All Forum Posts by: Christine Kwasny

HI Christian.  Sounds interesting.  How long do you anticipate this meeting lasting? Thanks!

I am under contract to make a cash purchase on a 4-plex in the Portland, Oregon market for $800k.  

I can fund the project myself, but would prefer to get a short-term hard-money loan for approximately $350k for 90 days or less, since I plan to immediately finance the property at the purchase price upon taking possession.  I have a relationship with four conventional mortgage lenders that have assured me that they can close on this deal. 

I would ideally like a LOC backed my existing rental property(ies), some of which have substantial equity, but that seems to be impossible in today's credit market.

Some basics on this deal: 

contract purchase price: $808k.  Due diligence will be completed by the end of this week (Friday, July 7).  

value-add short-term improvements: ~$80k

long-term capex improvements (non urgent): ~$90k

post-rehab value: $1.1M at 14GRM

Please message me if you are interested.  Thanks!

I am looking for a LOC secured by one or both of my rental properties; a 4-plex and a SFH. Both have substantial equity that I'd like to access without using a cash-out re-fi. We have strong reserves, and good paycheck income. Seems like this would be easy, but it's proving impossible.

Trick is that 1) both properties have a primary mortgage, and 2) my husband and I are US citizens but live outside of the US.  I have contacted numerous local banks (local to my rentals), but one or the other of the above issues is a stopping point. 

I'd love to find a lender, so appreciate any leads!

In my experience, both above answers are correct. I do not currently hold my properties in an LLC since they are residential loans (less than 4 units), but I will be transferring them there soon (I will get to that in a minute). No bank I have spoken with will make a residential loan to an LLC. As mentioned, it is possible to transfer the title at a later date from your personal name to your LLC, but you do run the chance of the bank calling the loan (or sending you a nasty-gram to change it back). You wouldn't want to do this if you re-financing the property. However, both my attorney and my lender have never personally had a client's loan called for this reason, so you are weighing the risk of personal liability against the bank finding (and caring) that the title has transferred. For me, I will be transferring all of my property into individual LLCs since my personal real estate portfolio, and personal assets, have grown in value. This makes me feel better than some founded, or not, lawsuit will likely not result in financial collapse for my family.

As for commercial loans (more than 4 units), many lenders will lend to an LLC, some without personal guarantees (although with less favorable terms). I know Chase bank will do this. You can contact Patti Condon in Portland - she is great. I have a long list of local Portland banks and brokers that can provide more flexible terms as well. You may need to seek out what financing solution you are looking for.

It sounds like you are trying to control your personal liability.  This is sort of complex and you are best speaking to an attorney, and a CPA, since LLCs will affect not only your personal liability but the way your taxes are filed. Also, everyone's personal situation (and comfort level), are unique.   I just completed a bunch of liability and estate planning with Neda Soofi in Portland.  I thought she was excellent.  My CPA is Tonya Bennet at Brown Armstrong.  I like her a lot also.  In my opinion, spending a few hundred dollars in initial planning to understand how all this works, is money well spent. 

Good luck!

I am looking to sell two single family homes I own in Beaverton.  One in the Murray, Garden Home area; the other in the Cedar Mill/Nike area.  Both are in nice neighborhoods with excellent long-term families that want to stay.  Rents are at market.  Properties are in good condition and are low-maintenance.  Easy rental.

Looking for 4-20 unit buildings in the Portland area.  Upside potential preferred.

Looking for plexes.  4-20 units.  Portland metro area.  Prefer upside potential with improvements, but not necessary.

I have a handful of properties in the Portland metro area, and am actively looking to exchange into or purchase close-in multi-family properties.  Preferably with upside potential through renovation.

You can learn more about me at christinekwasny.com

@Andy Luck:

Yes, you are correct that getting emotional can be your undoing. I really don't get emotional with the properties because...well, I just don't.

And, yes we were lucky. I almost didn't buy the place; my brother is a firefighter who told me all about victorians and their lack of fireblocking and how the fire damage could be extensive and unpredictable. I typically don't even consider a building this old because I don't want to deal with all the old stuff like galvanized pipes, knob n tube, lathe n plaster, lead paint, old windows, etc. We made an exception here since all these things had been modernized, and the building showed no signs of structural compromise despite the severely damaged roof structure - as verified by several structural engineers. After many opinions, it seemed like the fire damage was probably limited to the roof, with little to no damage to the vertical structure. We got lucky, as this was the case, but we were prepared for more extensive damage. In addition, we got a fair purchase price for the risk we were assuming and the neighborhood is hot, hot, hot.

Just replacing the roof (which was about shot anyhow), the underlying roofing structure, engineering, permitting, etc, etc was about $45,000. The damage was old - probably from 1987 when the last fire department response was recorded and the vintage of the interior remodeling and system upgrades (plumbing and electric). I suspect that the owner at the time took the insurance money, upgraded the interiors, plumbing, electric, installed new wood windows, and simply slapped a new roof over the charred structure. At the time, this neighborhood was redlined, and the property had recently been sold from the federal redevelopment agency after completing a nearby freeway and hospital project that bisected and essentially destroyed the historic neighborhood.

The before/afters aren't very interesting unless you call an in-kind roof replacement exciting!

As a follow up to anyone looking at a similar situation:

We did purchase this building, and decided to do a full overhaul right away for various reasons, which in hindsight was the wise decision, although we were a tad bit over our heads

.

In regards to replacement of the roof and fire-damaged roof structure, we interviewed and compared quotes from two large fire re-hab companies. Both were very competent and I'm confident either would have done a great job. Basically, it came down to cost and differences in approach. Costs were very close, so that wasn't a big issue. One wanted to do stick frame; the other pre-built trusses. We decided to go the stick frame route due to savings in time, and flexibility to make adjustments as needed once the old structure was removed. There were also serious access issues. As it was, removing the old debris and getting new materials up was challenging enough. I don't see how trusses could have been placed short of helicopter.

In the end, we got lucky; the fire damage was mostly restricted to the roofing structure, although there was fire damage to interior walls from where the fire started, which was minor and not load bearing. Basically, the structure was engineered, plans reviewed and approved by the City, and the work was done. The crew did a great job and and the finished product is great. Now there are no more worries on that end. It could have gotten pretty ugly with fire damage in wall structures that would have required repair/replacement. We were prepared for that, but were fortunate that this part of the project stayed on budget. I should note that this was a very large and messy job. Vacating the building was a necessity; the interior and exterior were full of debris and heavy construction for nearly 4 weeks, a situation no tenant would appreciate and I see as a liability. The contractor was very conscientious, but removing an entire roof and fire damaged material is very messy business that is pretty major construction.

The project as a whole took nearly six months, but the building is fully renovated inside and out, it's beautiful and low maintenance. We have been able to get higher than anticipated rents, and overhead should be low for a long time to come. It took nearly 8 weeks of negotiations with the seller; 6 weeks to select the right fire repair contractor; 6 months of vacancy; and countless incredibly stressful situations, but it's over and done with and I feel we have an great asset added to our portfolio.