All Forum Posts by: Azeez K.

Firstly, my sincerest thanks to you guys for providing guidance, support and taking time from your busy schedules to respond to my question:

@Waylon Themer

Initially, I was not thinking about the cost of re-financing at the end of the 5 year term so you bringing up the cost certainly helps me put that into my calculation.

@Roy N.

Thanks again your response gives me comfort and my key takeaway is to follow-up with my mortgage person to see if the rate they are quoting have either a cap or right of conversion into a fixed rate mortgage.

@David Krulac

Thanks for your input. I have a follow-up question for you since you mentioned you were against all balloons how do you get commercial financing for your property w/o Mortgage Balloon scenario. I have had a tough time finding traditional community banks/lenders that offer fixed rate commercial loans. The only way I was able to get a fixed commercial loan the first time around was because it was my first Small Business loan..all other banks have indicated that they only do balloons 5 or 7 year balloons. Any guidance?

@John Chapman

You bring up a great point that type financing should match investment goals. I have decided to take the advice and continue to keep this as fixed loan since it's part of my long term portfolio so many thanks.

@Mat Lewczenko Kudos for getting the foreclosure deal with the bank and increasing your COC return. Happiness is positive cash flow - :-) Fred Adler

@Pat L. - Point noted thanks for your insight.

@Vangie Gal - I have had existing financing on the property for 1 year. No pre-payment penalties, Cap rate is 11.5%, LTV is 77%, Planning on taking some portion of the cash for purchase of a new MF (as opportunity presents)

@Giovanni Isaksen

6.75% rate worked in the investment plan to begin with. What has changed - The desire to grow and increase the portfolio of properties quicker as such wanted to raise more capital by refinancing plus using seed money to purchase a 2nd, 3rd etc..

Agree - ran some preliminary numbers it makes sense to refinance. However, accounting for uncertainties and cost to finance the property at the end of 5 years it seems being on fixed rate would make sense. To be honest, I have not accounted for your last bullet in terms of my strategy and will have to give it more thought.

Again thanks to you all for your guidance and feedback. I have learned a lot from your collective experiences.

@David Krulac

Firstly, my sincerest thanks to you guys for providing guidance, support and taking time from your busy schedules to respond to my question:

@Waylon Themer

Initially, I was not thinking about the cost of re-financing at the end of the 5 year term so you bringing up the cost certainly helps me put that into my calculation.

@Roy N.

Thanks again your response gives me comfort and my key takeaway is to follow-up with my mortgage person to see if the rate they are quoting have either a cap or right of conversion into a fixed rate mortgage.

@David Krulac

Thanks for your input. I have a follow-up question for you since you mentioned you were against all balloons how do you get commercial financing for your property w/o Mortgage Balloon scenario. I have had a tough time finding traditional community banks/lenders that offer fixed rate commercial loans. The only way I was able to get a fixed commercial loan the first time around was because it was my first Small Business loan..all other banks have indicated that they only do balloons 5 or 7 year balloons. Any guidance?

@John Chapman

You bring up a great point that type financing should match investment goals. I have decided to take the advice and continue to keep this as fixed loan since it's part of my long term portfolio so many thanks.

@Mat Lewczenko Kudos for getting the foreclosure deal with the bank and increasing your COC return. Happiness is positive cash flow - :-) Fred Adler

@Pat L. - Point noted thanks for your insight.

@Vangie Gal - I have had existing financing on the property for 1 year. No pre-payment penalties, Cap rate is 11.5%, LTV is 77%, Planning on taking some portion of the cash for purchase of a new MF (as opportunity presents)

@Giovanni Isaksen -

6.75% rate worked in the investment plan to begin with. What has changed - The desire to grow and increase the portfolio of properties quicker as such wanted to raise more capital by refinancing plus using seed money to purchase a 2nd, 3rd etc..

Agree - ran some preliminary numbers it makes sense to refinance. However, accounting for uncertainties and cost to finance the property at the end of 5 years it seems being on fixed rate would make sense. To be honest, I have not accounted for your last bullet in terms of my strategy and will have to give it more thought.

Again thanks to you all for your guidance and feedback. I have learned a lot from your collective experiences.

Greetings BP Friends!

Hope you all enjoyed the long weekend.

Here is the situation:

1. I currently have a 15 year fixed mortgage on a MF @ 6.75% (Long-term hold)
2. Was considering re-financing and found a bank giving me a rate of 4.5% with a 5 year Balloon

I have always used traditional fixed 15-30 year financing in the past. This is the first time I was evaluating a balloon mortgage scenario.

However, since my rate was high I thought refinancing at a lower rate as it would increase my cash flow in the short term that would allow me to invest some of the proceeds to fund future deals.

Concern:

Having never been through the balloon mortgage scenario:

• Concerns with making the final balloon payment
• Failure to refinance the property at the end of the term. I don't want to sell the property at the end of the term as its part of my long term strategy.

The mortgage rep was positive that if all things equal I should have no issues re-financing at the market rates and still keep the property.

I want to get guidance from fellow seasoned investors if I should stick with what I have now or go for the balloon mortgage scenario?

Thanks in advance for reading the post and your continued guidance and support.

Hi @Derrick Shipman

Welcome to BP. I am a multi-family investor in Atl. Just started earlier this year and closing on my second MF soon. Would be happy to connect with you.

@Chukwudi Motanya

The multi-family market in Atlanta (ITP) is strong. The rental rates are strong and occupancy is high especially (ITP).

However, the inventory of MF available at this point in Atlant based on my limited experience seems to be low. You can find a lot of run down MF properties in Atlanta that have a lot of deferred maintenance but all the good ones seem to go off market quickly.

It certainly makes sense to do MF has a long term buy and hold areas especially in the up and coming areas ITP. Hope this helps. I would be interested to see what fellow Atlanta members have to say on the same.

Wish you the best.

Welcome to BP @Stephen Richardson you have come to the right place. You will find a wealth of information here and the BP community is very helpful.

I am a fellow investor from Atlanta and wanted to welcome you to the community.

All the best

@Thomas Williamson your rehab looks great. Good Job. Rinse and Repeat.

All the best.

Hi @Bret L.

Welcome to the BP Community! I am a fellow Atlanta investor as well primarily focused on MF.

If you make it down to Atlanta hit me up and would love to network. I would recommend you read this article by our esteemed colleague @Brandon Turner http://www.biggerpockets.com/renewsblog/2013/04/09/how-to-buy-a-small-multifamily-property/

Also another good read on MF is multi-family millions. All the best. Keep us posted on your progress.

Thanks

You are most welcome. Wish you continued success in the years to come.

Congrats @AC Cooley !