All Forum Posts by: Chris Winterhalter

@Jon Holdman

Is it a bank and/or a true balance sheet lender? Lending is definitely driven by the location and market however I haven't heard of 15 year fully amortized fixed rate commercial loans from a local or regional bank. I would imagine the rate is a few hundred basis points higher because of this. Either way that is a great resource to have!

@John E.

The SEC deals with securities not the direct purchase or sale of real estate. We have the freedom to purchase or sell just about anything (within the laws) in the United States without restriction to income or social class if the selling party agrees to sell and you have the cash to purchase the asset/item etc.

Pooling outside investor funds is where the SEC comes into play. When you pool funds to purchase real estate you are creating a security or tradable asset. Because of that you are subject to the SEC's rules and regulations.

Anyone can buy a commercial property with the right resources and sufficient capital. However you traditionally find more sophisticated and experienced players in commercial...that isn't always the case however more so than single family investing. Buying a single rental property as an investment is much easier for the average person than buying an office building.

Congrats on being 15 and having the desire to learn about real estate. Good luck!

@Account Closed

I would find someone in your local area (maybe through BP) and intern with them during your summers. At your age time is on your side. I would learn every side of the business in and out including:

• Property Management
• Construction
• Development
• Acquisition & Disposition
• Brokerage
• Financing/Lending

What asset class are you interested in? Commercial or residential? Commercial has a lot of subsets...think about what you want and explore summer opportunities in that arena. The Real Book of Real Estate by Robert Kiyosaki explores a lot of different asset classes and investing niches. It is a basic overview but will give you some insight into a lot of different areas. Good luck!

@John K.

Commercial lenders, i.e. local and regional banks do not offer fully amortizing fixed rate loans beyond really 7 years. More common would be 3 or 5 year fixed loans especially under 2MM. They will amortize over 20 years however will only fix the rate for up to 7 years. I've seen amortization up to 25 years however it is less common. 7 year fixed rates are also uncommon. Some markets are ballon markets and some markets will fully amortize but float/adjust after the fixed rate period.

Two for the price of one? Sounds like a BOGO (buy one get one) special. Where's the sale? I'm in!

All joking aside if you truly have a deal then seeking money for it won't be too difficult depending on the dollar amount. You can shop the deals at your local REIA club and post on Bigger Pockets real estate marketplace (you need a pro membership). There are a lot of threads on private money on BP however your friends and family are your first resource. I think it's more important to understand the underlying property values, rehab costs, and after repair values. For newer investors miscalculating value and rehab costs can kill your BOGO deal down to a buy two get one fiasco.

Can you obtain conventional financing for the properties? If you don't have the downpayment but can qualify for the mortgages then partnering with the right investor might be a solid option. Just make sure to properly vet any potential partners. Good luck!

@Shital Thakkar

Are they conventional 1-4 unit (fannie/freddie) loans? If they are then you would need to refinance to get either you or your wife off the loan.

@Shital Thakkar

This could be a completely different thread however that really depends on your goals. Are you looking for cash flow or appreciation? Or both? It is really difficult to cash flow single family houses over a 10-20 year period. IF all the houses are close by each other then that could help bring down costs a little. It is extremely difficult to manage a large number of single family houses. Even if you have a property manager in place, managing the manager is difficult when going through checks and balances. It's also difficult to go through so many periodic rehabs at different locations over the years. If you are looking for cash flow then multi-families make much more sense over the long term. If you are banking on appreciation then single families with lower returns in the right areas might be a better fit. Single families can be easier to liquidate and give you the ability to cash out one by one as opposed to multi-family. However multi-family is generally liquid in the right market at the right price. And you could always refinance to pull cash out if needed. Larger multi-families also give you access to more professional property managers and economies of scale. If you need to do a total upgrade at your 100 unit multi-family it will take a lot less of your time than renovating 100 single family properties. At the end of the day it comes down to your goals. How much do you want to grow?

@Josh Bishop

What interests you about commercial? Why would you want to invest in commercial as opposed to residential. I think it's important to specialize in one or two assets classes as opposed to trying to do everything. Especially if you are a smaller investor without a large team in place. There are a lot of ins and outs to every asset class. Commercial generally has more sophisticated investors with deeper pockets than small residential. That means you have to be on top of your game to ensure successful acquisitions and management. Smarter and healthier sharks swim in those waters. Hence my reasoning to specialize. I think if you are going to switch to commercial you need to spend some time understanding the asset class which you are going to invest in. The financial side is more intense and lending parameters are different. I would connect with other investors in your area that invest in your desired asset class. Possibly invest in a deal they are doing to get guidance and experience.

Commercial and large multi-family residential projects appeal to me much more than residential 1-4 units. I prefer dealing with more sophisticated investors, professionals, and vendors. Economies of scale are also important to me as opposed to a single family.

Yes many items are negotiable however I find it more difficult to get the unlimited guarantees lifted. I've talked to several banks that would limit guarantees before the crash however now their policies have changed with many new regulations in place. A strong relationship and extremely solid financials probably help however some banks won't budge. I've tried to negotiate this on several loans without much luck.

@Ben Leybovich

I have to agree with @DL Martin is just trying to get some sweat equity and long term cash flow.