All Forum Posts by: Ken Faler

yeah that would be the deal breaker, if the bigger party needed to provide the guarantee.I drilled the loan officer on this and he stood by his statement. He did say that the "other" equity partners who did not provide the guarantee would need to at least have a 620 credit score.

No but I am still working through my $450K refi, I had to pay 2pts to buy it down from 7.25 to 6.75. He had much lower rates on the 5 year loan. My plan is to engage him further on some additional questions for that "other product", that does seem too good to be true. I am pretty sure my private lender would play ball as am equity partner in the deal so long as he was not required to guarantee any debt. My private lender was a real estate investor in his earlier years, and I think if the loan officer is not missing something, or left out a critical piece it's worth looking into at least.

Apparently Liberty Rental Finance is a new subsidiary of Ocwen and specializes in providing bundled loans on portfolios of single family houses and apartment buildings. I am working with a loan officer right now on a bundled refi for $450K (group of 8 single family homes). 6.75% @ 70% LTV and they claim that's a 30 year fixed product. The first I have found to go out more than 5 years on a fixed rate. Rates high but my plans are to pay on a 20 year am, and the comfort of the fixed rate is worth it.

But that's not the best part...supposably this loan officer is also touting another product. He is offering a loan vehicle that...so long as one borrower who owns 25%+ of the LLC (Borrowing Entity) and has a 620 credit score ,then the remaining borrowers do not need to personally guarantee the note. So in theory if I start an LLC with a partner and provide $62,500 in equity and my partner provides $187,500 in equity then we are in the position to put 25% down (250k) on a $1,000,0000 apartment building, where I (the individual who put down only $62,500 is the only one required to personally guarantee the $750,000 note. (Now for the creative part) If this "other equity partner" is typically used to being my Private Lender. Would it not be possible to draft an equity purchase clause in the LLC paperwork allowing me to purchase his shares of the LLC over a period of say...5 years where he nets the equivalent of a 10% return at the time his shares are purchased. Coincidentally the 10% return being the same return he is used to getting on his private mortgages/notes. (The longer it takes to purchase the shares the more they cost). This solving the problem of how do I buy a $1,000,000 apartment building for $62,500.

John this is Ken Faler here another investor in the Dayton area. I vouch for all of the above comments and have networked with both Darrin and Christina who both seem to be at the center of a lot of RE activity here in Dayton. I currently own and manage  about 83 single-family properties in the Dayton area and Kettering is where I got my start as well. It seems to have a good mix of properties that you can pick up and be all-in $40-60K with the rents in the 700 to 850 range. Belmont is another adjacent neighborhood to Kettering where you can be all in in the $30-$45,000 range and experience rants around 650 to 700 for two and three bedrooms. 

I purchase the house in my name and my private lender provides me with 100% of the purchase and rehab funds. I provide him a first mortgage and note on the property. (something my attorney drafts for $150) Terms are interest only monthly payments at 10%, 3 year balloon, I guarantee the note personally and include a 12 month pre-payment penalty to guarantee my private lender a minimum 12 months of interest. I refi with a bank anytime after 12 months which is how long my bank needs me to have owned it before they can use the new appraised value for my refi. On the refi I usually end up with 20-30% equity based on the refi's new appraised value.

Christina nice to hear from you as well, trying to enter the social media world I guess, I am going to try and make the next Logan's RE meeting, thanks for adding me to the Facebook group! 

Thanks Elizabeth! 

Ken Faler here from Dayton, OH. First time on BP. I am trying to aggressively purchase and grow the number of single family rental homes I have. I am 33 yrs old and have acquired close to 100 houses over the past 10 years, 83 of which I still hold as long term rentals the remainder being sold as flips. I use private mortgages to fund the acquisition and rehab at 10% then use bank financing to take out the private lender between months 12 and 18, then move onto the next one. I prefer the 3 bed 1 bath brick ranch for $55K all-in that rents for about $800-850 per month. Starting to consider apartment buildings but struggle to find them at $0.70 to $0.80 on the dollar which is what I would need for my takeout refi to maintain the equity spread which so far has allowed me to grow up to this point.

I ran into this same issue when I was starting out, I tried the hard money route for purchase and rehab funds which ended up being very expensive due to the high fees/points and interest rates. A friend ended up funding me with a private mortgage from his self-directed IRA (Equity Trust IRA Custodian). That is what I have been doing since for my buy & holds. I use a bank to cash out the private mortgage after 12-15 months.