All Forum Posts by: Ronald Isgate

@Jared Sandler is spot on. I represent quite a few hard money lenders - and I am seeing way too many people coming to my lenders after sending supposed hard money lenders lock/application fees, only to see them run away with their money. This is becoming a bigger and bigger problem, so if you go the HML route, take the time to vet the lender(s) - plus you will find out what lenders prefer to lend on what projects/deals, as just like banks, each lender tends to have their own sweet spot they like (and dont like) to lend on. Best of Luck!

I agree with @Carl Hebert - check around to local banks and CU's - you may have better luck. I would also encourage you to cal around to other local investors ---- they will know who is lending, especially from a private and HML standpoint.

I agree with @Ryan Landis as well.  The only caveat would be expect to pay alittle more if you do not have a track record just yet --- but if you do and/or begin to develop a relationship with a lender then expect to see the rate go down.  Many of the lenders i represent are going crazy right now b/c of the current environment, so they can afford to be more selective.  Whomever you contact, be sure to have a solid deal package for them to consider so they know your are serious and so they can evaluate the deal as quickly as possible.  Best of luck.

@Greg Dickerson hit the nail on the head.  You cant get residential financing for over 5 units - but you can get commercial type financing for just about anything - with underwriting limitations of course.  Each lender looks/weighs different criteria differently - some place more weight on debt service, some on income, and some on appraised value.  Your best best is to call around to lenders to see what they offer - each lender has their own "sweetspot" as to what they like to lend on, and what they do not.  

Every bank/lender will have different criteria to a degree.  Some put more weight on debt service ratio, some on income, some on appraised value.  Your best bet is to call around to local lenders and see what they offer.  Each bank/lender is different, and you will quickly find out what lenders prefer to lend on, and what they don't.  Credit score will play a part as well of course, but again, its all in how each lender evaluates the loan (and the borrower). 

Absolutely network with other investors - they can give you the inside track on who they use - and more importantly who not to use.  There are alot of scam lenders out there these days, i am seeing more and more people who are submitting lock/deposit fees to "lenders" they have no experience/information on, only to see those "lenders" just run away with their money.  You definitely need to do your due diligence on any lender.  I work with several private lenders who lend nationwide who could also be of assistance for you, feel free to direct message me and i can share their information with you.  Best of luck!

@Brandon Ribeiro - feel free to shoot direct message me.  I am located in Doylestown and work with alot of investors, i can give you several brokers to reach out to.

I would start with speaking with your investors to see what their expectations are.  I know thats a loaded question, but you need to see where their "baseline" is and work back from there.  There are a myriad of ways to set that up to achieve your - and your investor's goals.  Some investors want no part of being in the long term ownership, some do.  Some would rather see themselves as a quasi type lender, getting bought out as quickly as possible.  That is a key piece of information first.  Once you get that, i would strongly recommend sitting down with a RE attorney and your CPA.  I always speak with my client's CPA in structuring a venture.  Both aspects - legal and tax - are critical and both can save (or cost) you substantial sums of money unnecessarily.  

If you are talking about developing the land - whether by subdivision, or building multifamily or clusters - then my suggestion would be you first need to know your local municipality's zoning minimum requirements.  That will dictate what your best case scenario for what you can do with the property.  From there - you will need to hire a surveyor to survey the land for several reasons: 1 - to come up with potential plot lines; and 2 - to identify any areas which may be of issue (such as preserved lands, wetlands, etc which you cannot build on or cannot be used in calculating gross build-able lots; and 3 - identify where you can put septic and well (if no public utility exists there).  The survey can often reduce the best case scenario for you.  Once you have that done, you can then comp out the value of what you have - that way you can take that to the seller for negotiations.  I would regardless make sure you put a contingency in the AOS that the sale is contingent on getting all required approvals, etc.   There is alot more work that needs to be done but that would get you to the point of having the most amount of info possible.

My suggestion is that you speak with an experienced RE attorney and your CPA.  There are a myriad of ways to structure your project.  My suggestion is that your first come to agreement with your partners regarding the profit split.  I have seen many instances where some value the money more than the sweat equity, and vice versa.  If you cant get to an agreement on the business terms, everything else would be a waste of time and money.  Once you have that hammered out, you need to speak with a RE attny in your area and your accountant.  They will work together to come up with the best format for you all, both for asset protection/liability, but also for tax purposes (which is just as important in my opinion).  Both will save you time and money in the long run.   Best of luck with your deal!