All Forum Posts by: David C.

@Vinnia Tjhin is this for a commercial loan or does the loan have to be in your personal name for Cross Country Mortgage?

@Brian Burke which rate of returns do your investors typically want to see? I see the different returns as well as the different ways firms calculate them, but I don't want to be overwhelming with it. For example, IRR levered vs unleverred, do you provide both of these? The same for IRR, ROI.

In addition to which returns/ratios to show, what frequency do you illustrate the returns to your investors? For example, if the hold period is expected to be 5 Years, do you present the IRR only at year 5 or do you provide it for let's say years 2-4 based on the analysis of sales price & growth? In case the property has the potential to sale sooner.

The same applies with cash on cash vs cummulative cash on cash, terminal cap rate (forecasted years 2-5), etc.

Finally, am I correct to present the IRR in a given year with the assumption of the sale in that year? This is for presentation/ forecasting purposes only, not actual returns.

In this case, there is no pref rate. 

@Lisa Sluss you can cash-out refinance without a mortgage. My clients have done that numerous times. Do you have any community banks in your area? These banks are more relationship based and have offer flexibility in their underwriting. What state are you in?

@Brian Burke I appreciate your perspective from the investor side, that's what I need. My reasoning to offer it was similar to cross collateralization to strengthen the deal for the investor. But it appears it would not have that impact. I will continue thinking of another way.

@Brian Burke

Thanks Brian! This is definitely helpful in achieving my long term goal of buy & hold. On the equity side, I am researching structuring the deals in a way that the investors will have ownership in at least 2 properties (including the subject property) for every offering to help mitigate their risk. Initially, the first property would be one that I currently own and is cash flowing and the second property is the subject of the offering.

In setting this up, I was thinking to have my current property deeded over to the new LLC and purchase the new property in that LLCs name.

What are your thoughts on how to best accomplish this or something similar?

I have some friends/family interested in partnering in real estate. I have the credit to qualify and they are willing to put in enough for the down payment. Their goal is to make some extra money utilizing my experience and credit. I will analyze the property, negotiate, manage the property, and screen tenants. I am open to this because I don't have to use my funds and it allows them to achieve their goal. My questions are:

1. What would be fair equity split in this case?

2. If equity, do I need to add them as a limited partner in the LLC (would create a new LLC)?

3. Would this be better to structure as a loan from them and pay interest?

@Brian Burke

In a situation where you can have interest only payments for almost the duration of your stabilization period (say 18 months), and the cash flow is the same as in an equity relationship, would the risk be mitigated? I am open to both structures (equity/debt), but because long term I would rather own the asset outright, debt seems to be the more cost effective method, depending on the cost of the debt, to achieve this.

@Brian Burke when raising funds, what are the pros/cons to using investor debt vs equity? 

 I think the combination of Stessa & Tenant Could will work for me. Together they offer all of what is needed and can be achieved for free or very little cost. 

I just signed up for Tenant Could to try it or and the first section I went to was the accounting. As an accountant this is big for me. I would prefer that the option to sync with the bank if available, but for now I am using a software called Stessa for the accounting & rent roll. I do like the website feature that Tenant Could offers. This is a major plus.