All Forum Posts by: David Kazarian

@Zack Thiesen

I would think so but things might be different from state to state. We can talk offline and see what your goals are. There is benefits for having it under a corporate structure. One of the main reasons is liability.

@Zachary Gwin

With regards to commercial, if you are purchasing a property in an LLC it doesn't matter if it is a SFR or MF. Banks are still going to look at the guarantor in the LLC. They will see your credit score and will do a dive into your personal financial condition. If it is a commercial loan through a bank then you will not get a conventional mortgage that goes out 30 yrs. In most cases it will be a 5, 7, or 10 yr that will either balloon or become variable rate at the end of the term.

@Blake Hrabal

If you are doing what Jon is suggesting you are getting into hard money. Hard money is based on experience along with credit and property. When you do 20% down & 100% rehab you will typically pay the quoted interest rate stated for 1 year. After that you will need to refinance. The money for the rehab is not available in one payment. You will set up draws with the lenders based on % of completion. 

You should be aware that you will need to show the lenders cash on hand to make the interest payments. You can't just finance the property with 20% down and have nothing in the bank. They do look at personal financial statements to see how much money you have to make those payments.

Hope this helps. Best of luck. If you have more questions feel free to DM me.

@Zack Thiesen

If you know your credit is not the best I would talk to a credit repair group like David suggested. If you need a suggestion on who to use please reach out and I can give you one. 

Then I would follow Kase's recommendations and talk to local community bank. They are often more flexible & competitive then a Chase or Bank of America. I would recommend looking here to find a local independent community bank.

If you are not having success still you can look at hard money. A lot will go on experience, so the more you do the rates will come down when it comes to bridge/rehab financing. They will do a cash out financing for 30 yrs but the rates are going to be more expensive since it is hard money. If you get your credit repaired then these rates may look better.

@Tyler Warne

Greg's advice is good on seeing where the market is currently. I would add calling up a couple of listing that recently sold and see where they actually closed and why. As a realtor you know that what people are listing at doesn't reflect the closing price. Issues or hiccups that come up with those property along the way can reduce the price.

Expensing everything seems like a great idea until financing is needed, then everyone is surprised that they can't get a deal financed. If you need help with the financing side feel free to reach out. I work with some lenders that finance gas stations and hotels. 

@Brian Watters

Nice to e-meet you. I live in the NW burbs and I recently started going to meetup groups on the NW side. If you have time in the evenings I suggest you check some out. Good way to meet like minded people in person.

Good luck.

@Kyle Wilkins 

Not sure what neighborhood you're in but I go to the NW side ones. There is a lot of new investors, I wouldn't feel intimidated at all. No one is born with experience and eventually you just need to jump in.

I would check out RE Investing Strategies Round Table & Networking & "Shark Tank" Deals Presentation. I have been to the first one and I plan on going to the Shark Tank one this month. I have heard good things from 2 independent groups of people that I know. If you're interested in going to those message me and let me know. I will look out for you. 

I believe the hosts do multiple meetups around Chicago, if you can't make the 2 I named there maybe others in your area.

Happy New Years & Best of Luck!

@Kyle Wilkins 

Like @Odie Ayaga said "Treat it like a business." You can find a partner. If you partner, you need to figure out what you are going to bring to the table in the relationship. Are you bringing the skilled labor, time to manage the project, opportunity (a great purchase price on a property), or money. Good way to find a partner could be through meetup.com or Facebook groups. I like Meetup because I can try to establish the personal relationship of meeting the person in real life. There are a lot of meetups in Chicagoland area. While you are checking out groups you can save some cash for the cash on hand (COH) requirements & find skilled labor. 

I agree with Odie's advice and not involving friends & family for the initial endeavor. This is a personal preference. I have seen long lasting friendships get ruined bc some guy put all the money in and the other guy was labor. They didn't have the same vision of the property and they didn't have an exit strategy.

Best of luck this year! Maybe I will see at some meetups this year.

@Kyle Wilkins - I am a lender who does HML and other nontraditional financing. If your credit is good the you should definitely start off using conventional financing. Your cost of capital is going to be much lower vs HML. With no experience you will start off paying 12% for a bridge loan for ~1yr. After construction is complete then you will refinance at 5.5 - 7% depending on the LTV and your credit score.

In my opinion, HML is great for quick closes, people who have experience, and people who can't get a conventional anymore bc they reached the 10 property limit from Fannie & Freddy.

When looking at HML question these things...

• The fees to close
• How much cash on hand you need
• When do they start charging you interest on the construction financing? (Some will only charge when you draw)
• What does the draw process look like 
• Obviously Interest Rate

You should go to some meet up groups and try to make contacts with some wholesalers. You should also see how others are sourcing deals. The price you get into a property is very important and the HML rates might be worth it, if you close quick (10-14 days) & generate equity through rehab.

@Luke Petro - @Brie Schmidt is correct. If you want a higher LTV for an investment property then you will need to go to a Portfolio Lender and the rates she quoted are about right. You need to ask yourself, "Is the extra $24K worth those rates?" and "What will earn if I had the extra 24K?" The cheapest possible cost of capital is usually better but if you can earn 100% (an extreme example) do you really care if you pay 6%? I would assume what you are looking at is not as black and white.

This doesn't help right now but in the future when you have good cash flowing properties and you want aggregate them together or have 1 property worth $2.5M+ then you can get better rates for a refi or purchase. At the $2.5M point you can move out of the hard money and start getting into different financing options.