All Forum Posts by: James Klafehn

I am all ears. Ill send you a PM.

@Stephanie Medellin, I didnt specifically ask for a FHA refinance. I was hoping for a HELOC so I could have access to cash as needed. Id still prefer to go that route rather than having a new set payment that was higher.

I am still wondering about subdividing. Is it better to subdivide the 10 acre property into 5 - 2 acre plots or to keep it all one parcel? As far as I see it some of the pros/cons include,

1. Possibly a lower property tax liability for one large parcel as opposed to 5.
2. It may be easier to find loans if they were 5 separate lots.
3. No upfront cost to continue as one tax map. Subdividing would cost money.
4. With one large parcel I can get a HELOC and continue building equity in the property.
5. If I subdivide and I get 5 separate loans on the property that will get me closer to that 10 loan limit and banks may be more difficult to get money from in the future.

Most people in this thread suggested that I subdivide. Is that really the way I should go?

@Stephanie Medellin, yes that's pretty much right. Since starting this thread I have paid off 3 of my 11 cards so my score is higher. I also live on the property myself so an owner occupied HELOC is what I applied for last. I could've received a HELOC up to 90% LTV. But yes everything else is correct.

We all know that there are 3 credit bureaus that all have different numbers (my current score ranges from 625-699 right now) but I have just learned that banks use different "scoring models" and come up with completely different numbers. The last bank (the one that denied the HELOC) told me their scoring model gave me a 609. She told me that each bank uses its own "scoring model" based on their own risk assessment of the applicant. I need to look in to that more. My credit score has never been this low before so I have never encountered this.

I am not strictly looking for a construction loan. I have applied for everything, a commercial loan, a home equity loan, a HELOC, construction loans, private lenders, friends, and none have worked out. They cant get passed the credit card debt, DTI, and the fact that I was 30 days late on 3 payments last year. I built the duplex and got married and cash got tight for a couple months. I have never been late on a payment ever in my life but missed a couple last year. So between those things, banks keep saying "no".

So my plan is to keep paying down the debt and possibly subdivide the property.

I actually have two property management companies this one and one other. Both are doing very well and cash flow is excellent. I don't need any help managing them (which, in part, is what I am bringing to the table), I am just looking for capitol so I can grow this company faster. If the person happens to have experience with real estate land acquisitions that could help with out of state land purchases, but its not required. Mainly, I just need large cash investments from a reliable person. I don't want to give away equity in order to gain that but I have attempted to get large loans on my own and it hasn't worked out. I have also attempted to reach out to private lenders I have found on this site but they tell me they "don't invest in ny", "only invest in their area", or all of their funds have been lent out at the moment. 

Your right, maybe I have watched too much Shark Tank but I feel like an investor is going to want a part of this property management company/development company as well as future projects under this brand. Its one company. I got it started but I need capitol to grow it. 

I don't want to give away too much info about my brand but suffice it to say that it fits a much needed niche and has proven to be highly desirable. There is nothing like it currently on the market. I know everyone things their idea is the best thing out there but this is real and its profitable. 

Regardless, I don't want to focus on that. I just want to know how other partners structure buy and hold real estate partnerships. I don't know the first thing about partnering but I do know how to manage rental properties and build.

Hello BP Members,

I have a profitable property management/RE development business and I am considering taking on a partner in order to grow the business quicker. I have been opposed to taking on a partner because I like controlling my own ship. However I need access to more cash in order to grow the company. I would also like to take this business model and brand to other states which I have never done before. (which would also take more cash than I have at the moment)

Any advice? I assume we would form an LLP? How much equity do investors want?

Rental income from the property is currently only $79,140/year but I have approval from the town to build 3 more duplexes. Once those are completed gross rent would be approximately $178,860/year. Assessed value is currently $450,000 and when its completed I predict it to be valued at roughly 1.5 to 2 million dollars. 

What ownership is an investor going to want? And for how much cash? Also, how would future investments work? In order to grow this company and take this brand to other states its going to require significant further investments. Who pays for that?

Thank you for the advice!

How do I go about subdividing? Who do I contact first and whats the process? A survey company? A lawyer? Someone else?

I already know that the town will allow me to subdivide the 10 acre lot into 5 plots without filing for any special variances.

Any idea roughly how much it would cost?

Thanks!!

I was just denied for a HELOC on the property. I was hoping to pull equity out so I can pay off my credit cards. After paying those off and having one HELOC payment instead would make my DTI much better. Unfortunately the resulting DTI was still too high for the banks perimeters so they said no to the HELOC.

So at this point I am at a loss. The loan from a friend of a friend fell through. I've also reached out to 20+ private lenders I found on this site but they either "don't invest outside of their area", they "don't invest in NY", or all of their capitol has been handed out.

I am going to take all of my income and dedicate it to paying off these cards as fast as possible. Maybe by winter I will be able to get my DTI to a place that banks will work with me.

I am considering taking on a partner so I can grow this company faster but I that is my absolute last case scenario. I really don't want to give up equity in my company or the income that I am enjoying. I also honestly don't know the first thing about taking on a partner. But that's a topic for another thread.

I just thought I would update this thread quickly. I still don't have funds secured. I received some good tips and potential funding avenues thanks to this thread but I haven't fully vetted any of them yet. The leasing season is in full swing here in Ithaca and it has been keeping me busy.

Surprisingly a friend of a friend has heard of what I am doing here and loves it. He wants to invest but needs to run it by his wife and lawyer. Considering how many times I have gone through this, I am not going to over think it.

Personally, I am feeling very frustrated with the whole process. A friend reminded me, "If it were easy, everyone would be doing it.". It was a nice reminder, I just wish there was a little less clawing and scratching for each deal.

@Mike F. I havent needed to yet. It was a threat so tenants make sure they pick up after their animals. After 3 years here, poop in the park hasnt been an issue, yet. But as the property grows Im sure eventually there will be that one tenant who thinks they dont need to pick up after their dog and yes, in order to keep myself and all of the other respectful dog owners happy, I will definitely use that option if I have to.

Alright, if I cant find a hard money loan or private investor Ill subdivide and try it all again.

Thank you for your input! What a great site!