All Forum Posts by: Aaron M.

@Stephanie P.,@Marty Johnston

Thank you both for your response.  I am new to commercial loans so I am learning a lot here.    That does make sense that with one loan you could not sell a property which they hold a position on without jumping through some hoops

I was assuming (bad idea)  that a cash out refinance rate would mirror the mortgage I could have gotten if I used commercial financing to purchase the properties.   

So that being said,  lets add some questions here

1.)   If I had 100K of equity spread across all properties what would be the best way to leverage this equity to expand our portfolio?

2.)  If we are able to pay off all 5 properties in 10 years while maintaining good cash flow,  is leveraging equity to buy more properties a good idea?   Right now cash flow is not the driving factor.  I would like to get to a point 10-12 years out that cash flow is about 100K to 150K per year.  Right now cash flow is about 20K considering all expenses (including debt service on the 10 year private money loan)

Lets supposed I owned 5 Properties (3 duplexes and 2 SFH) with 325K market value and purchased them with private money with 10 year repayment period.

The properties would be owned by an LLC for 1 year and showed a positive cash flow of 20K with the private loan

(Cash flow take into account they typical things Taxes, Insurance, maintenance, capex, vacancy...)

After one year suppose I wanted to do a cash out refinance 80% LTV (260K) using a

Commercial Loan @ 5.5% with a 5 or 10 year term and 25 year amortization

with the change in debt service cash flow would go down to 15K per year    (Cash flow still  takes into account they typical things Taxes, Insurance, maintenance, capex, vacancy...)

I am comfortable with the cash I would have on after the refinance  after paying off the private money

My question is do you think a commercial lender would make a loan on the bundle of properties?

Is there anything that I am missing ?

@Randy Gillespie  Understood.  When reading the requirements of holding security deposit it said it needs to be held in an escrow account at a federally or state-regulated institution.  We setup a separate checking account at our primary bank to hold the security deposits.  From your knowledge is this ok?

@Steve Babiak  The rentals are in a small Borough in North east PA.  I have started to read the local municipality laws/ordinances pertaining to rental properties.   Could there be also county laws/ordinances i need to be looking into?

@Randy Gillespie 

Just found that and was reading as you posted.  Thanks for the link.

One think that i didn't expect is the tenant is entitled to interest after 2 years?  

Hello,

I am starting to do some research into the application process and lease agreement requirements in Pennsylvania

1.)  Can i state that i do not accept section 8 vouchers?   

2.)  What disclosures am i required to present at lease signing?

3.)  Where can i find this information spelled out for me?

I will be consulting an attorney however i would like to have my ducks in a row and documents prepared for review to keep costs down.

Thanks in advance

@Stephanie P.

I believe I am just not familiar with commercial loans.  After some reading i see that term does not have to equal amortization length due to balloon payments or resets.

Let me re-phrase my question.

1.) If the property is purchased and managed by an LLC will most banks require a commercial loan even if its fewer than 5 units?

2.) What type of loan is typical for a start up Real Estate investing LLC? We have 5 properties with 8 units and a good deal of equity in each. We are looking to expand

Thanks

Aaron

I recently started out in Real Estate investing. I have a 50/50 partner and we have formed an LLC to handle all transactions and management.

Examples i see on here talk about cash flow assuming a 30yr traditional mortgage.  With our setup,  we will need to use commercial lending which has a 10 year term at a slightly higher interest rate.

Any feed back on how to analyze cash flow with the higher principle payment that a commercial mortgage will require?  Something that might cash flow well with 30 yr lending wont look so good on a 10 year term.