All Forum Posts by: J. Martin

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@Account Closed , they say that they'll usually do non-recourse as long as you're strong enough to make your signature worthwhile.. then you don't have to sign! ironic.. Nice pricing though.. Did you ask how much more for a 10yr fixed rate on a 30yr am? (Not sure if you plan on holding on to these properties that long..) The yield curve has a decreasing steepness as you go out on the curve right now past the first few years. I have a feeling you've seen this link before, but if not, this is a "dynamic" chart that shows how the S&P performs next to a constantly changing "dynamic" yield curve over the years. How accurate is the inverted yield curve? How does the steepness foretell gains? hmmmm

http://stockcharts.com/freecharts/yieldcurve.php

@Bill Gulley , as far as I can tell, Minh examines everything financial I believe, including probably more real estate deals than our loan review team! lol But he's not a bank examiner. Just me and Johnson. But I would be really interested to see how many there are.. I'm going to search around and see (sometime!)..

I've heard about the 90's, I've heard about SNL's - have had some great fraud speakers and heard some of the greatest swindles around.. But in all honesty a lot harder to find than as many as are likely out there.. Seen some go down in the crisis. Closed a few banks, unfortunately. But I think most are just trying to make a living and and deposit/lend, especially in our community banks.. Bankers and I/B, etc aren't all evil or fraudulent. Just like all examiners are not overzealous or out to punish.. But it has happened..

@Account Closed , good stuff..

Nice, tight DSCR. Good for you. MF is favored out there, plus you're in a prime location (I assume down there), and I'm sure they take into consideration the strength beyond the subject property DSCR... (I'm assuming recourse beyond standard "bad boy" carveouts).

I'm with you on the timing.. Could have been better; could have been worse. But I am very happy with what I have. Even if I had gone BK in the crisis and was living in a cramped studio, I could be happy. There's a lot in life to enjoy :) Even poor, I could take a beautiful free hike through the Presidio, Land's End, & Sutro Baths like I did last weekend... Honestly though, the CF doesn't hurt either lol

Oh, @Bill Gulley , and yes, I have seen the same grown man cry who told me 2 weeks earlier that he'd been "banking since before I was born." And this was not from any punitive recommendations. It was from the frustration stemming from an inability to answer basic high-level questions about one of the key areas he was responsible for managing.. I gave him some time to gather himself and he apologized later, and eventually came up with the "right" answers. But it's awkwardly uncomfortable (and maybe even painful) to watch it happen sometimes.. In this case, after hearing that comment coming in the door, it just made it a little harder to bite my tongue.. I try to take the high road and let things roll off. I don't like to shave any time off my life dwelling on negative things.. But damn, it was ironic!

In all fairness, I wouldn't really want to be on the other side of the table and have someone scrutinize my work. But that's part of what the fat paycheck and the FDIC-insured deposits that produce all the ROE come with.. a highly regulated environment..

@Bill Gulley How bored do you want to get?! (unless you're still interested in this stuff) Basel 3 came up with a specific level of solid liquidity needed for a prescribed runoff level. The proposed US interagency guidance proposes larger banks need to hold high quality, (super) liquid assets for a prescribed amount of runoff (overly prescribed/inflexible if you ask me) - rather than relying on off-balance sheet funding sources and a balance sheet full of less liquid investments/assets (they more or less want treasuries or cash to fulfill a low/moderate runoff, with haircuts/limits on Agency MBS)

The caveat is that the runoff is what you would see in a low/medium liquidity stress scenario, so they can still project to lean on borrowings in high stress. I'm just worried these relatively mild stresses become the new "PCA capital standards" of the liquidity world. Everyone measures against that bar, which is often times too low for overall risk management.. The guidance is just proposed and in comment period now, so as they say, we'll burn that bridge when we get there! lol

And I didn't mean any offense by "sound like a banker!" In this case, just that both you, @Account Closed , and the bankers reasonably point out how the economic environment surrounding FOMC rate increases are likely to contribute to rent increases.. But good to know you'll be able to manage it either way ;)

Welcome @Glenn Lucas ,

You'll find lots of good info in the "Learn" link across the top navigation bar, and in the link at the top of the new intro section. You can tag people by putting @ in front of their name, then clicking their name when it pops up at the bottom of the message box. You can click on the "vote" button if you like someone's post or is helpful. And you can earn "awards" for various "achievements" - just look at your profile. Hope that helps with the site!

On the investment side, after I got knowledgeable, I bought a 4plex with an FHA loan. I think that's the best way to go big with just a little capital. 3.5% down and they use the rents from the 3 other units to qualify you, so ups your purchase price a lot.. Just my 2 cents! Good luck with your investments Glenn!

I was going to post some pics @Troy Fisher , but having technical difficulties with the link. Always have problems with tagging people too.. Must be all that new Pro member money flowing in, clogging up the internet pipes! lol

@Jen Kurtz , I like your style ;) Good luck in your adventures!

@Account Closed , looks like you know your numbers with the variability in the rate.. (why am I not surprised?!) I've also seen the 35-40% expense ratio on MF in the Bay.. And since we're on the topic, not unusual to see an underwriter take into consideration what another 200bp or so would do to DSCR at existing rent levels (although I acknowledge the opportunity for increased rents in the economic environment in which rates are going up..)

Thanks for the kind words for me and @Johnson H. . It's been an amazingly informative experience over the last 5 years of the financial crisis, and only wish I would have jumped in as soon as you Minh! (although was a bit more constrained on capital and capital access..). Of course, if I would have had a dime to my name a few years earlier, I might have got caught up in the crash and learned some REAL leverage lessons.. Lucky timing for me too..

I mentioned the 1031 because you were talking about the (now) low yield on the singles, so thought you might want to swap into a MF with higher CF.. But you're right about the cash-out. Great way to tap the equity without disposing if you're good with your existing gross rents/profit per dollar tied up after cash-out.

@Bill Gulley , you sound like a banker on CRE stress testing with rate increases: "Well if rates go up, they'll be making more in rents! So my DSCR will be flat!" Well...... that's probably true, but this is a stress test! lol You should have seen the look on this C-level's face today when we told him they were going to have to hold more liquid assets (and squeeze ROE further!) with the new guidance coming out.. It's a different world today.. Hopefully we can carry your torch in a "satisfactory," or even "strong" manner into the future!!

Welcome from the East Bay @Thomas Hart ! You'll find lots of good info as others mentioned/linked. Also, try the "Learn" link across the top navigation bar. You can tag people by putting @ in front of their name, then clicking their name when it pops up at the bottom of the message box. You can click on the "vote" button if you like someone's post or is helpful. And you can earn "awards" for various "achievements" - just look at your profile. Hope that helps!

Btw, I've spent some time just above you in Healdsburg, and love relaxing up there.. But I live down in the flats of Richmond where I bought my 4plex.. Little different vibe! lol Welcome Thomas. And soak up all that great information on the site. See in the forums!