All Forum Posts by: Rich Weese

This thread is 9 years old, I think.....

1933 South State Hwy. 161. !28 units known as Treetop. I had a buyer at $13 million back out one week before closing last month due to lenders changes on financing. Currently receiving LOI's in the 11's and have just countered back at 12+. Nice property that I have owned for approximately four years.

So, do you actually live in Grand Prairie?

@John Morgan

I asked you in a previous email if you really live in Grand Prairie? I have an apartment building there and haven't visited in quite a while. I was curious as to what you think about the particular area where this is located if you really live in Grand Prairie. I know I had a few tenants that were there working on building new commercial structures.

Congrats on the cash flow from your SFR S. I remember when I started in real estate decades ago and had it planned out when each property was going to be paid off. It was a great strategy.

@Nick B.

Nick, this has too many holes for me to understand. If you have time and would be available to fill in the blanks, I would appreciate it.

Assume:

$10 million sale

70% loan by some lender

I don't understand how the other 30% works. What does the buyer come in with for down payment? Is the seller basically carrying 10% but not calling it a second mortgage? What type of documentation protects both the buyer and seller in this type transaction?

Thanks if you have time.

Financing changes caused my buyer to walk away one week before closing. Lender cut $1 million from loan amount and required 12 months PI TI totaling over $700,000 to be held in reserve. I was concerned with the coronavirus and lending changes that the market may become tepid. It hasn't been the case but the prices being offered are approximately 10% less. I've been lucky in the occupancy and the T – 12 have remained very constant so far.

Here is a question for BP. Are lenders allowing the seller to carry secondary financing on Fannie Mae or Freddie Mac loans question one of the potential buyers is asking me to carry 10% of the sales price which I assume is making up for the 10% reduction he is receiving from his potential lender. I know I did this a lot 40 years ago but haven't heard much about secondary financing on commercial lately.  Please share if you have done this.

@Daniel Z Fang

I started investing in real estate nearly 50 years ago. One dollar was a lot more back then! I remember my first real estate broker telling me his goal was to become $1 million in debt. I was very young and thought that was a little weird. Understanding that became very easy as I began to purchase real estate.

I think you look at leverage differently based on your age, reserves and goals. Mine have changed tremendously over the decades.

The broker who wanted to become $1 million in debt had a very simple strategy. If he was able to get financing on that much debt and make the monthly payments to service the debt, and inflation was 6 to 8% annually, he would be making $60,000-$80,000 on paper each year. Those numbers represented a lot of money 50 years ago and I decided that was a great plan.

The numbers grew exponentially and allowed me to retire at a very young age. I have changed my methods of purchasing and owning real estate on a continual basis. It is now on autopilot unless I decide to take some chips off the table every few years.

Pick a plan, make it work and time will most likely give you the results you are looking for.

Good luck.

@John Morgan

Do you really live in Grand Prairie, Texas? I actually currently own 128 units in that fair city! It was supposed to close several weeks ago and fell through at the end.

@Jared Smith

Here is a new thought on your choices:

Buy one home a day for 30 days and speed up the process. I actually accepted a challenge approximately 10 years ago to try and buy one home a day for 30 days. I came close! I relocated to southern Texas for the effort. Great state to buy real estate!

@Rich Somers

I think your current method of submitting LOI's with a certain amount left in an escrow account is a great idea and would be receptive to that as a seller. It would be interesting to see the language you use that is acceptable by a seller. I would probably agree with your last sentence in the previous post but I do not have any of those three things forcing my sale. I am just to a point where I would like to take some chips off the table and not interested in continuing the 1031 games any longer. With the equity I currently have in one property, I would need a $25-$30 million 1031 exchange and I'm too old for that.

@Aaron K.

I don't need you trying to teach me. It is why I mentioned the more recent one. Well aware of how this all works after owning thousands of doors and 4 decades of RE.

@Aaron K.

@Greg Dickerson

I appreciate your replies but must disagree with you both on one thing. My transaction that fell through had a 2% nonrefundable earnest money that became hard AFTER inspection and due diligence periods.

The broker that told me about this concept yesterday just put a $6.2 million apartment building in escrow with $200,000 dispersed upon signing of contract and entering escrow.

I know this is still happening. Time will tell whether there are still buyers doing nonrefundable earnest money.