All Forum Posts by: Jimmy Klein

Yes in this case, the financials are pretty much everything. You have no credit backing from the brand. For example, we worked with a NNN Taco Bell. The Taco Bell was operated by a fairly strong franchisee with over 150 locations. So its good to get a sense of how many locations. Also how many have closed?

If this guy only has a couple locations, I'd be worried about a build-to-suit since he could bail any minute. Maybe if your not comfortable with his financials get a letter of credit. As John mentioned above, throw his wifes name in the guaranty and then it starts to look better.

The bulk of the business we do is value-add opportunities in for haunted properties. We buy haunted properties for a fraction of the cost and bring in a real good priest to clean it up. Typically flip the house post-cleanse for a 50% profit. 

We maintain a team of highly qualified priests including but not limited to christians, jews, hindus, buddhist, etc. Let me know how we can help.

@Joel OwensThanks for the response. Yes, we have a full development plan on it. The land will be part of our equity piece. The appraised value of each acre is $250k, so I just want to make sure the bank will not turn around and say that we only bought it for a 100k an acre just a few months ago.

I wanted to know about a future land development. I purchased cheap acreage located on a major road, very good location. About daily traffic count of 45,000 car. Purchased cost for each acre is 100k. It's only 5 months now and each acre is worth around 250k. I bought the acreage all cash. If I went to a bank and wanted to use land equity as my downpayment, will they value the new amount or just my purchase price?

@Joel Owens

Thanks for the response. Yes. I am very familiar with CMBS loans. We have taken out several on our properties as a way to remove recourse and also get very aggressive terms. However, we have never assumed a CMBS loan. I know there will be greater emphasis on underwriting of the borrower. However, we currently have limited liquidity after we purchase the property. The question I simply have is what are the ballpark liquidity requirements to get approved. I don't know the CMBS underwriting policies and standards or does each servicer have their own rules?

@Chris Winterhalter

Good talking to you again. Yes, typically we bring our own financing to the table, but the seller took out the loan, which leaves us little room to do anything. We have zero interest in defeasing because it would cost us an arm and leg. Yes, so we just wanted to see how the CMBS lenders underwrite on an assumable loan.

Looking at a commercial asset that has an existing CMBS loan with very attractive terms. The loan is very new actually. I wanted to know, if we were to purchase the property, how would the CMBS lender underwrite us. Obviously, they have already lent to the property, so there won't be much underwriting in this sense. The loan amount is around $8 million. We have enough to purchase the property, but I heard the CMBS lender will underwrite us and require almost 10% of that in liquidity. This is a huge stretch. Is this true? Or will the lender just vet our capability to run the property?

This is a strategy that I am thinking about doing for retail strip centers. I can buy some located in nice areas for $100 psf and aggressively cut the rent to get the thing leased up and over time as the tenants get comfortable in the location, push the rent up.

Saw this site. They only invest in Philadelphia and provide turnkey properties. Thinking about throwing some money into one or two properties, but I can't find anything about this company.

Some other things to note that I didn't mention was that you'll need to make sure rent is high enough to account for wear and tear of your FF&E. Simply renting the room is not enough. When a tenant is staying for a year, trust me there will be damage to the furniture. As a current hotel owner, we start seeing wear and tear after six months and thats for rooms that are not going full every night. Unlike traditional apartments, you will be responsible for the furniture in these rooms. Just imagine them being furnished apartments with all inclusive amenities. Also you will need to probably even provide services such as wifi. So therefore I am stressing the importance of making sure you have high enough rents to cover these amenities. You will need some staffing as well, just one maintenance person and one person in the lobby to manage the property. If the numbers match up, this acquisition might be worth it. 

We are currently looking at an interior hotel as well that isn't doing extremely well that we might plan to convert in separate units or reflag to a better hotel brand, but are doing proper due diligence to make sure we make our profit.