All Forum Posts by: Jered Collins

I've yet to see a property on there eligible for financing but I could be wrong.

I bought a house on auction.com in Richmond, VA that was slightly under the reserve price. When the auction ended, I expected them to relist it but within 2-3 minutes of the auction ending I got a call from auction.com informing me that I had won. I was shocked. I got the house about 10k under market value. I was beyond happy.

You are free cash-flowing $416 per a door?!?!?! That is amazing.  You see a lot of people state they want to get at least $100 free cash flow per a door.  You are 400% above that metric.  Maybe, look at doing a cash-out refinance to fund a new project if possible.  I have never gotten about $150 free cash-flow per a door before.  I'm kinda jealous of you right now.

65% LTV is about the going rate for my commercial investors... especially if you're novice.

$11,000,000 Contract Price

65% LTV = $7,150,000

Equity needed (35%) = $3,850,000

Gross Effective Income @ 90% Occupancy = 40 Units * $1,700 (avg. rent) = $68,000

Expenses (C property 50%) = $34,000

Debt Service ($7.15m @ 4.5% 25 yr TTM) = $40,000

Preferred Returns to investors (7% of 90% of equity) = $3,465,000 * 7%/12 = $20,200

Monthly Income Statement:

Income: $68,000

Expenses: $34,000

NOI: $34,000

Total Monthly Debt + Equity Payment = $60,200 

Cash flow: ($26,200)

Ouch.... your cap rate is 3.7% at a yearly NOI of $408,000/$11,000,000. Your DSCR (debt coverage ration is negative as well). Assuming you will most likely go for Fannie or Freddy/HUD loans you are not going to make the requirements. You need to find out what the comp cap rates are for a C apt in your area. A 3.7% cap rate is lower than prime multi-family in San Francisco. I wouldn't think a C property should be any lower than 7% at the most.

Congrats on your success.   I do have a few questions to ask if you don't mind.

What % of the deal are you bring to the table before you look for equity?

What % preferred returns are you giving back to your investors?  Do you share any remaining profits after investors have been paid?  What is your allocation of net profits from sales proceeds?

Do you have investors lined up ready to pull the trigger on deals?

Thanks and good luck in the future.

 Yes, it's a P&I loan fully amortized to the seven year TTM.  It's a loan, so you request the amount you need and it is wired to your banking account.  

I used SoFi to finance my 1st fix and flip.  I received $87,000 at 9.25% for 7 years.  My credit and current job allowed me to go up to $100,000 if I needed more.  From start to finish with my money in my bank account, it took about 96 hours.  I will do business with them again.

You might see me there this weekend.

Found a 4 foot water bong in one house I looked at. 

I'm really confused on our your mortgage is only going to be $380 a month?  How much money down are you paying on the property and if it's more than 20% can you share your thought process?