All Forum Posts by: Chris Mason

Insurance broker. 

However: If you've already made 20 calls and had no luck, then your 21st call is to Lloyds of London. 

Quote from @John McKee:

loan is due every 5 years and it is currently up now. Renting at 6K lessons the value of the property but nothing I can do about it because I may never find a tenant that pays 7,400 again.....this is the downside of paying for a class A NNN tenant that eventually leaves.

Bank won't allow to refi back to a 25 year amm. @Greg Kasmer spot on about using other paid off properties on the loan.  The bank said they can act as a cosigner on the new loan without being collateral.

The only problem is that I am still upside down about $500 dollars a month with cashflow.

Only suggestion I'll add, that hasn't already been mentioned, is that you don't have to refinance with the same bank. That's great that the bank who currently holds the note wants you on 20 year or 15 year amortization, they view you as a captive customer, they don't have to earn your business any more, as far as they are concerned. 

A new lender with 25 year amortization and maybe a lower rate, will have a lower payment. That lower payment, in turn, helps the DSCR, and now you don't to come in with as much. Most of the loans I do are on 25 to 30 year amortization, and included in that is people calling me b/c their current bank would only do 15 or 20 in cases where they've had the property for 15 or 10 years already.

Every time your car insurance is up for renewal, that's an opportunity to make the carrier earn, or re-earn, your business. Same thing here, just on a much larger and more important scale.

For spaces that small, with minimal TI going in, I don't think that's crazy. You tend to see higher turnover when it's that small; good chance the property owner or property manager can't find people that a) only want 700 sq ft and b) are willing to sign a 5 year lease. 

Go read the next 100 threads below this one in the mobile home park investing subforum that we are in. :)

An off-the-wall suggestion would be local networking events attended by business owners. Chamber of commerce, and so on. When they ask "so what do you do?" the correct answer is "I'm looking to find the right business that might be interested a retail space [bla bla bla]." You will get a lot of "oh, maybe I should introduce you to..." - and, boom, now you have at least leads. 

You strike the balance by looking at your goals. 

If you want a risk big and win big proposition, that's Grandma Millie's Sewing Shop. 

Low risk and low return, Subway's where it's at.

For maximum sales price in 2-5 years, you need to consult a combination of your broker and a crystal ball. Silicon Valley is not rural Ohio is not east Los Angeles. One thing that will remain true for all is the outlier buyer who would want it either vacant (perhaps for their own business), or easily turned vacant. That's where your lease terms come into play. 

30 year fixed rate mortgages only exist for home loans b/c of FDR's New Deal in the 1930s, it's not really a thing for commercial mortgages. Incidentally, what I posted is how home loans work in most countries on the planet, the kiddy-glove 30YF is the exception globally, not the norm.

For a new and inexperienced developer, banks don't currently have appetite, so model your numbers on a hard money loan at 12% to 15% (I do not offer these).

Hey Frederick,

I invented a 20-unit property and ran it through our database really quick. You paid $2m for it two years ago w/ 25% down (it was suffering from mismanagement and deferred maintenance), invested $325k in capital improvements, and it's now valued at $3m with an NOI of $195k (cap rate assuming $3m value is 6.5%). You purchased it with a HML, and are now rate/term refinancing the $1.5m (75% of $2m) hard money loan for better terms b/c you show six months of stabilized rent, the T-12 and rent roll with the monthly breakdown shows a clear trend towards where we are at now.

Your hard money loan matures at the 2-year mark, but you weren't silly enough to call me at the 1 year and 11 month mark, so my partner lenders that have great terms, but move slower, are on the table. You called me 4 months ahead of when that hard money loan matures b/c you are smart and realize that time is money.

For the 2nd option, it lists "7/25, 10 year maturity." That means the rate will be fixed for 7 years, the payments will be calculated on a 25 year amortization, and there's a balloon payment at the 10 year mark. 

From left to right:

- Points are 1.5%, 1.25%, and 1.25%

- Prepayment penalties are in place for 7 years, 2 years, and 3 years. I can search for "none," but didn't for this example. 

- I didn't search for non-recourse, that just popped up by dumb luck. 

- The 3rd lender, on the right, with the best rate, requires that one borrower/sponsor be experienced in the asset class, and that they personally live local to the property. 

- 1 regional lender (Pima + 1 other county), 1 state-wide lender (AZ), and 1 national lender, not in that order, is represented here. 

Seems like it would be easy enough for a residential underwriter to condition for the home to be vacant prior to closing. 

What numbers or figures do you have?