All Forum Posts by: Chris Winterhalter

@Sylvia B.

Awesome job at repurposing the church! What was it like negotiating with the church? Or was there a realtor involved?

Also I'm fascinated with the gold/silver/rare coin business. Do you value and pay for your properties in gold and silver?

@Jim Workman

I don't have a lot to add however I thought I would give you a bump to get your question answered.

As I am sure you know a big down side to syndicated TIC deals is that all owners have to agree when doing anything which can create gridlock in a large TIC deal. This can be more challenging especially when compared to a limited partnership deal where you have an experienced manager.

@Nikolay Voronovich

Really the only people that you are going to find to co-sign an owner occ loan would be family/friends. Do you have any information about the actual real estate deal or if this a condo you are paying retail for because you want to live there? You could get a co-borrower (equity interest) or co-signer (no equity interest) depending on the type of loan. I'm not up to date on conventional loans but I would speak to your mortgage lender about the ins and outs of both.

Why not find a less expensive place to live....something that you could qualify for? What are your goals for buying the house? Just to have a domicile you can call your own or for investment as well?

@Jim Douglas

Understood...is the trust going to require personal guarantee's? If you get a no money down loan with no personal guarantee what are they going to do if you default? They take back the property and have you manage it until it sells? It's somewhat tricky on the trusts side however I think you can work through those issues.

I would push to do the deal at your proposed no money down, 2-3% interest rate, 5 year ballon (longer if possible), and a 15 year amortization. Barring that you have the proper capital in reserves to do the deal. I would make sure you can finance out within 5 years so go talk to several local banks. Like you mentioned no one knows the property better than you and your sister. Save all of the excess cash flow (what little there is) for extra reserves and to have when refinancing.

One more thing...is one of the five beneficiaries interested in holding the note on the property? Maybe they can divide the interests where one person would get the note on the commercial building. Once the trust gets divided the note could kick up to 5-6% and turn the 5 year ballon into a fully amortizing loan. Just a thought!

@Joel Owens

Have you ever been involved in a deal where the buyer used an FHA 223 (f) loan? I've never met or spoken with someone that has actually closed one of these loans. I've heard minimums can be very high. It's definitely an attractive loan if you can qualify and get through the process. There are a lot of loan costs involved though.

I used PropertyLeadsNow (Now Zbuyer) for several years in St. Louis during 2009-2010. I've talked to the owner of the company many times and he seems like a pretty solid guy. He's put a strong focus on sales since the change to Zbuyer. I STILL get calls from time to time and it's 4 years later. I respect the hustle as long as they are providing a quality service.

When I used the system you could get a preview of the lead and then make the decision to buy. You could also get set up on the monthly HOT lead system for $50-60 lead. I would buy a lot of old leads and just follow up. I made a lot of money over those two years just from PropertyLeadsNow and their old "garbage" leads. I think I was even on their website as a testimonial (I got a discount for sharing). The owner always tried to sell me on the $50-60 lead (10 a month) deal however I never went for it. The difference was you only would get the lead after they "qualified" it. Fortunately there weren't a lot of people using the system at that time in St. Louis so it worked out really well. It sounds like it's gained popularity across the country recently. It really depends on your market and how many users they have there. I think just like all marketing you need to give it a solid 4-6 months to judge the results.

@Jim Douglas

What type of commercial property is it? It sounds like you and your sister know and understand the building intimately. You mention you managed the property with your sister for years...what exactly did you manage? Did either you or your sister handle the accounting? I think if one of you handled and understood the financial side of this particular piece of real estate for multiple years then that would greatly help you understand what the future holds. What type of amortization are you proposing? Who are you exactly negotiating with on the trust side? It somewhat sounded like you or the trust wanted to be out of the seller financed portion of the deal in 5 years. Is that you or the trust? If the numbers work I would try to get a longer term from the trust if possible. If not the deal is probably going to need to work at a 15 year amortization in order to pay down enough equity to refi in 5 years. It will also depend on your interest rate. You need to speak with several local/regional banks who have an appetite for this type of real estate in your area. Give them the scenario and be very upfront with them about your personal income, credit, and asset situation. They are not going to be able to tell you much since a lot can change in 3-5 years however at least you can get educated.

@John K.

Churches fall into that speciality real estate category that requires a lot of specific knowledge and experience to properly execute. Converting the space is a whole different story however let's focus on maintaining the space for a religious organization. Your goal would be to purchase, renovate, and lease churches around your area correct? How many deals are out there? I would imagine there aren't an abundance of deals to be done. Also it is my understanding that most churches are owned not leased. There are a lot of churches that lease space however they are generally a part of a different type of real estate (school, event space, hall etc etc). So I think the actual number of leased churches is rather low. So maybe that's an opportunity? Lease to own? Seller finance? If you go down this path you would need to be really dedicated to learning the business and networking within the religious community.

You are going to run across a lot of challenges.

• Financing is very difficult on this type of real estate. Local banks finance churches among other speciality lenders however a vacant church will be hard to finance. You could purchase cash then refinance after you lease up the space.
• Are you massively networked in the religious community? I think you would need to be to find prospect tenants. There are very few leasing brokers that handle this type of transaction.
• How are you going to underwrite the tenants? Probably like anything else....look at past financials, credit of the main pastor, attend church on Sunday??? I would speak to a lender that funds these types of transactions to see how they underwrite the loan on an owner occ basis. That should give you some insight into the process.

@Grant Kemp

You are incorrect...this is a commercial property not a single family residence. Commercial lenders have no problem lending to entities like LLC's. Conventional mortgage lenders that require loans to be in your personal name only apply to 1-4 units where the loans are sold in the secondary market (fannie/freddie).

@Jim Douglas

I would form an LLC with a solid operating agreement for the purchase and consult a good attorney for any and all legal advice. Can you tell us more about the deal? At what LTV would the trust be financing the purchase? Have you spoken to any local/regional commercial banks?

@Account Closed

You are probably looking at 60-65% LTV for 5+ units to maintain DSCR's at those caps. I would guess the returns start to break past double digits once that sweet heart appreciation kicks in??? It's very interesting to think that the market is pricing certain areas of the country with risk levels in the 2-4 caps. I know you get a lot of foreign investment on the West Coast however it's still very interesting to conceptualize.