All Forum Posts by: Ron Steele

Phil,

At 67% LTV I don't think you would have a lot of problems getting that loan. Do you have any experience. Do you have a relationship with a local bank? 5 year lock is standard as I'm sure its negotiable. I have really tried to negotiate bc, 5 year is fine for me and I was happy the bank said yes. Your situation may different and in a few year mine might be also. I haven't seen a local bank do 10 but maybe 7.

Let me know how I can help.

Its subjective to me. 

A= High End

B=Middle Market

C= Middle to Working Class

d= War Zone

Some are my property others might equate "war zone" but its really not, but 2 blocks over I wouldn't go in the area. Its all kind of relative in my opinion when you get to the c class.

Also yes you can force equity if you bought right. The mistake most newbies make (I was guilty of this before I knew better) is to pay more than what is is actually worth. Good value add deals are very rarely marketed. The brokers send them out to their select investors. So to add value my first suggestion would be don't over pay.

I do think c properties ( or lower) as you referred to can be the exception to rule. Its generally less competitive. I've bought property that was listed bc nobody really wanted it. You have to evaluate why hasn't anybody been able/willing to solve the property's problem and also do you have the $, skill set, relationships, etc… to solve the problems. Whats a good deal is relative to the investor and their goals, abilities, plan, risk tolerance, etc….

Good Luck.

I usually use 3k-5k as my budget.  Usually I can do it for much less but thats a good guideline. So for 50 units a budget of 200k should cover if all 50 need to be renovated. If all 50 need to be renovated then you would need reserves to cover the interest payments on the construction loan. Usually 6-12 months maybe more depending on your track record.

If you don't have a track record in this rehab then it will be very tough to get that loan for that many units. Might want to start a bit smaller. Now if the property is semi stabilized you have a better chance. With the bank I use the require 20% down of total cost (purchase price and rehab cost). They will do 12-24 month interest only loan will various draws.

Then once the loan is ballooned they you will either have to sale or refinance with a 5 year 15-25 year amortization. Full recourse.

I don't think this size would quite qualify for HUD refi or similar program, but maybe so. Local bank would be your best bet as they are being aggressive with multi family right now and these loans can be competitive.

I primary do lower income areas (think sec 8 and gov't subsidy) so banks need the CRA (Community Reinvestment Act) credits. 

Good Luck and let me know how I can.

I've never purchased a distressed asset. They were always stabilized or semi stabalized. I have a property thats 56 units. Its an REO and from the operations its 89% occupied and still slightly losing money.

From examining the operations the bank is running super overhead on a small property, consisting of 4 full time employees, high management, and it seems to be poor collections and just poor management in general. 

Anyways how do you value a property when it doesn't make money or is distressed. I always look at the noi/cap, but in this case the NOI is zero but I do know the caps in the area.

My plan would be to stabilize the asset, then refinance.

Thanks in advance

@ Kyle Mack I will contact Wells Fargo today also. Thanks for this information. I've heard this but not from an attorney. I will keep you updated. 

Thanks for the input but this is conflicting information. I've heard some people say the contract for deed gives you equitable title and allows a refinance. Others say it has to be a purchase. Just wanting to know if anybody has actually done this type of deal. 

I've spoke to a lender and operator who says that they will do Hud insured loans in the 1-3 million range after 1 year seasoning. 

I have a property I acquired on contract for deed. I'm paying a 13k monthly payment with a contract sales price of 1.5 million.  The occupancy was around 65% or so and I have gotten to 90%. Once stabilized the property should appraise for 2 million or so.  My understanding with the contract for deed I have an equitable title in that I can treat this as a refinance.  

My strategy is to refinance and the property with my local bank then get the HUD financing. I've spoken to HUD lender and they are doing anything in the 1-3 million space.

Anyone has any experience with this type of deal.

Thanks

I just wondered are there such thing as equity brokers just like there are mortgage brokers. I'm speaking primarily in the multi family space.

Thanks

Most lenders I'm seeing are offering 80% LTV for for multifamily financing. I have a property that will appraise for about 1.8 million and I can buy from bank at 1.3 million.

Will the ltv be used or will they apply the ltc of the 1.3 million. If I bought the property at 1.3 million and they made me put the 20% down ali would have instant equity to refinance after whatever seasoning period of the particular lender correct? Would any lender allow 80% ltv in this situation giving me credit for buying with equity thus lowering the down payment required?

Never had a chance to buy with this much instant equity before. 

Thanks