All Forum Posts by: Chris Cambridge

Jim the real question for you to answer is what is the NOI? Then figure the DSCR. From there you do a quick test on your expected rates and amortization. Does minimum DP really means 100% for you? I see it used in the same sentence as pay for itself! I hope your offer was not based on proforma because no one will finance you based on projected income. Lastly cash is king. Lender says they'll do it at 75% then be sure to have reserves to service the debt for at least 6 months or 10 of purchase price left over. That's my 2c!

I'm going to repeat a prior posts about residential deals purchased in an LLC and structured as a commercial transaction.

What you would most likely encounter from a commercial perspective is a 30-year, fully amortized loan product for purchase or refinance that can be used for both single rental properties and rental portfolios. Some loan types have a fixed period for 3-5 yrs.

Low rates would probably start at 6.5% and the LTV should reach up to 75%. Credit score of 630 or more and underwriting based on commercial. So assume 1.25 DSCR on NOO 1-4 Residential, Townhomes, Warrantable Condos. Some lenders would prefer to see a long term lease (not month to month) in place whereas others can give credit for vacant units.  

What you would most likely encounter from a commercial perspective is a 30-year, fully amortized loan product for purchase or refinance that can be used for both single rental properties and rental portfolios. Some loan types have a fixed period for 3-5 yrs.

Low rates would probably start at 6.5% and the LTV should reach up to 75%. Credit score of 630 or more and underwriting based on commercial. So assume 1.25 DSCR on NOO 1-4 Residential, Townhomes, Warrantable Condos. Some lenders would prefer to see a long term lease (not month to month) in place whereas others can give credit for vacant units.

There are options out there.

Rason these are strong CAP rates, Did you negotiate a steal? Are these in contract? There are a myriad of options for a great deal. The usual still remains. Down payment (no 100%), quality of asset, cash on hand from buyer, last but not least credit.

Charlie the idea behind buying in the LLC is to underwrite it as a commercial loan. 3- 30 yr options are available and rates are above those FHA quotes of 4%. The property should be stabilized and depending on program credit can be given for vacant units. If the property needs repairs you fall out of favor with most but there is a solution for that as well.

Fact is you can get a commercial loan if you purchase this in a corporate entity. The loan can be fully amortized. My question is what's the seller's problem with that bank (maybe a past grudge)? Maybe they pulled on last buyer, who knows.

Hold on to your knickers Cory the following statement might be a revelation!

Philosophy: One roof, one tax bill, multiple income streams/property vs multiple roofs, multiple tax bills, one income stream/property

So as to not sell the pie in the sky. Get more cash or reliable partners.

Matthew your 20% is a good start. What is significant here is the NOI as this primarily would be funded depending on cashflow. There are ways to add to the capital structure to have the lender satisfied if the LTV is limited.

BTW is this a stabilized property? Where is the value add component?

Let's see what can get this across the goal line.

Chris

The commercial loan for this deal can go 30 yrs the rates start realistically at 7%. Still credit driven though but underwriting is based on the cashfllow primarily to get the nod. 

Ask for actuals get APOD broken down for trailing 12 mths. Then match to proforma you have. You will see the increase in revenue and if repairs were done that will be shown too. If you feel like fables and lies abound get tax returns.