All Forum Posts by: JJ Harris

I have built a few self-storage facilities.  I would be happy to share a couple of insights that may help you eliminate, or proceed with that option.  I use two companies in the southeast that do comprehensive feasibility studies for developers once they've identified a parcel of land.  They cost around 2K for the preliminary study, but it's well worth it.  Self-storage of the scale that makes sense in Mississippi today can be a 3 million investment pretty quickly.  It's not the kind of money you get from a local bank without a strong business case and third-party validation of your project, in my experience, is a requirement.  My company operates our own facilities and manages for others, so we have a depth of experience in that particular area.  I will share more if you end up pursuing that option.  Good luck.

I can recommend the crew at PMI of Memphis. I've never had property managed by them, but I have a franchise in the PMI system and know their systems and processes. I manage my own portfolio with the same systems and think that most investors would be happy with PMI perfirmance.

TY!

Investment Info:

Single-family residence buy & hold investment.

Purchase price: $75,000
Cash invested: $8,000
Sale price: $135,000

Buy and hold rental. Sold at the 6 year mark.

What made you interested in investing in this type of deal?

Attractive purchase prices in my area versus rental rates. I own a property management company and feel confident I can operate these types of properties effectively.

How did you find this deal and how did you negotiate it?

Drive by FSBO sign in yard. Called and negotiated a cash-quick close deal.

How did you finance this deal?

Cash purchase and the 50%ltv csh out refi.

How did you add value to the deal?

Leased the home for 6 years with below normal vacancy. Home was occupied all except 3 month the entire purchase to sell cycle. I owner financed the home at sell at current market rates.

What was the outcome?

positive cashflow and increased value plus debt retirement and owner financing yield add up to great profit for a 6 year buy and hold.

Hi Jesse.  That's a tough one.  I'm sorry to say that I'm not aware of any quick solutions to those very legitimate roadblocks.  Repairing your credit is a year or more long process.  After a year of timely payments and debt reduction, your FICO score will certainly improve.  I have no idea how bad your credit currently is, but people can usually purchase with a mortgage with as low as a 650 credit score.

I would humbly suggest that you network with a couple of COMMERCIAL bankers in your area.  If you purchased your tri-plex with traditional mortgage funds, you would have gone through the banks mortgage lending department.  The commercial lenders speak a completely different language.  

I started with a small commercial deal.  Its was maybe 210K.  The banker didn't care too much about the quality of the deal, or my business plan, or my investing experience, etc., because like you , I had a very healthy income that could handle my complete mismanagement of the property.  It was a good thing too.  I did completely mismanage that property.  

I'm a full time investor now and property manager.  I would like to say that I have a stable of commercial bankers that will absolutely do my bidding, but that's not been my experience.  

I do consistently work with several different bankers who, after a track record of diligently working deals to profitability on my part, are willing to lend me increasingly large amounts of money.  My market may not be the same as yours, but these guys all have a portfolio of cash that they are responsible for lending out and getting a rate of return on.  Commercial bankers in my (tertiary) market can often lend 500k, 750k, or even a million without going to a higher committee.  Once you have one deal or multiple ongoing deals that cross over whatever threshold that is, you will have to be evaluated by a larger committee of bankers with your contact repping you and your deal.  

If you have a good income a great credit, you can get yourself some commercial money. It wont be millions.  The bankers here in my area are concerned with three variables.  How much money you have, how sweet your deal is, and your track record making deals work.  Any one of those can override the other two, but obviously a little juice in all three buckets is ideal.  Since you don't currently have a relationship with anyone, you're going to have to lean heavily on the income and credit bits.  

Find a budget you can handle with your salary and credit and make a move.  Once you make the bank some money on that first deal, I promise they will be in touch asking what you have on your plate for the next deal.  

Once you're borrowing a couple million dollars, no salary or credit is going to cover that debt if you let the deal blow up.  They will be taking risk on your ability to execute.  Good luck on your hunt for your new commercial lender!

Hi Pepper.  Hope you're still grinding away at the deals.  I would love to know if you got anywhere with the 10 units.  There are tons of obstacles between the first chapter of RDPD and cashflow.  My wife and I are serial investors and there are many times I've had to pick myself up off the floor and remember to put one foot in front of the other.  Regarding your question about stronger and faster partners no longer needing you after they have your information, there are protections you have once you have the property under contract with a reasonable due diligence period.   I had many of the same concerns and held back from partnerships for many years.  It's a great way to learn and I wish I had done it sooner.  

Would be interested in a meet-up of investor-minded BPers in the south MS area.  No selling.  Just network building.  I want to know what you know and I'll trade.  Any interest?  Casual.  Once I get an idea of the size, I will find a location.  I know August is terribly hot, so probably be inside somewhere.

Stephen, you're interested in the MS Coast for the same reasons many other people are.  MS is a great environment for RE investing right now.  There are buy-and-hold rentals available and our rental rates have risen considerably in the last 3 years keeping the demand high and inventory low.  I'm a RE broker myself, but I focus exclusively on management, so I would refer you to one of the local brokers who specialize in investment transactions.  I can send you a couple of names if you're interested. 

SBA loans can help with cash flow if you have a solid business plan. Pushing the amortization schedule out to 20 years greatly impacts cash flow. I've done rehab and buy and hold here in south MS and the only time I can get 20-year ams is when building from the ground up. SBA is notorious for being paper work heavy and time-consuming, but it's really no more difficult than any of the banks that are going to require a pledge of all of your personal assets. Best of luck with your investing. Do you go to the monthly REIA here in Gulfport?