All Forum Posts by: Doug Karkow

@Michael Barnhart Hey Michael, I never did invest in Monticello. I imagine the vacancy rate is reasonable, but the very small town was a concern (and still is) and it wasn't going to be very efficient for my team to operate there so I did not pursue that deal from 2 years ago.

@Andrew Kougl Hi Andrew, my partners and I are invested in Cedar Rapids and love this market! We're closer to an 8-cap, but 12+% CoC returns are very achievable. As for financing, nearly all the lenders I work with will only ask for 20% down, and some will allow you to do less than that depending on the relationship and the asset you're asking them to finance. I recently financed a SFH with my preferred lender for 0% down on the purchase AND rehab, but it had a ton of equity in it so they felt comfortable with it.

What are you needing to get started in this market? Deals? Partners? Property manager? Shoot me a message and I'll do my best to point you in the right direction!

@James Seely Thanks James! I'd very much appreciate the referral! I'll send you a PM, and thanks for your help!

@Tyler Rasmussen Hi Tyler, this sounds like it might be just what I'm looking for! Thanks for your feedback, and yes, is very much appreciate a contact if you have one!

@Daniel Zwick Hi Daniel, thanks for your feedback! I have used Hills Bank commercial loans as well, but like you said, I believe they lend based on cost (purchase price plus rehab) rather than an as-improved value. I'll keep these types of lenders in my back pocket in case I can't find any that will do a loan based on appraised value.

@Doug Karkow And just in case I can hit a few more key words, the Cedar Rapids and Iowa City areas specifically ... 😁

Hello BP community!! Is anyone aware of a lender in the Linn County or Johnson County areas that will lend based on appraised value (LTV) rather than on cost (LTC)?

And to clarify, this seller is capable of doing a small seller-carry (~$200k) but is not interested in carrying the whole purchase for any length of time.

Thanks for the responses guys! We've proposed a few options to the seller that don't require seller-financing and are waiting to hear back. 

@Greg Dickerson One of these options may have been in the same vein as what you're proposing although, if selected by the seller, there would be several details to iron out. Perhaps you can help us once more! 

We've proposed a scenario where we partner with the seller's LLC through a Tenants in Common Agreement with our own LLC. We would prefer not to include them within our LLC since we may hold this asset for many years. Is it possible to have a TIC Agreement that describes a 100%-0% ownership split (our LLC 100%, seller's LLC 0%) but with the seller's LLC receiving a preferred return of, say 5% interest only? This would simulate the same seller-financing terms we've negotiated, and without a chunk of equity on top. Then when we refinance after a couple of years, we can buy out the seller's LLC?

My business partners and I are trying to purchase a 63-unit deal (spread across 6 buildings) near Cedar Rapids, IA with a Fannie Mae loan product. We're after their low interest, 75%-80% LTV, 30-year fixed rates, and non-recourse terms.

From what I can tell, this property meets Fannie's eligibility requirements: ~$2 million purchase and 93% occupancy, and we pass the net worth and liquidity requirements. In order to arrive at the seller's desired purchase price, we negotiated contract terms that included $200k in seller-financing so that we could still hit our cash flow and ROI targets. Lo and behold, we've been told that Fannie Mae does not allow seller-financing, so we're back to the negotiating table unless one of you can correct some flawed assumptions! Here are my questions that I'm hoping the BP community can help us with!

1. Is this true - is seller-financing not allowed with Fannie Mae multifamily loans?

2. Are there any other low interest, long amortization, non-recourse loans out there they allow seller-financing?

3. I've got to assume that there are plenty of investors out there with Fannie Mae multifamily loans that used private money for the purchase. How is seller-financing that different, or is private money not allowed either? To be clear, I'm defining a private lender as one who's given a preferred return in exchange for their capital but no equity stake in the asset, rather than an equity partner.

Please help, and thanks in advance!