All Forum Posts by: Joseph Cacciapaglia

A lot of times when banks start talking about connection to or commitment to the area/community, they're really just asking that you open your operating accounts with their bank. Of course, they also like to see a local manager, especially if you're over 100 miles away. One question I like to ask is, how do your other out of state clients help you get comfortable with working with them.

Also, depending on the $ amount, you may be better going with an Axos or Zions type lender. It's been a while since I've worked with either, but they both had a national small balance program.

@Heath Jones that extension clause is a pro move. I was only working on the commercial side last time around, and we saw valuations and LTVs drop in tandem. This caused a lot of proceeds issues with refinances, not issues with borrowers/properties qualifying. However, it looks like your structure gives you plenty of room and time to execute your business plan. If you only had the initial 5 year term, I think it would be a close, if we run into a similar downturn (FYI, I don't believe this is where things are headed, but I'm ultra conservative in my assumptions anyway). Most of the people I saw really struggle had 3-5 year terms, and no extensions.

I think this is a great example of what you can negotiate, and off of Loopnet at that. It's always funny to me when people say you can't find deals that are on the market like that. People are buying them everyday, you just have to make a lot of offers, and be a decent negotiator. Thanks for sharing!

I have seen a lot of private lenders use a "minimum 6 months interest" requirement, so even if they repay sooner, they pay interest for 6 months. You could use this for any length of time really. You need to be sure you aren't running afoul of usury laws if you're going to include something like this. 

Unfortunately, it is your job to do due diligence on the COA rules. A good agent would be helpful with this, but it is your responsibility to read the condo docs or hire an attorney to advise you. That being said, what type of loan are you approved for? Did they approve you based on projected rental income? I might push harder with them to get a denial, based on the new information.

Ultimately, it seems that you did not perform, so you may just forfeit your deposit. If your deposit is very large, maybe you could buy the place anyway and move into it and rent out your current place. Or you could possibly resell it with owner financing/wrap, if that's allowed in your state. 

Sounds like a good deal. I love the hustle of the personal notes from friends and family. Raising capital is the biggest hurdle for most people, when it comes to scaling. Do you mind sharing some details about the owner financing? In the last downturn, I saw a lot of people get burned because they couldn't qualify to pay off their owner financing debt. A lot of owners will only provide a short balloon period, which makes the ability to refinance paramount. Last time around, it became close to impossible to refinance a lot of deals without significant equity injections. I'm hoping to hear that he gave you a fully amortizing deal, or at least a very long balloon period.

I think @Charity Skore is correct. I would contact an attorney and ask what the quiet title process is like in your state. Some places that I've worked, this has been a relatively simple proceeding. Of course, the seller should really be the one doing this, not you. It is there responsibility to deliver marketable title. Depending on how long the process is where you are, you could offer to extend your contract until it's complete. If they're not willing to clear the title, I would pass.

The best part about working with wholesalers, is that the price is already negotiated for you. You can analyze your deal without guessing at what the seller will take. The down side is there is usually little to no wiggle room, and you often don't have any real due diligence period. At least in my market, a lot of wholesalers are requiring significant nonrefundable deposits day 1, which is a risk I wouldn't personally take. You often end up working with a seller that has been strung along for a little while, and slightly more difficult to work with. A lot of people believe you get a better deal from wholesalers, but I don't think this is always the case.

On the flip side, working with an agent can be difficult, because you see all these properties listed, and you don't really know where you'll end up on price. It takes making a lot of offers to negotiate a good deal in today's market. However, you have maximum flexibility on the price and terms, because the contract isn't negotiated ahead of time for you. This means you can use a full due diligence period to get quotes on everything, will little to no risk. I believe it's harder to find great deals this way, but are not rolling the dice as much on the front end. You also can't just pick any old agent. You need to find someone that has experience with the types of deals you're doing.

As far as building a team, this is another area where it helps to work with an experienced agent. They should be able to recommend lenders, inspectors, insurance agents, and contractors in your area. It's in their best interest that you become successful, so you will do future deals. 

These projects are always great when they work. When you aren't granted the rezoning, that's another story. Have you spoken to a good land use attorney in the area? Do you have a good sense of what percent of your projects will get approved? If you're going to move forward with this plan, I would try to use options, so you only have to close if the rezoning is approved. There are a few investors here in San Antonio doing something similar in a popular neighborhood, but just building a SF on the new lot. They seem to be doing well. I actually just sold one of the homes that was on the original lot to a STR investor. There are plenty of people that prefer a smaller lot, because it's less maintenance.

 There are certainly parts of SA that are a lot tougher to rent than others, but there are also plenty of places that rent quickly. Just like in any other market, you really have to know where to look, and  be quick to jump on the right deals when they come up. I think anyone complaining about the speed of renting here has bought in a bad location or done a poor renovation. Plenty of people see "great deals" online, and don't realize that the rent to price ratio is so high, because of the difficulties in those areas.

If you have a lot of these properties, direct mail may be a good idea, but it's really a numbers game. I had one client that would mail places like this every quarter and every year would get a few deals out of it. If you only have a few in mind, I would try to call. If the corporate address is in the public records, you can google that address, and may find company information. I figure out who really owns a lot of properties this way. Often the corporate name doesn't tell you much, but the address is for a real estate investment company or something similar.