All Forum Posts by: Craig Grella

Michael,

When you get that loan down below the 65-70% mark you should renegotiate your guarantee.
PNC should be able to handle that for a small fee. If not, there are enough MF lenders out there who can handle the no-recourse carve outs for a good property at a low ltv.

I don't know TX law so I wont comment as to how it would be viewed, but I'm getting stuck on understanding why you need to use that structure.

Are you looking for the quick profit, or long term cash flow? That should dictate what you're doing here.

I'm not sure how you have your paypal account setup or how he has his setup, but I'm just thinking of the 2.9% hit he's going to take by accepting a paypal payment.

If he's willing to take that kind of hit, maybe offer him 2% less on the payment, save yourself a few bucks, and cut him a cashiers check.

I always enjoy reading Bryan's posts and responses, and in this case his words are very true, and what Scott R says is true too, even if it is a somewhat cynical view of RE - I tend to agree, and though I don't believe everyone lies, i do believe everyone tries to paint their project with their own rosy glasses.

I deal with investors looking for money every day, and have found what Bryan says to be true for new investors and experienced ones. Access to capital is always a hurdle. I advise my clients to spend most of their time building equity, because with equity the financiers will line up to fund just about any project you throw at them. I think your time is better spent working with the equity you have and handling deals you can handle, than stretching yourself with a loan that doesn't make sense. Starting small and playing smart will allow you to work through the bumps in the road and build your portfolio, and your equity.

When i started investing I moved quickly from SFR's to small MF buildings. I found the hurdle there was having to make an offer before seeing real documents. I would do all this work on analysis, set meetings, negotiate prices, and then view property. Once I did get the real docs from the seller (usually on the day before the contract expired) I found that 9 times out of 10 the seller had overstated income or understated expenses and the deal fell through. On one deal, I met the seller at his building and interrupted him while he was repairing some sheetrock and painting a vacant unit. When I asked about his expenses, he actually told me he didn't have any expenses other than mortgage and taxes. I guess he got his paint and sheet rock for free.

I got over that hurdle by working with a few savvy brokers who found me great properties and drafted my offers with "walk" clauses so I didn't have to spend any money to get to the real docs to analyze my deals. They also handled much of the chit chat with the sellers until I needed to see the properties myself.

Cool post/question:

My partners and i did a commercial development loan on a piece of land that was tied up in litigation, and needed funding to clear the way for the transaction to be closed. It involved two very big developers, the FAA, and the City of Las Vegas. It was really tough to do, and required hundreds of pages of docs, a few site visits, and countless hours on conference calls, but in the end it was well worth the work.

We got to deal with some pretty savvy investors, some great RE attorneys, and make a new connection to a lender with which we'd later fund over $20 million in commercial hard money loans.

Alot of interesting responses on this post. I don't know where the blame should fall, but you can be sure it will be the RE investors who bring the market back; not the fed, Fannie, Freddie, or any investment bank.

Thanks Mitch.
I haven't read that one yet.

I also like the ebooks from hubspot.com.

they're well put together and list a few quick hits where you can tweak your sites and strategies to increase readership.

If you get on their mailing list they'll send you something nearly every day, but I enjoy their material.

Without knowing what state this property is in, that kind of transaction may view you as being the lender, which might require a lending license on your part. That's been the same type of crackdown on simultaneous and dual closings in certain areas.

Steve,

I think the familiarity angle is a big part of those portfolio banks being able to offer a program that's a little out of the box. The commercial banks are box checker underwriters. For the most party, they're not going out of their way to dig into the numbers of a local market for a relatively small deal. But the portfolio lender can get up close and personal, especially if they can reach out and grab that borrower's other business - deposits.

Thanks for the link Steve.

I just got a call from a client last night on a property I helped them finance in Chicago. They installed a cage door on a duplex where they were doing some rehab. Not only did the vandals get through the cage door, they took it with them, along with two new water heaters that had been put in.

Who steals a cage door? Seriously.