All Forum Posts by: Brandon Hicks

 There are several articles out there and at least one of them mentioned that he falsifying purchase agreements so that assets would appraise higher. They  also mention that was wiring funds into buyer's accounts prior to close so that they could the money as towards or as their down payment. This is what I lead me to give the hypothetical (but probably correct) scenarios up above. 

So with the example of him secretly funding the buyers down payment…

I guess it’s possible that he’d sign a PSA for $5m when it was really $4m and he’d wire the $1m to his buyer before closing.

Then the bank would fund the deal 100% to the TRUE purchase price and Matt would get his $1m back because the buyer would wire it into closing

The bank just didn’t realize it was lending 100%

Pretty clear cut case of bank fraud. 

In a case like my potential example, the buyer and Matt would be working together to produce a fraudulent PSA and I'm assuming supporting docs to show the property could meet the bank's DSCR requirements.

Lots of chatter in the CRE world about Matt today. It'll be interesting to see how it pans out but it's not looking good for him from what I've read.

That article was poorly written IMO because it does villainize the seller 2nd. Seller 2nd's are perfectly fine IF you disclose them to the bank and you're buying it in a way (price/terms) that it still meets DSCR metrics.

@Robert Frazier we’ve done a couple of self storage deals the last couple of years where the seller held the financing for us in first position. We put down 20-25% on both and got what it would’ve cost us at the bank for a rate. Roughly anyway…1st was in Feb of 2021 and we got 5% on that one. 2nd was Feb of 2022 and it was 4.25%. We did a deal where the seller held a 2nd too and it was at 4.0%

We just wrote 2 offers today on a storage deal where one of them was for 80% seller financing at 5.0% and the other was a standard bank financing structure.

We don’t need seller financing so we don’t want to pay a premium to get it. Either they want to finance it or they don’t.

@Henry Clark .50 BMG is a popular round for target enthusiasts. The rifles chambered for it tend to be in the $3-10k range. Not super common, but not uncommon. So it’s a possibility.

why is this in the commercial forum?

Real estate investing is problem solving and the most beautiful thing about that is we get to CHOOSE what kind of problems we deal with.

I'd sell it and buy something in a better area in a red state. 

It is what it is 

@Kaylee Walterbach

When someone says “save money” it means that they’re attempting to save some of the money/income that they already have.

The amount that you can save is finite...the absolute most that you can save would be 100% of the money/income that you already have. That is of course, not possible.

If you focus on creating more money/income you’re dealing with a potential number that is infinite.

I’d rather focus on that.

Are you pitching the deals to smaller banks local to the properties? 

We do smaller commercial deals and in several states but we've had good luck with local banks that we approach directly due to them being too small to justify using a broker. Terms are typically 20 year amortization (5/1 ARM) and 20-25% down but the closing costs are minimal and rates have been in the 3.95-5% range on the deals we've closed in the last 6 months. Better rates for deals we've done in our home area.

@Joel Owens with the terms you outlined up above and the loan not being crazy big, why not look at smaller banks local to the property? We do much smaller commercial deals and in several states but we've had good luck with local banks. It's typically 20 year term (5/1 ARM) and 20-25% down but the closing costs are minimal and rates have been in the 3.95-5% range on the deals we've closed in the last 6 months. Better rates for deals we've done in our home area.

@Hoseah Njuguna

Have you discussed this deal with your banker to see if they would even finance it with it being empty?

Is the seller open to a creative purchase? You could potentially get seller financing for part of it. We bought an industrial deal that was leased a few months ago where the bank lent us 75% and the seller held a second mortgage for 25%. Even after paying for a years of insurance, phase one environmental, appraisal and so on...we ended up only having $2100 total out of pocket to close it. It was a small deal at $310k but it’s an 11.3 cap so it’s a good one.

You may be able to do a lease with option to purchase too. We’re currently in the middle of two of those and 100% of our lease payments go towards our purchase as long as we finalize the purchase.