All Forum Posts by: Jean G.

Hello,

I am reading through the requirements of USDA Multi-Family loans (for larger non owner occupied multi-family properties), and they have certain income limitations for tenants, as they are intended for lower income housing.

Does anyone know what happens if someone were to buy an existing property (with existing tenants) with such a loan? Is it not possible if the existing tenants exceed the income limit (or they expect you to kick out these tenants?), or do they only require new tenants to meet the income limits? (Which for their "guaranteed loans" don't seem that low)

Perhaps @Brandon Turner has some input on this? (I learned about USDA loans in his book in the first place).

Jean

Hi @Michael Franklin,

this would work well, with 80%LTV I could even do 10/10/80, the question is whether mainstream commercial lenders actually allow seconds. The ones I spoke to said they "don't do that anymore", but I may just need to call. If someone has done this with mainstream banks and can confirm that this still exists in 2015, that would be very useful.

Knowing that this is actually possible would allow me to go place an offer tomorrow (before the thing goes under contract with someone else), otherwise I need a bit more time...

Jean

Hello,

I have finally found a bigger multifamily property that I like: 50ish units in a rural but very stable market, not a warzone at all, strong rents, and at around 2 million USD, a cap rate approaching 10%.

Now comes the question of financing and the amount of cash I need to bring into this deal. I have a commercial lender that will finance at 80% LTC for a rate below 5%, which is not bad, but I was wondering if anyone can give advice on how to do the deal with less cash out of pocket? Are there commercial lenders out there that will go up to 90% LTC? Or lenders that will do LTV instead of LTC (which would probably also help since it will likely appraise higher)?

Owner financing seems unlikely, but if I were to somehow convince the owner to finance a small amount, are there commercial lenders out there that will allow this as a second? (The ones I spoke to don't)

Any advice from experienced multifamily investors about how to package it in order to reduce the amount of cash required would be appreciated.

Jean

@Wesley Barnett

If you want to find a bank to refi at current market value sooner than in 12 months, you need to call every bank in town and ask them for the seasoning time after which they can use an appraisal instead of your acquisition cost. Then call every bank in the county, then every bank in the state (you can find the names on regulator websites, to make sure that you don't miss one). If you speak to every single bank you are bound to find one that will do it in 6 months, 3 months or even within weeks. You just need to keep asking until you have spoken to every possible bank.

Jean

Hi Brigham,

nice meeting you! I own one property in Hatch and would be interested in additional properties from 1 to 50 units in Washington, Iron, Garfield and Kane counties if you find anything interesting. I'm not opposed to rural areas like Panguitch and Kanab either, however everything I've look at in Southern Utah in last year seemed very expensive compared to other areas (Vegas and Northern AZ) and rents are rather depressed.

Jean

Hi Rochelle,

I look forward to meeting you at @Phillip Dwyer's next meetup in Henderson.

Jean

Hi @Bill Gulley,

thanks for you input! If I make the lender a member in the LLC, but he is not in fact actively participating in the management of the property (maybe because he is far away, or because he has no experience with real estate), and I not then creating a security once again?

Jean

As for the nice fixed 30y loans that Bryan mentions, you can still get them in your name, close in your name, move the property into a land trust (or generic grantor trust in states like Nevada), and then assign the beneficial interest of the property to the LLC.

Having the property sit in the trust as far as the recorder is concerned ensures that the bank won't exercise the due on sale clause.

Jean

Hi Lalaine,

what was the issue operating it as a vacation rental? Is there a problem with the HOA?

I heard from several different sources that vacation rentals in LV are doing very well (as long as you don't have HOA issues), and since the house is already furnished, why not continue with this?

Jean

@Ess Dee

Conventional lenders will always ask you if you're a citizen, and when you're not, the next question is about your immigration status. I know because I'm not a US citizen and get asked every time. They'll not issue you a conventional loan on a Visa Waiver program. I think that's part of the Fannie/Freddie guidelines.

So you definitely need to find non-conventional programs. I would try speaking to B2R Finance which told me once that they could lend to non residents. And as another poster mentioned, you could also ask your home bank in UK if they would finance a US property. You may have a currency risk though. A friend of mine purchased a property overseas with his home bank in France, although they required colateral in France.

Jean