Sufficient experience for lending?

[Allen B.]

Hi all, got another question as I’m preparing to step up to multi family. What options do I have in terms of required experience?

Background: I built up a portfolio of 10 SFR plus one triplex when I lived in Atlanta. Those are being sold in various closings next week. Funds are going into 1031.

Goal: to buy a single (or at most, two) larger 5+ multi family properties. Focus is on cash flow as well as value add over time through improvements and solid operation. 

Problem: I’ll be bringing enough funds that, in order to get any sort of leverage at all, I’ll need a good-sized commercial loan. Even aside from leverage considerations, I’ll need some sort of loan unless I can spend exactly the right amount from the 1031, else cap gains become a concern.

Now, I operated my portfolio by myself until moving away from Atlanta. I’ve got experience with tenants, leasing, repairs, taxes, etc. This feels like a pretty solid background for any sort of multi family. But what if it’s not?

Does anyone here have experience with concerns about insufficient experience for a given-size property? What did you do? Are some lenders more open than others? I assume that reduced LTV would buy some flexibility (say 60-65% rather than way up at 75-80)?

Have spoken with a few lenders already and everything on that front is kind of non-committal. Would like to get an outside perspective. 

On a related note, my (retired) father spent his career in commercial real estate management and leasing (mostly office). Would bringing him in as a co-sponsor be helpful, even if he’s only investing a token amount himself?

Thanks,

Allen

[Scott Wolf]

@Allen B., you'll be fine.  I got approved for a loan from M&T bank with no commercial ownership experience whatsoever.  Just experience from working in the field.  Everyone needs to start somewhere, and as long as the RE you're buying is good, you'll find someone to lend to you.  Have a professional loan application put together, with a short bio including your RE experience & list of properties owned (include sold date if you sold or are selling) will also put you ahead of the game.