All Forum Posts by: Daniel C.

Hypothetical financing question for the group. I’m not looking for lenders, just looking to unpack this scenario.

Assuming they are both achievable, is there currently merit in holding 5 duplexes and triplexes in a single commercial portfolio loan, rather than 5 individual residential “portfolio” loans? I’m asking mostly regarding current terms, and not looking to get into legal protection angles.

Residential financing when it comes to small multis is never as amazing as all the headlines would have you believe, and I’m also eager to hear if your answers differ based on 2-3 units in commercial loans as opposed to 5+.

I’m very familiar with residential, but not so much commercial.

Thanks!

@Adam Sharp

Be more aggressive with the price next time from the start. Number of qualified applicants shouldn’t change the way you value your rental. We always list for a week with a delayed showing, collect all the applicants, then choose the best based on credit (payment history) and income. We can quickly see if we’ve been too aggressive with price just by the number of inquiries we get each day.

Are commercial lenders able and/or generally willing to use an income based appraisal on 2-4 units, if income based produces a much higher value than market based?

@Sachin Parate

From experience, it will only effect your dti as any loan would. It is not a mortgage. I also don’t think the SBA reports to the credit bureaus, but the lender will likely see the credit pull and ask for the debt information to be factored in.

@Lisa Forde

No payments for twelve months but interest will accrue.

No portion of the loan is forgiven. You had the opportunity to ask for up to a 10k advance (1k per employee). You would have already received if you have the loan docs, and it doesn’t apply to any part of the actual loan.

@Ryan Dodson

I closed on a property yesterday. The first very paper I had to sign was stating that none of my properties were in forbearance. Not something I would get involved in unless it’s your last resort.

Real estate is local, but as far as I can see..

Supply is low, and new demand is not being met.

Interest rates are already low and going down.

Lending is tightening based on some of the concerns you pointed out.

Prices didn’t drop because supply fell as fast or faster than demand during the lockdowns. As things open up, rates will continue to cause demand. Low inventory will continue to throttle supply. I expect prices to climb.

@James Allen

I’m not a lawyer, but that’s my understanding. I don’t think it prevents you from all the documentation and filing requirements they are mandating though.

Definitely check out the Facebook video mentioned above, I did and it was very thorough.

There is a very thorough breakdown of the closing docs on YouTube if you search for sba eidl I was approved.

@James Allen

I am far from a lawyer, but here is what I understand as I was approved as well.

1. You are correct. If over 25k and collateral is required, selling or refinancing any properties (or any personal property) needs to be approved by the SBA.

2. It clearly states that the funds need to be used for costs caused by the pandemic (and no expanding or refinancing debt). There is nothing I saw that said you have to use it first and can’t hold it in your account though, but proving that you need the loan based on losses from the pandemic could be more difficult if you are paying with other funds I imagine.

3. I was approved. I don’t think I plan to take it. If you don’t actually have/anticipate loses anymore, you may not want to either, although holding it as a wait and see is certainly a strategy.