All Forum Posts by: Tim Johnson

Welcome to BP, welcome to the United States, and welcome to Minnesota!  Feel free to reach out if you have question.

Hi @Toben B. 

From my experience, for commercial loans most banks are going to want to do a 3 year balloon.  It's because they are keeping the loan on their books and can afford to be charging low interest rates if their cost of money goes way up.  You could talk to more small banks...you might find a 5 year balloon.    

Ultimately, faced with the same decision I ran the numbers and looked at the likely scenarios.  My 18 unit would cash flow with interest rates up to %8.75.  While possible I deemed that an unlikely scenario.  I took the financing package and the risk that comes with it.

Hey @Account Closed

There is a discussion of that very topic here:

https://www.biggerpockets.com/forums/48/topics/918...

Good luck!

Welcome @Brian Compton!  Good luck to you on your real estate adventure!

@Malcolm Thomas 

I have not personally heard of their program, but there is some discussion on that topic here:

https://www.biggerpockets.com/forums/79/topics/690...

Hi @Sheldon Alex. These a lots of ways to find deals. Talking to an agent is one possible way, many people find it's difficult to make the numbers work on deals that come from the MLS. Some people use Wholesalers/Direct Markets to help them find deals. Those folks advertise with direct mail (and other methods) to find motivated sellers of distressed properties. Some folks rely on property auctions or buying property on the courthouse steps. Still other folks will "drive for dollars"...drive around and look for unkempt properties that the owner might be willing to sell.

There are a number of different strategies to find good deals on real estate.  You might try a few different options before you find the one that works best for you.

I wish you the best of luck in your real estate endeavors! 

Wow, nothing like jumping in with both feet! :)  

My biggest concern would be, is the property really going to sell for $2.1 million?  There aren't a large group of buyers at that price (although there are some).  Maybe a few things to check...

- It would need to be on a premium lot or in a premium neighborhood.

- Really check the comparable homes sales.  Use several comps so you are not tempted to compare it to one house that sold for big dollars but was extra special in some way that your home will not be.

- Make sure you are comfortable with this builder.  Check his other work and keep up to date on the progress of this home.

The best of luck to you!

@Irfan Saeed Hi.  I wouldn't discount the price much unless the craftsmanship on the addition is poor.  It should compare apples to apples with property built that size originally.  Just my two cents...

Now there's a way to differentiate your rental property!  "You had me at Bidet."

You have a few options in structuring the deal.  You could treat it like a loan where you pay the investor a fixed interest rate (9 percent for example).  He loans you the money and you repay him with interest when the deal concludes.

If the investor wants a larger piece of the action you could offer to split the profits 60/40 or some other agreeable percentage.  Just make sure you agree what happen in the event of a loss.

If you are confident about the up-side of this project, I would structure it like a loan.  If you think a break-even outcome is likely for your first project, I would offer him a portion of the profits.  Just make sure he understands the risks either way.