property your client is purchasing.

@Adam Sankowski I have done deals like this before successfully using local banks (I am from Dallas). Typically, we are 15%-20% down with a 20yr-25yr amortization and 5 year balloon at Wall Street prime +1%. Banks also want to see a debt service coverage ratio of 1.2 or better. Our best deal had so much equity in the purchase that we got a 10% down loan and we have had other solid deals with 30 year amortizations even with a commercial loan.

A big part of this has really been showing previous experience, establishing a relationship and not asking for these terms on every deal, but being very selective. On my first commercial loan about 5 years ago I called 45 banks, 5 got back to me, 2 could do the loan. It is hard work, but you can start with a list and ask "do you do portfolio lending on residential real estate? I am interested in purchasing an investment property." Hope this helps! Happy hunting!

Hi @Samuel M., why so set on Dallas? To answer your questions, property taxes have been on the rise and have made it fairly difficult to cash-flow on normal banking terms for places around the metroplex. The more outward you go, the better the terms (Greenville, Gainesville, Sherman, Denison, Waxahachie)

Hi @Eder Tavares! I think it may be tough to find someone that has experience in both markets, but are you looking to purchase a property for STR or do Airbnb arbitrage?