All Forum Posts by: Steve D.

@todd dexheimer

That  bigger commercial deals are easier to finance than smaller deals seems to be the perception, but the untold truths in most cases are the following:  

1.  you need to partner up with others because you may not have the big downpayment $ required for these bigger deals.    Easier said than done, and for many of us, we don't like the uncertainty of partnering with someone over a decade(s) long commitment.  

2.  Banks do look at your liquidity in giving out these big loans.  You can't have $200 bucks in the bank and do a 3 million loan, I don't care how good a deal you have.    Unless of course you partner up with others (see #1).

3.  Risk is higher because with commercial loans, you are not allowed to make additional payments to pay down the loan over the 5 or 7 or 10 year fixed term.  This is a big disadvantage because for a 25 or 30 year amo, after 10 years, you still have the bulk of the principal left on your loan.   You don't know what rates will be at that time.  So after fixed term is up, you have a problem:  you either refi (what will rates and terms be in 7 or 10 years?) or pay it off (will you have cash and will your partners agree to this?) or sell (1031 it and if so, can you get partners to agree?)    So this is a big risk.  At the end of the day, the goal is to ACTUALLY OWN SOMETHING, rather than juggling debts back and forth for the rest of your life.

I know I'm preaching to the choir, but sometimes I'm frustrated by the insinuation that bigger commercial loans are easier to get....once you get into the game and actually try to get one, road blocks appear left and right.   Unless of course, you are ok with marrying a few strangers for a decade or two on a multimillion commitment.  Not my cup of tea per se but to each his own.  

There are options but things get tight after 10.

If you have 2 left, I would recommend using those two for 3-4 unit multifamily. It is still considered residential and you can get a longterm fixed rate, and allows you to scale up a little faster than buying two more SFH.

After 10, your options are to either go commercial (multifamily 5+ units) which makes more sense than using a commercial loan for a SFH, or go to portfolio loans through smaller banks which are typically 5 year ARMs.

As was mentioned, your wife can potentially get 10 more loans if she qualifies.  But...don't count on it being as easy as the first 10.   They will look at your joint tax returns and your stuff will be on there too.   

Gets tight after 10.  

@filipe pereira Thanks. :) Been listening to these types for a long time...it’s humorous.

Keep in mind that everyone has a schtick.  

Cardone makes his money advocating his brand of investing with accredited investors. Of course he is going to slam any other investment like SFH.

In similar vein, Dave Ramsey has made millions selling products that promulgate his schtick -- no debt under any circumstances.  His stringent inflexible stance on this has made him famous and made him millions.

Robert kiyosaki made his millions selling books burying his biological father, and has his own schtick.  

List goes on and on.   Anyone who has a podcast in fact, if you listen long enough, you will learn their schtick.  They are doing the podcast for a reason.   I can honestly say that Josh and Brandon are the only ones I have found that are honest and are not doing it to advocate a specific "schtick".   The rest are, sorry to say, charlatans.  

@Brian Burke

Thank you for that information.  

For a 3.2 million loan, I'm being told there is 1.5% origination fee AND about $15,000 "legal fees".   I asked if there are other fees, and was told all lenders have fees in addition to the origination fee, to cover lender costs for all credit reports, third party reports (i.e. appraisal, environmental study, property inspection report, zoning etc.), legal and processing fees (including travel costs). 

We just sent in our LOI and it was accepted.

Looking at all the above fees, plus the transfer tax fees (substantial in my state), I'm looking at about $170K to $180K in closing costs!   This seems very high and I'm wondering if I need to shop around a bit.   But seems like most lenders will have similar fees?  

They are giving me a 10 ARM with 30 amo at 4.4%.

Thanks!

I was waiting on the part about her taking you out on a date but it never came.

David Dachtera I respect this is your opinion, but I have to come out and express my disagreement. Doctors have to make a living just like everyone else, and financial independence and wealth generation need not be sacrificed because their work involves caring for others. One can be compassionate and caring not just in one's day job but also in the way one treats tenants and other team players (contractors, agents, maintenance people). The 2 are not diametrically opposed.

Dave Ramsey's plan is perfect for someone in your situation. 

His program is called FPU (Financial peace university I believe). 

My strategy (in this order):

1.  LOAN PAYDOWN -- this is main reason I invest.  Others are buying house for me gradually. 

2.  CASH FLOW -- icing on the cake as #1 is occurring. 

3.  APPRECIATION -- cherry on top of icing -- I'm a buy and hold investor.  My plan is to never sell - hopefully pass these houses down to my kids.   So this is a theoretical advantage that will likely never be realized (unless I refi or sell).  Appreciation is nothing if it is not REALIZED (refi or sell).   I bought a house in 2001 for 175 that now is worth 325 at least, based on comps.    What does that do for me?   I don't want to sell it because it is a prime rental location.    So I don't think about it much.   It means little to me as  BUY AND HOLD INVESTOR.   But  the rent I collect means a lot!

I collect $30 per person and use www.tenantbackgroundsearch.com

If everything check out and they are accepted, I credit them the app fee on their first month rent.  

I tell them this upfront and haven't had problems getting people to pay.   You are also weeding out the bad seeds because if they know they have bad credit, they won't apply and lose $30.