All Forum Posts by: Brandon Vukelich

Thanks again @Albert Bui. Yes, ideally we would re-fi into something better if it makes sense.  We have that hefty PPP.  Maybe we should chat offline. Feel free to call me (number is in my signature) at your convenience any time.  Thank you.

Thanks Albert. I figured my traditional lending partners may be incorrect or just not familiar. Previous owner rehabbed the property in 2018 to turn it into a full time STR business, so unfortunately, 2019 is the only full year with great financials. Obviously, 2020's figures are going to be down 30% or more at this point. Seller owned it in her name. We have purchased and held it in an LLC. This will be our first tax year.

Purchased our first STR property in Feb 2020 using Athas Capital, 6.875% over 30 years. Price (appraised value) was $1.1mil, loan is $815k with a $40k prepayment for 2 years. We selected Athas due to our "traditional" residential lenders said it would be challenging to obtain conventional financing due to lack of 12-month leases in place and the property operates as a STR "business." Based on the situation at the time, quick closing was critical and didn't allow for much opportunity to shop our deal around. Wondering if there are any lenders that could pull together better financing, soon or in a year or so. The property is a stacked duplex in front with a detached studio (DADU) in the rear. There are four entities (owners) of the holding LLC. All have very good credit. Appreciate any insights into alternative financing or input if what we have in place is "ok" for this type of property.

My quick 2 cents....it's not as easy as people make it out to be. You REALLY have to know your market, know rehab costs and ARV (after repair value or estimated retail price). Keep in mind the 70% rule isn't a concrete tool. Your end-buyers (flippers) will have have various expectations on target net profit, some have lower resale costs (because they are licensed agents or sell FSBO) and/or they have can flip a property at various levels of repair/costs.

Everyone has access to the same data online these days. Either look through public records, pay for a service to send you properties, "drive for dollars" or something else. Find buyers by networking via local Meetup or other REI groups in your area.

Don't be cheap on your purchase and sale agreement, assignment contracts, addenda, etc.  Be sure you either have a real estate attorney draft them up or obtain them from a qualified source.  You're dealing with contracts and you better know how to use them and cover your butt.  Best wishes on your journey!

What would make this a GREAT DEAL? - I'm skewed from our West Coast situation but a 6.5% CAP with potential to raise that within 12 months. Positive cashflow of $200+ per door. The ability to lock a decent financing terms. Also, is the area up and coming or a seasoned high demand location? Low crime. Rents trending upward?

What are some key questions that you would be asking me about the property? - Some of the same q's above. Financials/rent roll, what's the unit mix, how much parking available, walkability, leases or M2M, w/d in units, carports/garages/storage available, self-managed or PM?

What would peak your interest and make you reach out for more information? - Answers to the above.

What are your top three deciding factors that makes or breaks a deal (obviously the financials, but what else)? - Potential net cash flow, deferred maintenance, condition of the local economy.

What do you find frustrating about working with a sales agent for this big of a project? - Their lack of knowledge about the details, history, potential of the property and their unprofessional marketing efforts (in the listing or offering memo).  

With COVID has your buying strategy shifted? - Absolutely.  On hold unless a screaming deal pops up that is absolutely too good to pass up.

Agree with most...at first glance it is hard PASS. $1000 positive cf for 20 "doors" wouldn't fly with most investors unless you are ZERO into it.  Even so, no forced appreciation and not a fan (personally) of that many SFRs at only $50/unit.  Best wishes on your investment journey!

No problem.  I suggest Crushing It In Apartments and Commercial Real Estate by Brian Murray.  A good read for beginners or more novice investors.  Also, if you listen to podcasts, Apartment Building Investing with Michael Blank.

So many factors to properly answer your question.  Lender will want typically see your down payment as "seasoned" and borrowed last minute.  They won't loan you 75% if you have a private loan for 25%.  You can typically re-fi after 6 months but you will have to show significant appreciation in value in order to cash out your investor, assuming you borrow the full down payment for purchasing.  You may want to consider finding an investor to be your partner vs loaning you the funds.  But I highly recommend you search BP for commercial lenders or reach out to one in your area and have an in-depth conversation to help you "get your ducks in a row."  Best wishes on your investment goals!

Ditto to Guifre above. You'll need 25% or more down plus 3, 6 or more months of reserves. Commercial lenders also focus on DSCR (debt service coverage ratio), most want to see a min of 1.25 and only lend up to 75% LTV, some cases 80%. Other than the typical requirements, they probably will require an Environmental report Phase 1 or 2 and/or surveys. Both can be expensive. They will factor in 5% vacancy, even if fully leased up. They also prefer to see "management or landlord" experience, indicating you'll know how to manage a commercial property. Best wishes on your investment goals!

All very good notes already provided. My additional 2 cents. You're probably aware of the new NWMLS F22FM or CBA's FMA Force Majeure Addendum to address timeline delays based on the stay at home order. These are helpful. Be sure to ask for trailing 12 months of actual income. This helps verify actual collected income vs what SHOULD be collected on the rent roll. Cross check rent roll with leases. Also, some landlords like to cut back on expenses months prior to listing to help beef up the P&L, CAP rate, etc. I've read a good rule of thumb is to question any expenses that reflect a change of 5% or more from the prior year. Suppression of expenses could mean more deferred maintenance. Lastly, target closing between the 5th-10th of the month, so you are prorated more rents at closing (helps reduce cash needed to close). Best wishes on your deal!