All Forum Posts by: A.J. Chesney

Generally unit mix of 75% 2 bed to 25% 1 bed in many markets is preferred.

50/50 is okay. 1 units turn more often which leads to more costs.

297k gross expected rent and it looks like seller pays some utilities.

They are quoting 113k expenses which is about 38% expenses. Seller paid utility on older buildings runs closer to 55 to 60% expenses.

2.7 million is over 100k a door for 24 units. That Is nuts unless this is a brand new build. Older buildings trade at half that amount per door even rehabbed.

Unless this property has way under existing market rents by hundreds per door, cost that can be shaved further, and fighting of property tax assessment to lower, and offloading utility to direct tenant pays then I do not see any benefit based on what is provided here.

If this had a bunch of additional valuable land or density could be greatly improved then maybe upside in converting or improving use.

Seems like a lot of overpriced junk out there. Why do you think these sellers are selling this stuff? They see the peak of the market................. : )    

Exactly.  For any loan (although mostly applicable to commercial) there are really three factors to consider:

1 - Amortization period.  Over what period of time are the Principal & Interest periods calculated (eg; 15 year?  20 year?  30 year?)

2 - Loan term.  Just because a loan is a 30 year amortization does not mean that it will be a 30 year term.  Case in point, the loan I referenced above (20 year amortization/6 year term) means that payments are based on the 20 year amortization schedule, however the loan is "up" a 6 years, meaning either a balloon payment is due or I have to refinance before that. 

3 - Rate.  Interest rate - fixed or variable, and if variable, how soon and frequently does it change and what does it change based on?

For this particular loan, I neglected to mention that I pre-negotiated a guaranteed renewal/refinance at prevailing market rates, so basically, this loan can better be viewed as a 20 year amortization/TBD term/"variable rate" with the first adjustment (from the initial 4% to prevailing market rates)  occurring at the 6 year mark.

Make sense?

I just wrapped up two commercial loans for similar properties.

One is 80% LTV on 750k, 20 year amortization 6 year term, 4.25%

The other is 70% LTV on 1.4m, 30 year fully amortized, 4.375% fixed for 7 years, readjusts every year thereafter

North.  Right off 51.  Just west of 55.

@A.J. Chesney, you could refi in the 30 days but you would fall into the same scenario. The LLC doesn't have the means to acquire the property so he would have to get a loan as himself. Then he would have a loan in his name, have spent money on the refi @ a different rate than what he has now.

This doesn't put him ahead neither in name on title nor financially.  As he mentioned earlier he is also in the middle of working on other parts to his plans.  Normally another refi would make thing more complex in the short run and not solve anything in the long run.

@A.J. Chesney

  I am quite active in Jackson... I funded over 80 deals there last year alone.

ITs a completely under the radar market.  watch out for that Yazoo clay though :)