All Forum Posts by: John Stewart

I would love some recommendations for lenders in and around the NW. Specifically Spokane WA.

What I’m looking for:

A very solid commercial lender - most of my real estate needs will have to be met with a commercial lender.

A recommended residential/FHA lender, I may be building my first residential home.

A number of contractor contacts that can build residential, commercial or both.

Thanks a ton!

If anyone needs the same list for Chattanoga, TN I’d be happy to share as well!

Update**

My lenders have pushed me out another 30 days because of the PPP. Still plan on closing, but it will be another month. Still feeling good about it.

@Ken Latchers

Yikes! Ok maybe USDA is not the best option..

@Todd Goedeke thank you for the in depth response.

The property is currently a wedding venue with 7 booked this summer, and we wanted to book the VRBO...which is how we discovered the property.

I really like the lease -option idea, but I want to build a house to live in on the vacant parcel.

Truthfully, I am ok if the business activities do not net me a huge profit per se, if I get to live on the compound. I have other income producing properties for that :)

@Ken Latchers I will research that. Thanks.

Right now, I have no properties in my name. Everything is in my LLC. Not sure how they would view that?

@John Underwood The owners do 0 marketing other than posing on VRBO/AirBnb.  I do believe I can be more successful, at least coming from the perspective of the last 8 years of growth.  I have been successful with a number of different ventures, one of which was a short term rental that put me through college.  The one unknown is the state of the venue rental/short term rental market in the coming months and years.

They are willing to finance the whole thing, would it be easier to get a USDA construction loan with land that we already own, or would the out of pocket be lower if USDA could help finance the land as well?  

@Michael Baum They are deeded separately, that is actually a great idea.  I will look into that.  Do you know if USDA will finance the land and build?

I certainly plan on pursuing the owner financing, however, I am thinking past the owner finance period, as they wouldn't hold the note for a period of 20-30 years.  I also would love to somehow wrap the construction into this deal as well.

Hello BP,

We found a deal that could be a fantastic buy. The house is rather large, comes fully furnished, sits on about 3 acres and has been a successful STR and events venue. In addition to this property, there is an additional adjacent parcel, 1.5 acres that is buildable. Both parcels are one of a kind, within 15 min. of the city, yet qualify for USDA financing. The owners are willing to carry the note as well.

My ideal situation would be to buy it all, build a house or two on the additional parcel and live in paradise for little to no money while running a STR/events venue. The purchase price is north of 800K, I would love some input on different ways to finance this purchase/new construction.

The USDA backed loan is very appealing...but the kicker is that they will only finance non-income producing property from my understanding, or more traditional forms of multifamily property.  I am very new to any form of USDA financing, but I am not sure how to make it work for me here.

Using a more conventional commercial mortgage or construction loan may work, but the current owners live in the property and have only rented the place out while they were out of town, thus it has netted much less than it is is capable of and P&L is lite.  The other question is I would like to build my personal home + another dwelling on the other parcel, would a typical construction loan cover the cost of a built home + new lot + construction costs?  I have not found one that would. 

I have considered an SBA business loan, but I'm not sure what it would qualify for.

The last piece of the puzzle, there are no comparable properties.  The owners disclosed that more than one appraiser has refused to appraise the property because of its uniqueness and distance from other homes.  Even if my personal income would qualify the purchase (it does not), a bank would probably not lend on it conventionally.

Any thoughts or thinks I have not considered?

Things are scary right now for us real estate people, right?

I just read an article about how NY is proposing a CANCELATION of rent.

I also listened to a couple of podcasts from some of my favorite and most respected business idols claiming that we are on the verge of a major DEPRESSION...

I too have my own theories about the totally wrecked balance sheets, the terrifying overleveraging as in relation to income, and P/E ratios that are out of control of many of the world's leading corporations...not to mention why so many of the world's leading CEO's just stepped down in the last 6 months (google it) 

Given those facts, we may just be on the verge of a depression.  Or maybe we are not.  Who is to say?  That's not the point of this post.

What I want to talk about is the mindset that very few of us have, and why it will mean success for some and failure for others.  The craziest part is that most of you already know it!

Warren Buffet famously quoted, "when people are greedy, be scared.  When people are scared be greedy."

I'll admit, when I got my first tenant message me through my management portal saying they lost their job, I was scared.  They listening to brighter minds than my own claiming that there is a depression on the near horizon i got really scared.  But that is not how we make money.  I also realized that wholesalers have dropped prices across the board because everyone is scared.  I have lenders who are hungry to do a deal as well because so many people have put a pause on investing.

My mindset shifted a few days ago after remembering what Warren said, this is the time to be greedy.  There are certain things that are uncertain, but isn't that always the case?  The only difference now is that we have new uncertainties to deal with as opposed to uncertainties we are all used to dealing with.  

It has always been said, you make money on the buy, and now is no different.  When was the most money made in RE ever?  During the last great down turn, a time of unprecedented uncertainty.

The only difference here now is that you may not be ok if you buy a bad deal, like you were a year ago.  I am closing on 6 units in 30 days, with no change to lenders or how we operate our business.

Would love to hear from you about how this has affected you and your business!