All Forum Posts by: Brad Gibson

I'm looking to close on a duplex in one of my markets with a small independent bank.  They're offering 20% down. WSJ Prime +1 on a 5 year ballon that is amortized over 20 years.

Seems to be a simple and straightforward process.  I would shop the loan until I found a small local lender.

@Adam Wigdorski

Ok, cool. I’m not sure that I’d have access to the same terms. It sounds a little like you give some & get some.

The WSJ prime is 3.25% and I'm +1 on that. Looks like the rate on mine will float, yours will re-set every five years, but there's a pre-payment penalty. LTV is same.

Thank you so much for the response @Andrea Weule.  That makes me feel more at ease.  The banker did indicate that when the five year term was up, they'd just renew it assuming I'd met the obligation up to that point.  Good to know that is standard operating procedure.  

This is a good deal. It isn't a home run, but it cash flows $150 per door and provides a COC return of around 15%. It isn't a home run by any means, but I'll have instant equity, stable tenants, and a cash flowing asset right away. Some of the properties I thought would be mere singles, turned into home runs. Slow and steady wins the race over the long haul.

I had another smaller bank offer WSJ Prime +2%, but I passed and kept looking to get this lender.

Finally, you are right about the debt on the personal finance stuff.  It can be jarring to see $1.5 million dollars in personal debt if you don't think about the $3.5 million in assets that secure and pay for the debt.

Thanks for the response @Zach Quick.  I didn't use a broker for the 5 year balloon with a 20 year amortization.  I'm working with a local independent bank rather than a broker this time.

As to whether I got a good deal from the brokers on the 7 or so loans prior to this one...probably right.  The interest rate in the 5% to 6% range and a couple points.  Not all that great.  That's why I'm trying to go with a local bank/portfolio lender.

I'm in the process of purchasing a duplex for "buy and hold" purposes that will cash flow from the start in one of my local markets.  I'd like to know if what I'm doing with a local bank to finance the purchase is about par for the course with a portfolio lender.

The bank has offered a rent of WSJ Prime +1% that is re-adjusted every six months. 20% down with a 5 year balloon on a 20 year amortization schedule.  No points and no fees.  Do I need to be wary on this deal? 

The reason I ask is because after I ran out of conventional loans, I've gone with commercial lenders like Finance of America Commercial or RCN Capital.  Their terms are different: 30 year amortization.  20% down.  Interest rates in the high 5's or low 6's  fixed for 30 years.  They all offered the opportunity to buy down the interest rates.  There are some points required to the lender as well as fees to the broker who connected me to the lender.

The fact that the portfolio loan is a 5 year balloon and the floating interest rate are a bit of a concern, but I guess I could always refinance into a fixed rate product later.

Thanks in advance for weighing in.

I applied for the EIDL grant in late March & received $1,000 as a grant since I have no employees paid by the LLC.

They sent a follow up email to confirm identity and bank information, but the loan has been “processing” for the last three weeks. 

I don’t know if I’ll be approved or not. The loan would be a fabulous way to have larger reserves to cover mortgages, taxes, & other expenses on the event that tenants get into real trouble and stop paying rents. 

Ideally, I could use the loan funds to pay the ongoing expenses while then dedicating the rent moneys that do come in to enhance the “free reserves” or dedicate to improving properties or even expanding the number of doors owned. 

I don’t have high hopes for the loan to come through, but I’d be stoked to get it & it’ll make a difference in peace of mind as well as the ability to ride out any future bumps from Covid. 

Welp. That’s what I figured. Sucks that folks are sitting on their cash & then complaining that the economy is seized up. 

When everyone else is greedy, be fearful. When everyone else is fearful, be greedy. 

Anyone else seeing lending tighten up for investment properties?

Called my loan finance broker today to assist with a loan on a buy and hold rental property that I want to put an offer in on today.  It's usually an easy slam dunk process since this is a home that will sell at $40,000 discount to what it is valued by the local CAD and with a little elbow grease will be a great cash flow investment...even in a crappy market.

After getting them on the line, they indicated I would now need 30% down and the interest rate would be 1.5 points higher at around 7%. I did a deal with them in February and was in the mid 5% and 15% down on a 30 year note.

I have a call into my local banker.  They quoted prime plus 1% with 20% down.  The problem is this loan floats and will be for only 5 years.  I tend to like to lock in finance terms long term and not have it float, but this will seem to be the only option.

Just want to see if this is a common occurrence and get any ideas about how best to finance deals in these "uncertain times".

@Cassie Villela Ecoair has done good work for me. They are not cheap, but they show up & their work is quality.

The downturn is already well under way. The only question is how deep & how long. 

Optimistically, things start to pick back up in late Q1 with capital spending in the oil industry. Pessimistically, it could be two to three years. 

The one thing that is certain is that as long as the world still runs on oil, then it’ll pick back up again. 

Now would be a great time to stockpile cash to make it through leaner times. That cash will also come in handy when prices fall & there are deals to be had.