All Forum Posts by: John Bernardo

Looking for a commercial DSCR loan product without a personal guarantee.

Can anyone provide a referral to lenders out there offering a product like this?

Without using a property manager, how do ya'll deal with onsite requirements made by STR ordinances? Here is a requirement for an STR permit in a market we're considering:

On a 24-hour basis, the STR owner or the owner’s agent shall be available to respond to complaints about the condition or operation of the STR, including nuisance behavior of the STR guests. The owner or agent shall
maintain the ability to make contact by phone within 30 minutes and investigate the complaint and take action to resolve the problem in person within one hour, if necessary.

Thoughts on this?

Quote from @Kerry Noble Jr:

I would use it to become a hard money lender. Charge 2 points and 12% or whatever makes sense. 

use it to partner on flips with a GC or anyone thats in your network. 

You can use it as gap funding also

Why not just buy T-bills at that point? They are returning 3.5-4.5% between the 2 and 10-year, and HELOC rates are averaging 7.5-9.5% right now so the spread and risk does not seem worthwhile

I've received an appraisal back of my property which does not account for livable square footage of my ADU.

The main building's square footage is ~1900 and the ADU is ~400 for a total of ~2300, but the appraiser is using pp/sf figures that only account for 1900 sf, so the pp/sf appears much higher than expected.

We have it listed and have been marketing it at ~2300 sf.

Is this normal?

I have a seller listing a home by including the ADU's bed/bath along with the primary building.

The main home has 1-1 and the ADU has 1-1 but the seller has the home listed on the MLS as a 2-2.

Is this expected?

I want to make sure that when reselling in the future, the home can be appraised/valued at 2-2 and not 1-1.

Thanks in advance.

Title says it all, looking to work with portfolio lenders who lend in Cali, Texas, Florida, Tennessee and can lend to out of state investors.

Interested in both hard money/private equity loans, refi, conventional and other 30y products.

Thanks!

What is the best way to understand current construction costs per sqft in my area?

I'm currently using the national average of $250/sf to calculate my ground-up cost, but would like to cross check that against local numbers.

Should I reach out to GC's in my area, or is there a better data source out there?

Quote from @Michael Plaks:

@John Bernardo

You need to pass the "material participation" test for this business. One of the possible ways to qualify is indeed 100 hours, but it's only half of the rule. You also cannot have any other person, including handymen and cleaners and property managers, work more hours than you. If one of them works 101 hours against your 100, you lose. 

Have your CPA explain material participation to you and why he thinks you do not qualify.

Thanks all for the input.

@Michael Plaks material participation is super interesting. With cleaners doing 5 cleans per month at ~1 hour each and handymen taking on maintenance items only, I don't see how they would ever exceed our 6-8 hours average per week.

We also do not have a PM and self-manage, with little/no automation yet.

Between myself and my spouse, we will be putting in at least 6-8 hours per week minimum in the operations of the STR. That includes any hands on operations in the STR, lead generation and follow up, coordination, working with agents, developing and operating marketing campaigns.

I'm working with a CPA who is arguing that STR should be considered a passive designation and therefore losses in our holding LLC cannot be applied to my W2 wages (which are > $150k). My spouse and I will be allocating more than 100 hours managing and working in this business. Sure we hire handymen and cleaners, but we are still active in the daily operations and listing set up process.

In addition, we plan to BRRRR properties into LTR holdings (separate LLCs), where the rehab process (even just the leadgen portion) over the year would definitely put us into the 100+ hour territory.

For both the STR and BRRRR LTR, can't we designate those both as active income given our involvement?

According to Fannie/Freddie guidelines, conventional refi products will require a 6 month title seasoning period before the full 80% of a cash out refi can be withdrawn. This restriction can really put the brakes on expansion and growth for less capitalized investors.

https://selling-guide.fanniema...

What are the best products and lenders which offer them that do not have this seasoning period? Are they strictly non-QM products?