All Forum Posts by: John Acheson

Ben, you can write off a lot but remember that the lower your NET income on your taxes, the lower your DTI for any future deals within a few years will be. Are you planning to finance another deal in the next couple years?

Kyle, there are a lot of steps to take to build a commercial project and I would argue that the 1st step would be to either purchase an aged LLC or season one. Then build up great credit and a solid down while paying down all debt. The great thing about some construction loans is that you do NOT have to own the land. Get ready to hire everyone from a builder to architect to lawyer to CPA, etc. OR try and owner-build a smaller project to get experience 1st, John

Peter, if DTI is going to be a challenge to get to those high CA purchase prices, the most important thing you can seek out in a lender is one without overlays that can use the target property's cash flow whether or not you've done landlording. Boosting credit and income while paying all debt off will give you the best shot at a big loan, John

Mike, my tip would be to buy an aged LLC with business credit or season one yourself. Then move any and all personal debt to the entity. Get your LLC to 80 and yourself to 720+ then go shopping for financing. Maybe even try and show as much income on the rentals to be able to afford a bigger target by showing more income and less debt. Look for a commercial property that you can force appreciation by rehab/raising rents. But if you're talking 4 units or less you can DIY on the residential lending side for less and CAP rates won't matter, John

Lewis, assuming that personal debt might be an issue, you can either buy an aged LLC with business credit or season one on your own, and transfer all personal debt. to the entity to get if off your personal credit report to boost your DTI. At the same time, credit repair your personals to the max, and then refi in the future after all the debt shows up $0 on your three credit reports. Then you can rehab, raise rents and actually increase the sales price!

One of the biggest issues for alternative housing like ADU's, Tiny Homes, mobile, mfg, prefab, etc. is that when you go to sell the buyer can't get financing. If a buyer can't click on a website for a mortgage, you're going to have to find an investor or cash buyer. That can be very challenging! If you hold forever and rent, it doesn't matter, but personally I would like to have either the rent or quick sale option open at all time because of economic changes that always show up in cycles.

Is the CAP average for the area? If so, it's too high and probably the neighborhood and/or tenants might be challenging or the numbers aren't coming from the tax returns. What kind of tenants?

Aleko, from what I understand, you can now get construction loans in which you do NOT have to own the land to get financing. That's a great way to lower risk as you can get the financing in place, and then shop for land, research costs of development, and move on to the next piece of land, if something comes up. On the other hand, you are stuck with that dirt/city/county, if you buy a piece of land before development. The costs in the beginning are usually plans, permitting, utilities, foundation and maybe plumbing and electricity. The building can be a stick build or prefab modular or something off the wall like a Tiny House, etc. Land gives you so many creative ideas, John

Tim, not sure if this is helpful but for me the 1st step is always financing since brokers are usually only licensed in one state. The reason I bring that up is that I'm an Oregon resident and won't be able to take my favorite mortgage broker with me when my wife and I move to Reno, NV. We're going to have to start over looking for a very specific lender based on my needs which are Fannie Mae direct without overlays. You will find that any challenge has multiple solutions depending on who you talk to but since you are in NV we may be able to share some info.  My wife and I lived in Vegas before Oregon but were not active in Real Estate at the time and since Reno has become overheated due to Tesla, Apple, Google, etc. we may hold off on buying for a few years.  It was huge buyers market 7 years ago in Vegas but have things come up?

Bradford, welcome to the community! I just signed up less than a week ago and it's led to over 100 emails/messages/texts with and from states, cities, brokers, lenders, buyers, title companies, etc. Everyone is so helpful and I love that creative solutions are almost endless in Real Estate. Never give up, John