All Forum Posts by: Jordan Stone

@Steven Goldman I agree, the rents per unit are low (can be raised), but the PP is low too. So low it makes the DSCR appealing and shows it can more than pay for itself. The current occupancy is 95%.

@Scott Wolf the HML I have tried have all said the per unit price is too low. The properties Arw in Mobile, AL.

@Jeffrey Albaum I will ask the lender I am talking with tomorrow about these options if they can’t offer anything less than 20% down on a commercial loan. I have mention creative ways to get the lender the 20% down, such as:

 1. Allow for a seller 2nd - meaning allow seller to carry note in second position for 10% and me pay 10% cash.

2. 10% down, finance the remaining 10% to be repaid in 12 months - interest only payments for 12 months. Commercial loans are typically refinanced in 5 years, so the missing 12 months of principal payment is not very impactful to them.

So I am trying to pull out all stops.

Jonathan, you would think, but there are no non-payments that I have seen in the 3 years of rent rolls provided. The rents are just well below market for the area, and have long standing tenants. The maintenance expenses are on the high side ~17%. I would increase the rents to accommodate for the rising cost of labor and materials to help offset this expense.

I am currently looking for a lender who will lend 70% or more of the appraised value - easier said than done. I don’t have enough time left in the contract to build a relationship with a private lender and have them fund a portion of the deal. Would love to eventually be there.

I currently have a deal under contract for 15 SFH and 3 duplexes for $306,000, the properties gross $6,750/month in rent. The properties are very conservatively worth $445,000 as-is.

I have $30,000 to put into the deal. As we all know 20% down is the typical required down payment for non-owner occupied loans, which is double the cash I have to put in. That said, this post is more about solutions on how to get the deal done with the mentioned resources, and not how it won’t work.

The seller is not willing to offer any type of seller financing, so that is off the table. I have been looking into an array of options, SBA loans, portfolio lenders, the mythical lenders that lend based largely on a property's DSCR, to getting hard money just to secure the properties and refinance 6 months later. Are there options out there I'm not thinking of that would be a better route? I have approximately 30 days left to get this figured out. I have a BP rental tool analysis, rent rolls and one year worth of expenses for the properties in an easy to share file.

Let’s talk real estate!

I currently have a deal under contract for 15 SFH and 3 duplexes for $306,000, the properties gross $6,750/month in rent. The properties are very conservatively worth $445,000 as-is.

I have $30,000 to put into the deal. As we all know 20% down is the typical required down payment for non-owner occupied loans, which is double the cash I have to put in. That said, this post is more about solutions on how to get the deal done with the mentioned resources, and not how it won’t work.

The seller is not willing to offer any type of seller financing, so that is off the table. I have been looking into an array of options, SBA loans, portfolio lenders, the mythical lenders that lend based largely on a property's DSCR, to getting hard money just to secure the properties and refinance 6 months later. Are there options out there I'm not thinking of that would be a better route? I have approximately 30 days left to get this figured out. I have a BP rental tool analysis, rent rolls and one year worth of expenses for the properties in an easy to share file.

Let’s talk real estate!

Real Estate has been something that I have studied extensively for the last 5 years. I have devoted myself to countless hours (4 hours minimum - daily) to build up my real estate competency, so I could minimize loses and learn from other's mistakes. This was big for me, because I come from humble beginnings and knew I had no connections, so I would have to make every dollar count - no room for error. That said, I sold my personal home in October 2021 and have been looking to dedicate the proceeds to my real estate ventures. I have found an out-of-state portfolio in Mobile, Alabama I am interested in and actually have a contract on currently. I want to figure out a way to make it work, but am afraid my 'lack of experience' will make doing the deal almost impossible. The deal is a solid deal. The ARV of the portfolio is $780,000, the purchase price is $260,000 all the properties (20 doors - 16 SFH & 2 duplexes) are in fair shape. Every door is rented, except one unit, which does need work. It is worth noting multiple houses and duplexes are one parcel. The gross rental income is currently $6,600/month, with the potential to increase rents. That said, I am struggling with a financing method that has me coming out of pocket for less than ~$52k. I want to keep the out of pocket cost to less than $30,000 - $35,000. The plan originally was to get a 90% PP/100% rehab hard money loan then fix up the one unit that needs work then refinance with a bank, but I keep hearing the PP per property isn't enough to qualify for HM (which seems odd, why would they not at least look at the homes before deciding that - if it was a $300,000 home that I got for $20,000 in fair shape that would reduce their risk). So that has me stumped a little. Then the next hurdle will be the refinance piece. From my understanding multiple houses on a single parcel is tough to appraise, therefore, tough for a bank to finance. A solution I came up with is during the rehab process is to split the parcels up and just roll that expense into the "rehab budget". This deal would be huge for my start in real estate and want to know if there are avenues I'm not thinking of to get over the finish line on this opportunity.

*Advise Needed*

Real Estate has been something that I have studied extensively for the last 5 years. I have devoted myself to countless hours (4 hours minimum - daily) to build up my real estate competency, so I could minimize loses and learn from other's mistakes. This was big for me, because I come from humble beginnings and knew I had no connections, so I knew I would have to make every dollar count - no room for error. That said, I sold my personal home in October 2021 and have been looking to dedicate the proceeds to my real estate ventures. I have found an out-of-state portfolio in Mobile, Alabama I am interested in and actually have a contract on currently. I want figure out a way to make it work, but am afraid my 'lack of experience' will make doing the deal almost impossible. The deal is a solid deal. The ARV of the portfolio is $780,000, the purchase price is $260,000 all the properties (20 doors - 16 SFH & 2 duplexes) are in fair shape. Every door is rented, except one unit, which does need work. It is worth noting multiple houses and duplexes are one parcel. The gross rental income is currently $6,600/month, with the potential to increase rents. That said, I am struggling with a financing method that has me coming out of pocket for less than ~$52k. I want to keep the out of pocket cost to less than $30,000 - $35,000. The plan originally was to get a 90% PP/100% rehab hard money loan then fix up the one unit that needs work then refinance with a bank, but I keep hearing the PP per property isn't enough to qualify for HM (which seems odd, why would they not at least look at the homes before deciding that - if it was a $300,000 home that I got for $20,000 in fair shape that would reduce their risk). So that has me stumped a little. Then the next hurdle will be the refinance piece. From my understanding multiple houses on a single parcel is tough to appraise, therefore, tough for a bank to finance. A solution I came up with is during the rehab process is to split the parcels up and just roll that expense into the "rehab budget". This deal would be huge for my start in real estate and want to know if there are avenues I'm not thinking of to get over the finish line on this opportunity.

A few things stand out to me on this post 1. your offers are too high 2. you’re not inspecting the property thoroughly yourself 3. lastly, you’re not including an inspection period.

Your offers should contain a buffer for those unaccounted expenses. And don’t just cancel the contract when you find those problems. Take it back to the owner and share your findings and try to get a price reduction.

You need to be willing to get in a crawl space and in the attic to identify these issues. You now have a couple reports to learn from. Look through the reports and see what they are identifying as problematic, so you know going forward.

Unless you have money to burn on lost EM and inspections, you need to include an inspection period, especially since you aren’t experienced enough to identify those bigger issues yourself.