All Forum Posts by: Chris Wallace

 Where does the money come from and what are the terms of the loan(s)?

Edit: Let me know if your calculator shows different numbers.  Mine used about 100k added to the loan for purchase expenses, loan origination, etc.  This is an estimate.

-Chris

Here's one scenario currently listed for sale (no affiliation) :

Walgreens asking price:  $5114504

Rent Roll:  $335000 annual - No rent increases from now until forever it appears

Absolute NNN

CAP rate: 6.55% (this is higher than a lot of them, I'm guessing due to the lack of rent increases)

If you could find 100% financing for 30 years at 5% you would still have negative cash flow.  

This doesn't take into account purchase expenses which can be substantial.

If you paid asking price you would cash flow -1K per year.

If you get the same property for 5MM you would cash flow about 6K per year.

If you get the same property for 4.9MM you would cash flow about 13K per year.

Now where can we find 30 year terms @  5% with no skin in the game?  

Maybe you only need a 10 year term but 30 amt and plan to sell or refi to cash out that equity. But you still need a 100% LTV lender that will do 5%.

Chris

Wealth to me is having a big fat Net Worth that flows enough cash to live comfortably and still continue to grow.  Real paycheck or contract work is purely optional.  No need for fancy vacations if you can live your life like a non extravagant vacation.

My mom owns one (not the business).  

Some newer information, if the sales are 50% or greater in motor fuel, then you can depreciate in 15 years vs 39.  https://www.irs.gov/pub/irs-wd/201509029.pdf See page two conclusion.

Look forward to the discussion on what to look out for if buying new. 

My concern is the wave of electric vehicles reducing demand over time.

Interesting thread.  Any updates or details revealed in the last month?

Chris

1.  The right to buy is at 1.8MM with each year going up by 2% until the end of this 5 year term.  If I were willing to sell the property for less than 1.8MM, do you think this would still be an impediment?  Would potential buyers see this a negative?

2. PNC business banking informed me of this today as well. From their own admission they don't cater to full time CRE investors.

I think the tenant would be willing to exercise the option early with some negotiating.  Taking the term out to 6-7 years remaining.

PNC wouldn't do a mortgage to use as a down payment on my current property. They would do a business line of credit up to 75% LTV.

Thank you for taking the time to answer.

I'm not really wanting to sell although I wish it was more profitable.  Tenant has a right to buy option until the current lease runs out in 2019.

Any suggestions as to where to find the best loan rates to pull cash out?

My goals:

Additional cash flow

Paydown on the new purchase

Build wealth

Minimize taxes.

I am likely to take a mortgage out on my house due to attractive rates on 15-30  year terms for primary residence.  Writing off the mortgage interest would also be nice.

I'm Trying to give a complete picture so I can tap into this great resource of BP.  

I own a commercial property, no mortgage. Two appraisals 3 years ago $1.8MM. Raleigh NC, so unlikely to have gone down

Rent $10,400/mo (2% annual increases). Tenant is original to the building, original lease started in 2003. Current lease 2014 – 2019 with two 5 year options. Fair market rent with process in place if we can’t agree on rent at each renewal.

Landlord responsible for roof and structure only. New roof 2 years ago ($45k).

Credit score 800+. I keep approximately $75K in cash.

Made $85-100k taxable last 5 years self employed outside of CRE. Transitioning to more and more RE until I sail away.

Personal Ohio residence has no mortgage. Total debt service non business related $1K/mo. No business debt.

Looking for minimum or no LL responsibility except maybe a lease negotiation, paying loans and cashing checks.

Would you attempt to sell current property or borrow against it?  If I borrow against it:

Assumptions: 8% cap rate $1.56MM value.  It may be worth more but always trying to underestimate.

20 year amortization @ 5% (Can I get this loan fully amortized?)

Borrowing 700K - 1MM from current property leaving DSCR (ranging 2 - 1.44), Use this money as a down payment on the next and to beef up cash reserves.

Chris

 That makes sense now.  I somehow couldn't make the connection with the way it was presented.  Thank you.

Realtors, current home owners and brokers would seem to be adversely affected.  Not sure how much the actual market will be affected.

Chris

Thanks for the link.  Interesting read.

Can someone explain this to me: 

"Loser: Real Estate Brokers

No more deduction for interest on home equity debt. A $10,000 cap on the deduction for real estate taxes."

Chris