All Forum Posts by: James W.

All of my loans are like you stated in one aspect at least - amortized over 15-20, due in 3-5 years.

Some are variable, some are fixed... just depends on how I was feeling on the day I signed the papers lol!

Yep, I'd say apples to apples: my last loan was an 8 unit, done as a commercial loan. I currently have about 12 other commercial loans spread over 3 different lenders, and none required a 1/2 year prepaid taxes.

My point would really be simply that what you experienced isn't a federal requirement, so it shouldn't be stated as "universal fact". 

Just so we're clear, I wasn't attacking you personally :) Just saying that lender requirements may vary.

Cheers bud :)

After giving this some more thought and applying the logic to a couple more deals, it's starting to make sense to do this on a sliding scale.

i.e. 50-75k investment yields 5% annual return.

76-100k = 6.5%

100k-150k = 7.5% 

etc etc - but I'm just spitballing here. What kind of rates are people getting/giving on deals like this out there in BP land?

^ I disagree due to my personal experience.

My lenders give me 80% LTV almost regardless of the property, based on my personal credit, income, and guarantee. I've never heard any of my lenders mention anything more than 1 month up front reserve for the tax escrow.

I don't think there is a "typical" scenario - every lender is different. 

Here's some advice - 

Getting to know someone in the right places makes a huge difference. If the President or VP of Lending is on a local committee (Civics, LIONS, Rotary, etc), join the club. Volunteer, work side by side with that person, have beers with them, etc. I've been leaning towards my smaller local Credit Unions as opposed to the Big Names, because they usually don't send deals to another city or state for underwriting.

I just joined Appleton REIA, thanks for the link @Kevin Stein

I"ll try to make the meeting February 3 at 5th Quarter.

Hey @Brandt Tingen - I took a couple of the suggestions made here.

1. A few yards of dirt to fix the grade, getting everything pitched away from the buildings was one of the most important items. In the spring I'll add some more dirt and either grass seed or landscape stone to finish it.

2. Gutters - replaced some, extended some, just worked to get the water further from the building.

3. One of the buildings had some severe cracks between the sidewalk and the foundation wall. This was filled with some kind of concrete patch material, and seems to be diverting enough of the water to keep it out of the basement.

The 4th building was a bit more distressed than the others. Side by side duplex with a sump on one side only, and no drain tile that I found. The walls are being pushed in from expansion of the clay ground. Like you, I found the estimates to be astronomical - one company wanted $30,000 to repair!

I ended up hiring a concrete company to cut out 6" of concrete around the entire perimeter, install drain tile and a sump pump on the other side. That ran about $4000. If the walls continue to come in due to expansion of the ground outside, I'll reinforce the walls  from the inside-out for another $6000 in steel, wood, and labor. All in, I'll be done with the basement for a little over $10,000.

Ok, so it sounds like I'm not the only one with this idea and it's definitely doable.

What terms are you folks giving your investors? Terms, ROI, payback schedule... ?

Thanks for the responses everyone!

Ok, let me back up a little.

I want to come to the bank with the 20%  as if it's my money. I don't need to tell the bank that I'm getting funds from elsewhere before we close. So when the property closes, then my lenders (not the bank) file a lien on the property in the amount they lent... is that correct?

What I'm looking to do is create a situation where I'm able to acquire more property, manage it, and share the management profits with the people investing in the downpayment. They get a risk free  What I don't want to do is give them any rights to the title (unless of course I defaulted on our agreement in any way, which I won't).

And then at the agreed upon amount of time (2-5 years?), I can refinance, pull money back out, and return it to them on top of their earnings. Or we choose to do it again on another property.

My concern is that my banker(s) might start getting sketchy if they know I'm coming up with the money from anywhere other than my own personal funds. So now that I'm brainstorming, perhaps I could offer my friend/lenders to secure their funds with other property that I own, keeping them off of the newest deal, and that way the bankers aren't given a reason to be concerned... hmm.

Anyone else here doing this exact thing? I'd love some feedback on what you're paying your "investors", how long you pay it to them, do you have a standard balloon time, etc.

Thanks as always!

Howdy BP!

I'm currently looking at a property about $1,000,000 that I see as about a 12CAP... slightly lower than my average, but a solid property (24 units, only 1 empty, not a fixer-upper).

I mentioned to a few people I know personally that for an investment of 50-200k, I could guarantee a 5% return. They are interested.

I would not want them on the title. I would like to simply write an I.O.U. on a napkin stating that I'll repay them +5% over the course of a year or so.

How have you seen this done? What advice do you have on how to structure this? Any feedback (as long as it's constructive!) is appreciated.

Thanks, and happy investing!

Well, if I could edit the Topic Title I might... lesson learned.

I don't consider myself a "slumlord". I was using the term facetiously in order to get attention in order to get experienced advice on some issues I have(had) with some new properties, as a new landlord.

Also FWIW I've stuck more money into fixing the properties up in the last 5 months than the previous landlords did in the last 10 years, and I haven't raised rent either. I've eliminated 65% of my water problems (mostly thanks to the rare useful comment here, none of which come as a result of some pompous prick talking down to me on the internet), I've made the properties much nicer for the tenants, and increased the property value in the process.

That's one of the better posts here. Thanks for looking past the snarky Topic Title and giving some legitimately good feedback. One of the properties that I'm still having problems with is an old farmhouse, and that might end up being the best solution for that property.