All Forum Posts by: Rick R.

 Ronald - The deal still works at 6.7% but the spread is low due to higher interest rates. We are trying to see if we can find a lower interest rate loan to make this work better

 @John McKee - can you let me know what Bank you are using?
This is a big box Commercial Retail property with 6+ years on the lease with multiple 5-yr options to extend
The lowest fixed rate option we could find was 6.7% with 25yr amortization and 5-yr fixed term with no pre-payment penalties. SWAP rates are lower ~5.75% with pre-payment penalties

I am looking for alternate finance options other than regular Commercial loans offered by Banks. Did any use BELOC (Business Equity Line of Credit) to purchase investment real estate? BELOC seems to require 6% points up front fees for lower fixed rate loan and can finance > 80% on certain RE properties.

We are purchasing a 7+ cap property with a long term lease. The current finance rates from traditional Banks are causing the cash flow to be too tight. 

Hi

Does anyone have Commercial Lender/Bank referrals in TX who offer Interest Swap rate loans for a Retail/Office building? These loans offer lower than interest rates but have pre-payment penalties if loan is paid off or refinanced before the loan term ends.  I heard the current interest swap rates are < 6% for 5-year term loans.

Any downside other than pre-payment penalties on these loans?

Thank you 

Thank you all for your prompt responses. Here are more details on the deal

Purchase price : $7.3mil, 7.15 cap, NOI = 522K, NNN leases (landlord responsible for Structure, roof only)

Loan : 30% down, 7% fixed for 5-years and 25-year term, Annual P+I = $435KK, ROI = $88K

Rent escalations during after primary lease term at 8% every 5-years

Big box tenant is publicly traded company are doing fine in this market

Hello Investors

I need some advice on this out of state Commercial purchase. We own small Commercial office spaces and are looking into purchasing a Retail building with 2 tenants with one of them being a big box corporate tenant which sells furniture and another a local restaurant. Big box tenant occupies 80% space and has been at this location for about 4+ years. This is managed by a Property management company

Purchase price is $7.3mil at 7.15% cap, NOI = 522K, NNN leases and both have 5+ years lease on their primary lease term with 3x 5-year options to renew. We will be financing this with 25% to 30% down at about 7% interest rate. With the current rents it works about about 7%-8% Cash on cash returns with Principal loan payment + cash flow. Our cash flow will increase if interest rates go down in next few years.

1) Any input on this deal? Our biggest concern is what happens if the Big box tenant goes out of business. It can be challenge to replace them

2) What gotchas to look out in the Lease agreements?

3) Any creative loan options to go for a lower interest rate? 

Appreciate your advice

Thank you George

Some more info - the 2 lots market value is $15000 and this compensates for the repairs

Sale price: $210k 

Years Rents = $24k/yr

Expenses + vacancy (from above) : $15k

Mortgage (30yr at 4.25%) : $1100/month = $10k/yr

Cash Flow : $24k - $25k = -$1K

The only way there can be positive cash flow is if I raise rents by 10% and the cash flow will be $1400/yr. The upside is if I build SFH/Duplex in the two lots.

Does anyone know per sqft cost on building a new SFH/Duplex mainly for rentals in North Dallas area? I am hearing > $85/sqft from few sources and this makes it hard to build any new rental homes.

Hi

I am planning to submit an offer on a rental property in B/C area in a small city close to Dallas Metroplex. Below are the details and can you please advice me, if this is something worth pursuing. 

Sale price : $210k (Duplex built in 2005 and 2 open lots  of 6000 sqft next to the Duplex)

Repairs : $15,000 (Foundation issues, replace carpet with tiles, kitchen upgrades etc)

Rents : $2000/month (each duplex unit rents for $1000/month) : $24000/year. Tenants pay all utilities

Maintenance (10%) : $2400

Property management (10%) : $2400

Vacancy (10%) : $2400

Taxes & Insurance: $8000

Down payment (25%) and rest conventional financing.

Rents can be increased by ~10%. There is little cash flow after mortgage payments. The two open lots will allow to built two more SFH/Duplex units. Until I decide to built on these lots, the rents from Duplex should be able to sustain it.

Appreciate for your valuable feedback @Jon Klaus.  I am discussing with an architect and civil engineer on what can be built in this lot. If another building can be built and have similar revenue stream, it would meet my goal.

I would love to get your input on the price and ROI

Price: $240k

Rent/year: 12*$2100 = $25.2k

Expenses (taxes, insurance & maintenance) : $7.2k

Cap rate = 7.5%

Additional benefit would be half acre commercial lot in addition to the revenue from existing building.

Hi all,

I am reviewing a property in a small city close to Dallas Metroplex.  The lot is ~1acre with an office building and enough room to build another office building. The major drawback is that the lot size has 600ft road frontage and ~70ft deep. There is a railway track behind the property which limits on what can be build here. There are easements of 20ft for power lines, cable and water pipes.

Current office building has a tenant and is open to sign a long term lease ( 5years)

Property details: Price : $240k, Building size: 2300sqft, 

Rent: $2100/month. Landlord pays property taxes, insurance and maintenance: $700/month

Finance: 25% down and the rest bank loan.

This building takes half the property and another building of similar size can be build on rest of the lot. I am trying to see if this a decent deal for buy & hold and future expansion of another building. 

Also, any creative ideas on what can be build with 300ft road frontage and depth of ~70ft?