All Forum Posts by: Kevin Dougherty

Your broker is correct, the average seasoning period for most traditional banks is 12 months. There are many alternative lenders who will allow refinancing inside of 12 months once the property cash flow starts trending upward from events such as rental increases and/or rental improvements. There are plenty of commercial finance brokers on here who can assist you. Talk to a couple and compare their services. Once you have the property under contract you can start collecting terms and conditions from these brokers and choose the one that fits your needs. It will be hard to obtain accurate rates and terms until the lenders have all of the information on you the borrower and the subject property and they don't usually provide rates and terms until you control the property.

Good luck

The only way I would except negative cash flow is if there were future events to occur such as rehabbing to increase rental income, property currently 20-30% under market rents, purchasing the property well under market value and its located in an area that has strong appreciation or Amazon is moving one of their new headquarters around the corner.

Integrity

Fiduciary Duty to the Client

Effective and Timely Communication even when the news is bad

Being a Great Problem Solver

You obliviously want to make sure the well is functioning properly, sometimes the well site will go dry and you have drill a new well site at a cost per foot. You want to test the quality of the water to determine if the home requires a purification system if it does not already have one.

If the bank will not permit you to have a licensed plumber come in to turn the system on for inspection then contact a reputable well site company and get an estimate of what it might cost to repair a well site, usually a pump to push the water up or what is the cost to open up a new well site if you should need one installed. Then factor that in to your acquisition rehab cost as a worse case scenario.

That depends on if you are using a real estate agent who is investor friendly. If yes, then they should know what documents are required for what you are trying to accomplish. If no, then competent legal advice is called for.

Yes, there are lenders like @Jay Hinrichs stated but it will also depend on you the sponsor, what does your bio say? What is your experience on taking on 70 new doors, do you have the infrastructure to get the property up to "market speed?" Your BP bio says you are from CA but the property is in FL, have you completed any acquisitions this large out of state before?

These are just some of the questions the lenders will be asking.

Well it depends on a lot of different moving parts, People like me love real estate & reits while others lean towards stocks and mutual funds because we understand real estate and they understand the markets. It also has to include the individual's risk tolerance level.

Now for the real estate that i would pursue,  an investment that will annually provide a steady cash flow of 10% return or better, a property that will appreciate along the way and one that has the least amount of headaches. This would probably look like a nice 6-8 multi-unit that my property management company could handle easily.

 Looking at this from a return position, each door produces $150 per month cash flow x 6 doors =  $900 x 12 months = $10,800 annually and now I just made 10.8% return on my money.

These questions should help you find a reputable lender.

Some questions to ask the lenders, these apply to all lenders including Alternative, Hard Money, not just the traditional banks

Fico: What is their minimum score they accept? You should know your score going in

Loan Terms: How many years, Fixed vs. Adjustable, Balloon Payments, etc...?

Loan Size: Minimum & Maximum ?

Max LTC (loan to cost) LTV (loan to value)?

Interest Rates: Everyone wants a standard answer but in all truthfulness, the interest rate actually issued is tied to many things so don’t be surprised when the lender responds to your question with “That depends”

Property Types: Do they lend on what you are purchasing?

Pre-Payment Penalty: If they have one, is it a flat penalty or does it have step down component like 6% of loan amount if paid off in year 1 / 5% if paid of in year 2 / 4% if paid off in year 3 / 3% if paid off in year 4 or is there a loan yield maintenance fee if paid off early

Use of Funds: What are the funds being used for?

Asset verification: How much documentation do they require, obtain a check list from them of what is required?

Points & Fees: how many to lender and broker (if you are utilizing one)?

Lending Territory: If they are local lender then this is not an issue?

Closing Time Frame: How quick once they receive every document from the borrower

Appraisals: Cost and how quick are appraisal being performed?

Special: Anything different they may require

This should help.

Congratulations and by the time you turn this asset around you will well prepared to take on other under performing properties. Sometimes this is where you make the most  money.