All Forum Posts by: Ken Jernigan

Get three years tax returns on the business. Analyze the P&L and business assets. Don't count any "off the books income." How are you going to make sure customers stay if ownership changes? Is there any bankable collateral? There are no 100% loans for this type of deal unless you are a doctor, dentist, veterinarian with an established practice. Or have significant side collateral. If you don't have industry experience, it's going to be an uphill slog to get a lender. SBA probably your best bet. Get seller financing subordinate to any bank loan. Or maybe a HELOC on your primary residence.

Most important motivation for seller finance is tax on the cap gains. Seller note allows him to defer the gains over the life of the note. However, he could just do a 1031 exchange with another property and defer the gains until he sells out the second property. I've also seen it in properties that have issues and don't move quickly. If this is an attractive property, it's likely to attract a cash offer when the owner wants to sell.

I just remediated the same mold in my crawlspace. It's very common in the South. Even if you clean it up, you have to control the humidity levels or it could return. Mold grows at humidity levels 60% and higher.

Another lane in the syndication highway is the ability to diversify and gain experience across asset classes. If you're doing SFRs this participation could give you experience in mixed use. Not to say you'd be doing the day to day, but you'd learn a bit about property evaluation, cash flow, etc. Same could be said for self storage, mobile home parks, retail.

Again, most lenders use global because you can take the cash flow from the property and use it however. So they want to know you have sufficient cushion to meet other obligations as well as the proposed debt. You do need to show other sources of income than the subject property, such as spouse's employment, other income properties, investments, etc.

There are stated income lenders who are more lenient, but LTVs are low and rates are high.

Yes living expenses are used to calculate global DTI. The reason being you control the cash, not the bank. However, most lenders add back non cash and discretionary expenses. On larger projects, some lenders require maintenance reserves. If you need more info, you can PM me.

@Evan Hutchins Is the $1.7 million value before or after the $300K in improvements? Who pays water? Have you seen financials on the park? Looks like the price is a bit high based on his ask, but that depends on the local market, condition of the park, etc. See if he'll subordinate his seller financing to a senior bank loan, so it'll be easier to get funding to upgrade the property if it needs it.

@Mark S. I'm involved with a small investor group in North Carolina that targets underperforming self storage, multi family and mobile home parks. Currently have two self storages and one MHP. Contract pending for a third self storage and negotiating for a small multi fam. I'd be interested in organizing a virtual group to look at deals, discuss structures, talk about funding sources.

This info is all online. You don't need to go to courthouse or have a realtor do it. Check register of deeds for DOT.

@Jane Lewis Any lender will want a Phase 1, and maybe Phase 2 environmental report on an auto repair shop before closing. If any contamination is found, most likely will require clean up and sign off from state environmental authority. Best to get out in front of this with a good environmental consultant. The reports can be expensive, and the clean-up more. You might ask if there is an old report on the property. That could tell you a lot.