All Forum Posts by: Chris Baber

People seem to assume you can't afford $1,000/month.  I will assume you can afford it.  I think it's too much ON TOP OF a 50/50 split.  I think it's okay for a mentoring fee, if you get LOTS of help and hand-holding and explanations from which you can learn.

I think a 50/50 split may also an equitable way to pay for their help, but both is WAAAAYYYY too much to give up.  I would prefer to pay a set price for mentorship, and keep my deal money, it should amount to way more after a year.  But, splitting the deal forces them to ensure it's a great deal, so that's valuable also.  It's all give and take and cost/benefit analysis you need to consider/decide upon.

As others have said, go to local REI meetings, meetups, or just try to connect with people here and see what value you can provide these people in exchange for their help.

Maybe you can re-design their website for them, or do some bookkeeping, or clean their office, or whatever skill you have that you think they might benefit from.  Don't ask them to help you, ask how you can help or add value to them, and they will reciprocate.

If you just want to throw money at it, look for and talk to at least 5 other mentors, and see what they offer, or what you can barter to get their help at a lower cost to you.

I would suggest you look at moving the property into your names, do the financing in your names, then move the property into a land trust, which is owned by your LLC.

This can help with anonymity since the land trust lets you make changes to the asset/ownership without having to report it, but still puts the asset into the LLC for liability reasons. You can then sell the land trust, which 'owns' the asset, instead of selling the asset yourself. This strategy can prevent you needing to report the change of ownership, which can trigger the 'due on sale' clause in most mortgages. There's more to it than just these points, but I think it's worth studying a bit. It could save you FAR more time down the road by avoiding headaches, so consider the time spent studying as another investment, which can pay rewards for the remainder of your investing career.

I've been studying YouTube videos from Anderson Advisors and have gotten a LOT of great information about structuring, and the reasons to do it.  Clint Coons has a pleasant voice to listen to, and and some really great ideas and explanations of his reasoning, which is more valuable to me than the ideas themselves.  I play videos in the background while I do other things, but find myself stopping a lot to really listen to important points critically.  But even with just passive listening, the ideas make it to your subconscious, so you'll still learn quite a bit.

With that said, what you do after refinancing is open to you, but I think you'll have much better luck with the loan in your names to get started.  Like Greg said, until the business/company has a history, track record of successful investing, cash flow and taxes reported, and assets, doing it in the business name will be much harder and more expensive.

Just a thought here.  The number may not be to your favor, i haven't run them, but here goes anyway.

A good private money loan might be a good option for the purchase and rehab, then refi into your conventional loan once all done.

the 203k is a great loan idea, but it's a bit of hoop jumping.  you have to get bids, escrow money, pay in draws, may not be able to do work yourself, and it takes a long time to get funded (due to the bidding and valuations it needs).

I close tomorrow on a hard money loan where I'm paying 2 points up front, and 10.75% interest, with interest only payments and a 9 month term.

My "appraisal" only cost me $250, since they only wanted a BPO, and fees were less than a traditional loan at a large bank (they hide a LOT of junk fees in there).  Meaning I paid about a point over a traditional, conventional loan, if that.  They qualified the loan on the deal, not me.  They didn't even ask for or about my credit, only that the numbers on my deal make sense.  They have a 3 month minimum interest I have to pay (if I paid it off in less than 3 months).  I would have closed in a week if not for July 4th giving my attorney a 5 day weekend last week.

If you could use a loan like this to acquire and rehab your place, and get yourself 10 or 20% equity, your take-out (permanent) financing would not have such high PMI costs (or none), and would also avoid some other FHA costs, so it might not cost you much more than the 203k in the end. If you recalculate your 203k loan with PMI as interest, and reverse the rate, the PMI could be costing you 1-2% in rate equivalent, for the length of the loan. They don't remove it anymore, it's permanent. I think they charge a point or 2 in up front PMI also, but I could be wrong about that. I haven't written a loan in almost a decade now.

If you don't have too much work to do, this private financing could allow you to finish the rehab work before you could even get the 203k loan funded to even start the work that way.  The extra rents you collect for getting done sooner might cover the extra costs, if there are any.

Like I said, I don't know your whole scenario, and this type of financing might not be 'cheaper', but it might be 'better' for other reasons.  

Worth thinking about.

Like Marco said, why not take the 1 bed for yourself, and rent the lower to your friends.  you're close enough to 'hang out with them', but don't have to fight over who left stuff in the sink every week.  Plus, it should help with lending to rent the lower.

Also, be REAL careful about renting to friends and family.  "Aw man, come on, I'll get you the money next week, I promise.  We're friends, right?!?"

Get signed leases and make sure they understand this is a business to you; and then treat it that way.

You may have to evict your friend one day; can you do that?

I love the idea of house hacking, but friends and business can be a volatile combination.

I would be interested in this math.  That scenario doesn't sound quite right.  But, that's really neither here nor there.

If you already have 6-9 hard inquiries on your bureau, and are borderline having a good enough score to do your deal, maybe wait.

However, if you don't have more than 1 or 2 inquiries in the last 6 months, this one shouldn't hurt your score much, and not for long.  You may be required to write a Letter of Explanation to the lender as to what was the reason, and what was the result of the inquiry?  (Bought my lease out. Lowered my payment $100/month)

It should not affect your deal, but I would also just check with your mortgage person first, just to be sure.  Some lenders have weird overlays and a recent car inquiry might bother some lender for some reason, so probably better to just check first.  It used to drive me crazy when a loan would fall out because a borrower did something like this without asking anyone, and it killed an otherwise sketchy deal.

Does no replies mean it's such a great deal you're all trying to lock it up without me?

Or, so terrible it's not worth talking about?

Thank you Luke!

I've reached out to both of them.

I'll report back my experiences.

I've got a lead on a commercial property I think will be good, but I don't yet know enough about commercial to try to do this myself. I'm looking for a good local broker to help me with this deal.

Appreciate any help.

Hello there.  This is my first deal review request, so please forgive any mistakes or dumb things you're about to see.

I'm a SFR investor, but multi looks promising. This property caught my eye for several reasons

1. mostly because I drive by it frequently
2. it offers a commercial space, apartments, and mobile home lots
3. it's close to my other investments and where I live
4. I feel like this is an area ready to grow (it's the non-interstate link from big town to small town)
5. it's not so expensive I can't find a way to do the deal
6. I've been investigating mobile home investing lately, and this is one way to learn that
7. I don't have a physical office space for my business, and this would lend credibility to my business (and allow me to have high-speed internet, which I can't get currently)
8. I can use an apartment and rent my SFR for more
9. the mixed use feels like diversification
10. I wouldn't be surprised to see an investor try to buy this and several other spaces up for a large development
11. I see potential in possibly converting the mobiles to tiny houses and increase rents accordingly

I'm not in love with the deal, but a couple of those reasons would sway me to consider a less-than-great deal, for non-financial reasons.

The numbers really look not very good, and it looks like a bad deal as it sits, considering I'm adding 1000 in rent increase and no rehab in this scenario.  I figure this is likely the commercial space value and I could probably add $50/month on lot rent, or trailer rent on the non month to month trailers (all but one).

I'm trying to learn commercial quickly, but I still don't know all the right questions, or what documents to request, or what things I don't know to ask that will bite me (are septic systems legal, violations, etc)

I would appreciate any feedback on any aspect of this deal, from my financing assumptions, cap rate, reasons I want to like it, office rental income, etc.

The numbers I used are from the P&L they provided, and seem really high.  It barely cash flows $1100/month with no financing, so something's up here, right?

THANK YOU FOR USING YOUR TIME TO HELP ME.

View report

*This link comes directly from our calculators, based on information input by the member who posted.

I can provide a lot more information, but felt like I rambled too much already.  I'm happy to answer any questions you may have, and will respond as quickly as I can, to not waste your time either.

thanks Chris.  It sounds like they would have worked with you about the same way, with or without the history.  I've had particularly bad luck with US Bank in the past, they had terrible customer service and too many nickle and dime things that just irritated me.  I just can't put up with that kind of behavior in the hopes it may help me in the future.

In this case, it seems you get their help now, but didn't have to deal with that in the past, so a perfect situation, and not reason to not avoid them today.

Good luck with your project, and please let me know if I can help in any way in my part of the world with your expansion.