All Forum Posts by: Brian Irk

Miles Sparenberg There are plenty of lenders who will allow 20% (or less sometimes). But it is going to depend on the circumstances of the deal and your financial picture. Try James Dix at Amerifirst Home Mortgage. BP won’t let me post his contact info, but you can google him. He’s a great guy and will work hard to find a way to make it work for you. Tell him Brian Irk sent you his way and see if he can help you out. Good luck!

Hi @Bryan Clark, I am a novice compared to most people on BP. I have only 3 units and I'm getting ready to close on 4th but all of mine are SFR so I am in that space. I am far more conservative than most investors so I take all of the ways to make money into consideration i.e. cashflow, appreciation, ROI, and tax benefits. The first "weed-out" question I always consider is: what % of the purchase price is the rent? If you are suggesting the two units will rent for $1200/mo, your looking at 1.2%. For me, 1.2% is my starting rate. I won't really look at anything below that, but again, I'm very conservative. A lot of others will look at cap rate, but IMO, I only care about cap rate if I'm investing in cash. When financing, it is less important. Other questions are important such as: will it appreciate? How much do you expect to go towards expenses of an old home? After the current tenant moves out, how will you fill vacancy? If you expect those to items to be high/difficult, I'd grade the investment as a C+/B-. If you expect it to appreciate and your cashflow really is $5k/yr after all expenses, your ROI time is about 4ish years which probably makes it a B+ investment. Again, just one man's opinion. Good luck!

@Derek Loda

I found two lenders.  They were both local banks.  The national banks wanted the "full refi" with all the standard closing fees. 

Both were banks in Indiana, but I was not required to have an account.

@Charles H.

I'm fairly new to the commercial game, but I have been doing a lot of research recently. Most commercial loans are ARM's, but many have balloon payments with a refi possibility. '

For us, it was important to find a lender that doesn't require what I called a "full refinance" which requires a closing on a new loan and every expense that goes with it.  I found several lenders that just charged about $300 for what I called a "renewal" which would just take the principal left on the loan and put it back under the same term with the new rate.  This is a pretty good option in my opinion because you won't likely find fixed rate loans for commercial properties.  The risk is too high for lenders.

Hi Henry, welcome. I think talking with a banker/broker to get an idea of your purchasing ability is a great start. After that, find a real estate agent who will help you look for properties. I took a quick peak of the MLS...there are quite a few decent multi unit options available downtown right now. That will likely be the best location to find a muti-unit. Good luck Henry!

Thanks for the answers gentlemen!

Hey BP,

I was just told by a financier that I may not be permitted to buy some properties I have under contract because there is a limit of 5 financed properties.  I had never heard of this law or regulation.  I believe there is a Fannie/Freddie financing limit, but none of my properties fall under that category.  All are traditional financing.  

I also believe that FNMA limit is 10 financed properties.  Could anyone lend me some insight as to what this banker may be referencing?

Thanks so much for your help

Hey Grant,

My wife is an active realtor in and around Indy.  She really likes two companies.  Indiana Foundation and Acculevel are who she recommends to all her clients and it's who we would use if we had foundation concerns.  Good luck!

Hi Brianne, Welcome to BP. I’m am working on my first commercial purchase too. So I’ve learned a lot in the past month. The biggest difference. Is that >4 units requires commercial lending if done in the traditional sense (i.e. from a bank). The biggest difference is that in commercial loans, from what I’ve seen, you cannot get a 15 or 30 yr fixed mortgage. Typically you are looking at one of two options. 1) 7-yr ARM or 2) 5-15 Balloon Which is a 5 year term amortized like a 15 year term with a either a balloon payment or refinance at the end of those 5 years. So basically the monthly payments are greater and the terms are not as good on commercial properties. The APR might be slightly higher but I believe it’s currently within .5 point depending on the lender and borrower. As far as taxes go, unless there are specific state taxes, I’m not aware of any differences from going to 4->5+ units. Unfortunately I’m not sure about 1031 exchanges. I’ve never done one. Hopefully this gets you started. Good luck!

Follow up: here is a thread I started a week or so ago that answers some questions regarding title and LLC's.

https://www.biggerpockets.com/forums/48/topics/498694-transferring-title-to-an-llc?page=1#p3061582