All Forum Posts by: Byron Paille

You can own 100 homes with 0 cashflow and 0 appreciation so the number of homes doesn't matter. The profitability of each home is what matters. 

@Byron Paille My immediate goal is 50 units in the next 3 years. I’m currently at 25. I currently believe I have options to achieve that goal assuming a few things happen and I am able to locate the appropriate properties which can be difficult in my area. I do not really have a desire to invest outside my area but may be forced to do so if the right properties don’t become available in my area.

 My goal is 1 home. The one I live in. Why? Because I have owned lots of real estate in the past and now own the loan, love being the lender over owning the property all day long. While there are alot of benefits to owning the real estate, sometimes its not worth the aggravation.

@Byron Paille

There are pros and cons to you mental processing. Allow me to explain, since I have a little experience with this.

5 note, 5 escrow, and 5 closings is not difficult. Keep shopping for a lender that will do it. Biggest PRO: you have separate notes and can realize the full market value. This is especially true if your valuation based on OP is accurate. The CON is that it kills a few more trees. A few more additional strokes of the pen.

A commercial loan to cover all 5 is nice. Biggest PRO: you can average out the income to assist with leveraging all the properties as if it was one. Possibly easier to qualify and less money up front out of pocket... via 75%-80% LTV. The biggest CON is that you might not be able to grt a separation clause. Thus these homes will now need to transfer together until they th loan is paid.

Do not put too much emphasis the terms, unless you plan to keep them and pay them off. A short term loan via commercial lending is a fine product.

I come from a position of experience. I was able to get a package deal of 14 home and an empty lot. It would have cost me more up front to go with separate loans, so I chose the commercial route. However, it was tough to find a lender that allowed a separation clause... it cost a nothe point and other fees.

Picture this, how will you be able to sell for the best valuation if you cannot sell them separately as you fix them up or whatever? Do you think you can sell them as a package if you are in a bind? Because you cannot separate them? Is there enough cash flow or market rents to qual for better terms as a whole or individually? Do you have enough funds to close them all?

@Byron Paille

There are pros and cons to you mental processing. Allow me to explain, since I have a little experience with this.

5 note, 5 escrow, and 5 closings is not difficult. Keep shopping for a lender that will do it. Biggest PRO: you have separate notes and can realize the full market value. This is especially true if your valuation based on OP is accurate. The CON is that it kills a few more trees. A few more additional strokes of the pen.

A commercial loan to cover all 5 is nice. Biggest PRO: you can average out the income to assist with leveraging all the properties as if it was one. Possibly easier to qualify and less money up front out of pocket... via 75%-80% LTV. The biggest CON is that you might not be able to grt a separation clause. Thus these homes will now need to transfer together until they th loan is paid.

Do not put too much emphasis the terms, unless you plan to keep them and pay them off. A short term loan via commercial lending is a fine product.

I come from a position of experience. I was able to get a package deal of 14 home and an empty lot. It would have cost me more up front to go with separate loans, so I chose the commercial route. However, it was tough to find a lender that allowed a separation clause... it cost a nothe point and other fees.

Picture this, how will you be able to sell for the best valuation if you cannot sell them separately as you fix them up or whatever? Do you think you can sell them as a package if you are in a bind? Because you cannot separate them? Is there enough cash flow or market rents to qual for better terms as a whole or individually? Do you have enough funds to close them all?