All Forum Posts by: Steve Burt

Does anyone have any good articles to learn more about the unique considerations of buying mixed use? My hypothesis is there could be unique considerations around:  1) insurance, 2) environmental diligence, 3) due diligence like estimating vacancy, and 4) how best to research leasing comps because commercial leases are so different among other items. I have not been able to find much via google but I am open to books, articles, podcasts etc.

Does anyone have any advice on either the extent to which Non-Recourse loans are actually non-recourse or how to find a lawyer to pose these questions on this topic to? I have extensively searched the BP forums but cannot find anything to address my question.

I am thinking about purchasing a small apartment building and looking at financing options for 5+ unit.

This type of financing is often nonrecourse, and may carry a higher interest rate for this reason. If I opt for a nonrecourse loan I want to be sure that it really is nonrecourse and my downside and personal assets are protected especially if I am giving up a lower interest rate and taking on greater costs for this loan type, LLCs etc. In the past ~8 years, the definition of bad boy carveouts has become more broad when adjudicated in court.

For example: if you can't pay your bills in your single asset LLC and declare bankruptcy, then that's violating the bad boy carveout. If you only have money to pay property tax, so you cant fix HVAC, then that's a violation. Essentially clauses that used to be strictly reserved for gross negligence or cartoonish levels of fraud and malfeasance have now been greatly expanded.

Any advice on how to research this or other people's experiences would be appreciated.

Links on Nonrecourse loans and changing treatment
https://providentlawyers.com/are-nonrecourse-loans-feasible/

https://dolgettalaw.com/2012-03-non-recourse-debt.php

https://www.cohencpa.com/insights/articles/nonrecourse-loans-be-smart-about-carveouts-that

I am looking at a property that is for sale for about 750k and is a 6 unit apartment complex. I think it is an excellent property but my question is what are my options for financing? Seems like a lot of products want a loan balance of more than 700k-$1M and this one is just a bit small for that. Local banks in the area have quoted me very unfavorable terms like 5 years with high interest rates relative to what else I am seeing in the market.

Thanks for this insight. I was also thinking about long-term for example I see pre-war homes on the market, and if you are a buy and hold investor you might be owning that asset for another 10-20 years, which in theory necessitates a remodel at some point in the future.. I also read that development of certain issues like mold may require work that would agitate asbestos. But if a specialist can treat the material every time than it must not be a too big of an issue?

If you are looking in regions of the country like the northeast with a lot of older homes, how do you think about asbestos? I see multifamilies in downtown areas of cities that are pre 1960. Where I live, owners have to provide an asbestos disclosure to tenants but otherwise it is not a major deal. I am wondering if more experience people can way in who have owned older properties for a long period of time. I am wondering if they have experienced any issues and how they have mitigated it.

After a year of this law in effect, how long is it taking to evict now?

Looking to connect or get a recommendation for a realtor or broker in the West Palm Beach or Miami area who has experience working with duplex investors. If anyone has any advice it would be appreciated.

@Cameron Lam Thanks for sharing this story. Can I ask if you have to personal guarantee your mortgages? Were you eventually able to stop providing a guarantee as your portfolio grew?

How did you evaluate your debt risk at you continued to add properties?

Hi @Dion DePaoli, thanks for writing. Page 5 is demographic data. Page 4 has a space for Loan originators signature. It is blank so is all the company name info around who the originator is.   Is that strange?

I talked to FCI and asked them about the lack of info, and they said it isnt always necessary to board and service the loan (and it is already boarded with them)

I am looking to purchase a note with a couple of partners. In the past I have used series LLCs for each investment and I am familiar setting them up. However I have never partnered with anyone. I am wondering the best way to structure this deal. I thought about placing the note in an LLC of which I am the only member and then signing a JV agreement with the other partners. The JV agreement would spell out the revenue and expenses allocation and how the deal is wound down.

I am not sure if this is the best way though as I have read in a couple of places that a JV exposes partners to unlimited liability. I was wondering if anyone could comment on best practices or mention a lawyer in the BP community that is versed on the subject