All Forum Posts by: Brian Napierala

I've spent the last 15 yrs paying off a rental (and a primary) +s & -s in doing so... could the money have been used elsewhere?  I'm always under the impression, that no mortgage is a good mortgage.  I don't have a payment, the income can be stored for improvements or rainy days etc.  

Moving forward though, I'm looking to the next property.  Thanks to appreciation, I have the ability to take out a decent equity that I hope to put to good use

I am sure there are several schools of thought about that one & a laundry list of pros/ cons on both.  I like the idea of residential units.  There are more out there, more opportunity & choices and its more relateable (we all need someplace to live).  Do your own research, find out what's available and what you like.  Of course, talk to other investors once you decide so you can be aware of some of the pitfalls.

Congrats.  There is a big Commercial RE show in San Diego (CREF), Sun-Wed @ the Marriott Marquis.  It may be worth going to, lots of speakers & information, lenders and related services at the expo.  

Hey Robert, since the property is in an LLC, you should be ok. You & your parents are just restructuring the LLC. Ownership title (the LLC) will be the same and banks want that continuity. As a safeguard, you could keep your parents on as minority owner ship, ex: 70% you 30% them. When refinancing, you would be listed as the majority owner and could be the only guarantor for a note. Be sure LLC documents outline you as a managing member with authority to sign for a refinance.

Regarding the existing lender vs. new lender, call around.  Sometimes an existing lender can waive some loan fees since they already have your note and you've paid on time (right :)).  Best bet is to call around.  Another factor, can you show tax returns or do you need to alternative financing (bank statement or stated income, etc) to get the loan.  If you can document income, you will get better financing.

In my experience, for multi units, office, retail, DCR is calculated from the NOI (total income less expenses) less the Principal & Interest payment. Professionally, I don't DCR 1-4 units. I have a great excel spread sheet that I am happy to share. You'll have to reach out online if you are interested.

Normally, commercial property needs to DCR (Debt Cover Ratio, basically property needs to support the loan). Looking at your scenario, you may run into an issue there. Lenders like to be anywhere from 1.20-1.25+ (there are variances) on Multi Family. Based on the current rent roll you have, its looks like you are going to need a down payment closer to 50% in order to make that work. There are lenders out there that have No DCR requirements for commercial loans with $500,000 loan amounts or less, might be worth looking into