All Forum Posts by: Joshua Fulenwider

David I listened to a presentation by Attorney Jillian Sidoti who specializes in crowdfunding and it was very enlightening  There a lot of ways to do it wrong so you should contact an attorney.

Jilian Sidoti's website has some information on it that may help you.

https://www.crowdfundinglawyers.net/

Talk to a portfolio lender with a specialty in Ag.  I have financed deals similar to yours but you have to find a lender that is comfortable with Ag.

I would recommend talking to a portfolio lender about a construction loan.  You will need bids in order to present them with a scope of work so the bank is comfortable taking on the risk.  The bank will order an "as-completed" appraisal and typically base the loan on the lesser of the price+costs or the appraised value.

Other options would be private lenders or hard money lenders.

Hope this helps.

As a lender let me say that I think you are better off cultivating relationships with a variety of bankers at several different institutions.  Banks change ownership, regulations change, regulators place restrictions on certain lending activities inside certain banks, lenders retire, and underwriting guidelines change.  

I have had several loans with my own institution.  We got bought out about a year ago and the appetite for construction loans (part of my investing business model) was non-existent in the new institution.  Luckily for me I have relationships with other banks and lenders and was able to continue my projects.

I don't know your area but the 8%+5 points seems outrageously high.  You will have higher costs going into refinancing multiple place into one loan (title insurance and appraisals for each property possibly).  I think it would be worth your time to go into every community and regional bank in your area and sit down with their commercial lender to talk things over.

That being said, just because you hit up one branch of an institution doesn't mean the lender in that branch will be comfortable with what you are doing.  So it may even make sense to talk to lenders in different branches if you are not getting the answers you want.

Let me know if I can be of more help.

@Marty Gold it is important to make the distinction between a traditional mortgage compared to a commercial real estate loan offered by a portfolio lender.  Traditional mortgages are what you typically think of with a 30 year fixed rate loan or similar product.  These are used to finance 1-4 unit properties only.  This type of product cannot be negotiated as they are designed for primary residence borrowers and there a ton of fair lending issues that are tied to them and banks can get in a lot of trouble for giving one persona break and not the next.

A commercial real estate loan on the other hand can be used for any type of real estate including 1-4 unit properties so long as they are primarily for investment of business purposes.  The underwriting and terms are a lot different compared to a traditional mortgage.  These types of loans can be easier to get and qualify for depending on your situation.  However the terms and fees are not as friendly as traditional mortgages.  However, the rates and terms of them do tend to vary a lot more from bank to bank and the terms can be negotiated depending on the quality of the credit (not just credit score) and how badly the bank wants the business.

What are you looking at financing and what's your experience?

@Jeff Dulla I do not know.  I haven't called them up.  The add does not specify.  Prices in the markets these adds are running in rang from the mid $200s to the mid $300s.

Have you talked to any local portfolio lenders in your area yet?

Getting a commercial line of credit against a piece of real estate can be tricky.

The bigger issue I see is that banks like to have an identified source of repayment.  If you do not have any sales do you have other income with which to make payments?

@Abe Osman couple of strategies you could try depending mostly on your numbers and assets.  Do you have other assets you can borrow against?  Personal residence?  Vehicles? Equipment (either personal or for the business)? Money against your personal residence would be the cheapest and probably lowest payments.  

Are you considering using the SFH on the property as your primary residence? If so can you structure the deal into 2 transactions? One to buy the home with a lower down payment and better terms on financing. The second to buy the commercial space.

If you want to send me a PM I'd be happy to talk over the deal with you.

I have been speaking with a couple of other lenders about this.  There is currently a company in my area advertising financing with $1,000 down.  Seems like bubble lending to me.  

I looked at using crowdfunding on a property a while back.  I got about half-way through the initial application before I was automatically rejected due to the deal being in too small of a town.  Between that and my experience with more traditional crowdfunding I would guess that the majority of the crowdfunding sites are going to be concerned largely with the metrics of the deal in order to get through the initial application.  Their computer systems are going to do a lot of the initial analysis for them.  Your experience, while still important, is probably secondary to them.

Based on what you've listed I would say you are probably already more qualified than most people that apply for a crowdfunding loan.  I can tell you that you are already more qualified than the majority of the loan applicants I get.

I think you should just apply.  The worst that can happen is that they say no.  At the very least you will know more about the process.

Hope this helps.