All Forum Posts by: Ronald Isgate

You should absolutely check around with other local banks to see if there would be any interest - but you are on a pretty serous time crunch, so when you talk to any banks that show interest, make sure you get a time line from them.  Also - definitely check to see if you have an out in your AOS so you dont loose your deposit money if this goes south.  You may be down to two options though considering the time issue:  a) bring on another partner (i know you mention that they want more than what makes the project feasible, but keep asking around); or b) hard money - which again could be an issue depending on how tight your numbers are.  Hard money can be very helpful in these types of circumstances (again, numbers permitting) as it would give you time to either find a more suitable equity partner or get rental income stabilization to refi out of the hard money loan as soon as possible. 

Hard money will most likely be your best bet. I work with and represent alot of private/hard money lenders, and unfortunately i am seeing more and more stories of people who have given supposed "lenders" application/lock fees anywhere from 5-15k and the "lender" simply walked away with their money. There are alot of scams going on right now it seems, so make sure you do your due diligence on any lender to make sure they have a track record and are 100% legit. Best of Luck!!

 

I agree with alot of what was said above - money is pretty easy to find.  Local investors/meetups are great resources for getting leads on investors - and finding what the local market is charging as well.  I work with and represent alot of private/hard money lenders, and unfortunately i am seeing more and more stories of people who have given supposed "lenders" application/lock fees anywhere from 5-15k and the "lender" simply walked away with their money.  There are alot of scams going on right now it seems, so make sure you do your due diligence on any lender to make sure they have a track record and are 100% legit.   Best of Luck!!

I agree with alot of what was said above - be careful and do your due diligence.  I work with and represent alot of private/hard money lenders, and unfortunately I am seeing more and more stories of people saying they paid an application/lock fee of 5-15k and the "lender" simply ran off with their money.  Believe it or not, its a small community out there - I agree with asking around other local investors to see who they use, and the rates they get.  It seems like everybody and their brother claim to be a lender these days, but the legit ones have a track record you can investigate.  Best of luck 

My suggestion would be to not short change yourself - check around with all the lenders in your area to see what programs they offer.  I will agree with the above comments that generally you get more stringent treatment with big banks - but you never know.  Each bank has their own "appetite" as far as what they like to lend on --- no rhyme or reason to it, its just their internal underwriting.  Lenders also often run "specials" as well regarding their programs.  I would suggest you make a few calls and get the lenders general overall programs - that will tell you alot as far as what they are aggressive in their lending practices, and what they tend to steer away from.  Once you get that info, you can better pick and choose who to pull an application with.

Good luck!

Arguments can be made on both sides - for and against. But depending on your location, if you transfer the property into a different LLC, you could trigger transfer tax - which depending on the amount of the taxes could make it cost prohibitive. Odds are the appraiser will value it based on market rent - i.e. you would not get a bigger appraised value if you rented it to yourself at double the market rent - the value is the value so to speak, as far as what it would rent for on the open market. Many times lenders have special programs for owner occupied buildings (some lenders have thresholds that if the property generates 51% of its income from the owner --- others that the owner has 51% of the square footage) - again, depends on the bank, but generally speaking owner occupied refi's tend to get better rates/terms than a flat out commercial rental. Give the lenders a call to see what their programs are - that (along with possible costs you could incur as a result of a transfer) will most likely dictate how you move forward. Best of luck!

Hard Money definitely has its place and usefulness - but as @Tom Shallcross pointed out above, all have their pluses and minuses.

It all comes down to the math as to whether the project warrants, and can sustain the cost of hard money. What I can tell you is once you develop a successful track record with a HML, generally speaking of course, you will get better terms and rate as you do more and more deals.

"Partnering" hard money along with private equity partners who contribute capital is a solid way to go as well to keep your costs down, again provided you have a solid relationship/expectations with the private equity partners re: their expected returns.

The last thing - if using HML - you need to have a solid exit strategy. I would strongly suggest speaking with a conventional bank to again get a relationship if possible, but find out what they need to see in order to do a refi. You dont want to get trapped in the hard money loan, default interest will kill the deal. Having a solid strategy in place for an exit is just as important, if not more so, than the strategy to get the loan in the first place.

Best of luck with your business and your future purchases 

I agree with @Karen Margrave - you have to be fully organized prior to finding a lender.  BP has a great resource for finding lenders.  You can also ask around to fellow investors in the area - that way you find the more local, private lenders (as opposed to the more institutional type lenders).  

Best of luck with your purchase

@Nadav Ben Horin unfortunately you would have to pay transfer tax when you transfer the property from one LLC to another (in PA) regardless as to whether the same ownership is in both entities. Even if you transfer for $1.00, you would have to pay transfer tax on the FMV or Assessed Value, which is usually the deal breaker in these types of situations. There may be other options such as transferring into a trust, but they have their own issues and costs associated with them that could also make it difficult/expensive.

It can be both - but usually on the front end.  If you pay on the back end, find out if they are adding the points to the principal of the loan - if they are you will be paying interest on that as well as the principal amount.