All Forum Posts by: Louis Cavallaro

The company name is Private Funds LLC, website is http://www.privatefundsllc.com/ and I believe the man's name was Larry or Laurence/Lawrence. He previously had the same type of thing going under a different company name which had TONS of complaints/lawsuits. If I can find that info again I will post.

 After comments on here and doing some light digging it was easy to see that this was likely a scam and at best case very flaky. The guy would not give me anything about his process is writing over email. I'm trying to recall his name and company. Will report back when I find it if that's permitted. 

Hey everyone, I wish I had posted in here earlier and maybe I could have avoided the below issue, but here is where I am now:

 I'm in the process of purchasing my first home, which is a duplex. Both units currently rented month to month.

I was supposed to close Nov 30th (or earlier as the seller wants), and my rate its locked in until Dec 18. My contract with the seller is good until Dec 15th.

The loan is from a local bank which hold their own notes, so I could do 15% down with no PMI and a great rate. They only do owner-occupied, not investments, which is what I want as I need a place to live anyways (at least for the first year).

Back to the current tenants that are month to month. The seller told me the first floor tenant was leaving soon, likely December but wasn't completely sure. I had thought, perhaps incorrectly from google searches, that I had 30-60 days before I needed to occupy the house and therefore remove this tenant. So I was not worried about them being in there a few weeks after I closed.

This Tuesday, Nov 3, I received a call from the bank that the underwriter is requiring a signed document that the tenant's lease will be terminated and that they will be OUT of the house BEFORE closing or they will not transfer title. 

Now if they told me this two days earlier I could have had the seller give the tenant 30 days. Their lease agreement is a 30 day notice on or before the monthly renewal/rent date. So now a 30 day notice does not start until Dec 1 even if given today, having them out by Jan 1. (Plus tenant is an attorney).

My realtor has contacted the listing agent to see what they can work out but its been two days and the listing agent has not gotten back to getting a bit nervous. 

Possible solutions:

*Tenant/seller sign to have tenant leave by Jan 1 and take that to the underwriter in hopes that will satisfy requirement and let me close Nov 30 (loan officer says it won't likely work but that she'd deliver the document to underwriter if we did it)

*The tenant agrees to leave by the December 15 contract date, possibly with financial incentive for having to do 2 moves and possibly storing furniture if his next lease doesn't start until Jan 1

*Request to extend contract to Jan 1 with seller which they could reject, plus RESTART loan process and forfeit money into the loan so far (loan originator won't extend the date of Dec 18 even though she didn't tell us about the vacant requirement on day 1 when I applied (3 weeks ago)). 

Even if I did know the requirement on day 1, if I were the seller I would not want to terminate a lease early because if my loan fell through they'd be out rent and back at square one trying to sell the property.

Has anyone has an experience like this or have any advice or ideas on how to solve this? 

Phil,

I've been in the same predicament lately... should I directly contact the listing agents on loopnet or try to find a commercial agent around Cincinnati to act on my behalf...?

I'll be interested to see what other members think...

Thanks Rob, I have sent a few emails out to brokers I have looked up on Loopnet.

I was hoping that someone here could recommend a broker that they have worked with in the past, or possibly another BP member who is an agent in the Cinci area.

Hey,

I am looking for someone to help me find and purchase my first apartment complex in the Cincinnati area (I reside out of state but am in Cincinnati often).

I have come across a few deals on Loopnet but would prefer someone who specializes in 20-40+ unit apartments to act as my agent before proceeding further.

Thank you

Yeah, I believe the $20k is their fee and maybe they keep that whether they secure funding or not.

I just read Josh Dorkin's sticky and from the looks of it I think I'm okay to post their website (they have a linkdin page, too). 

If someone can let me know if that's okay I'd like to post it and see if anyone's ever heard of them...

Hoping someone can help me shed some light on this. It may be something interesting or it may be something I don't want to touch with a 40 foot pole...

I've been looking for commercial financing, came across a website (not sure if I'm allowed to post the site here or not) offering 100% financing (wasn't acutally looking for that much) but thought I'd call out of curiously. The phone reception wasn't great and the guy talked very fast as if I'd done this before but here's what I got out of it:

For $1MM Loan, they would offer a 5 year interest only loan at 3.1-3.1%

My partner and I would need a security deposit $150k + $20k (not sure about the 20k?)

They would issue a LOI within 24-48 hours (I believe this is after we bring them the property?)

After 5 years the loan is due or we refinance. No early payoff penalties.

It would look good if it works out like this: Say we find a 9 cap $1MM apartment. $90k - 32k interest = +$58k after debt service. After 5 years of making $58k we have just under $300k and have a proper down payment to refinance. (Or we sell the property and pocket the $300?)

We would need to go to California to meet the lenders in person the first time.

He said my partner and I didn't need experience as long as the apartment/property had a management team in place and we had a security deposit.

I am going to call back but wanted to see if I could get a few questions answered here first so I come across as knowing what I'm talking about:

1. Is anyone familiar with this type of program?

2. The $150k security deposit. He said we would get this back.... Does he mean after we either close the deal or the deal falls through during due diligence? Or are they holding it as collateral until the 5 years is up? (wouldn't really be 100% financing then...)?

3. The $20k? He kind of snuck that in their, so I'm taking it that's their cut for securing lender/financing?

Is there a term for this type of deal so I can look it up and gather more info? It seems too good to be true if it works like I calculated above but still peaked my curiosity...

I didn't get the greatest vibe from this guy as it seemed he was being kind of short with me. I asked him if he could email me the program info to show my partner and he said the company doesn't send out info until it is time for us to see the contract, but that I could call back with my partner on the phone... 

Thanks in advance

Hey I’m back in the states and can use the web for less than a buck a minute so I’m ready to get rolling again!

First off, thanks so much to everyone who chimed in. I can already tell this forum is going to be a great place with a lot of support from knowledgeable people.

To answer a few questions:

@George Nikolakakos – from what the realtor told me, fracking is not what the community has been relying on but is expected to move more into the area (or so according to the realtor…). I’m working on getting more detailed info on the economy strength and population.

It is not on a large waste management plant but has its own private sewer treatment plant for the park. Yes, it is well water. Average lot size is 40x100.

I have a solid reserves and backup funds if needed. I just want to make the most of the capital I am aiming to put down initially.

Eric – the average age of homes is 25 years. Of the 6 vacancies, 3 of them are stick built. I have some ideas in getting the 3 plots filled. From what I’ve read, once a MH is placed they rarely move many more times. I would offer very generous rent incentives to people just buying a MH to place it in my park along with an incentive to the MH seller to send them my way. Free rent for x amount of time I was thinking…? Then the plot renter is settled there when the free rent runs out unless they want to drop thousands to move…

I’ll have to check out if there are other MH in the town, good thought. How would this sway your position towards the park one way or the other?

Curt – Probably not what you wanted to hear regarding the private water and sewer, but perhaps that’s a bargaining chip to get this at a price worth having to pay a park manager who is certified to operate the WW and WS (his salary about 7% of park expenses with another 3% going towards WW and WS testing and septic tank cleaning 6 times a year).

If just under 4% of annual expenses are from “American Electric Power” I assume the park owner is paying. A possible opportunity to individually meter each plot?

I am also definitely looking into mobile home boot camp. Read a lot of great reviews.

Bruce – the population definitely concerns me, as well. I also do get why someone who inherited the park would see a MHP that way and want to sell. However, in the end, they have a park manager, assistant park manager and office manager collecting rents, deposits, and writing receipts. It seems like they could hold on to it and just keep collecting is all I was thinking. They are willing to seller finance 75% so it doesn’t seem like they need a large chunk of money immediately when they could get more rent per month indefinitely vs my note with interest for a set amount of time. You’re probably right, just thinking out loud…

Jim – I am definitely going to gather more info on the private water/sewer issues as that could be the deal breaker. It’s great to hear the success you’re having on the small town park. Gives me hope that for the right price this could be a winner. I will be doing much more research into the economy and stability of the town this week.

*I will be contacting the realtor and if I can the owner directly to get some answers to the many good questions and issues you all brought up. Any other information you would try to get out of the seller?

I have 2013 income and expense sheet. Maybe ask for the previous 5-10 years of financials if he’s owned it that long? Legit tax documents vs seller furnished info?

Why traditional occupancy rate is only 85% and not higher?

Why can’t he rent out the only 3 stick build houses on the property?

5 years ago, he raised rent $20. How did this go over and why hasn’t he raised it even slightly since?

Any other big questions I may be missing here?

Thanks again,

Louis

Hey everyone, I've been on this site countless times and have come across great information so I have finally joined up. As I mention in my "about me" section I'm new to real estate but had done quite a bit of research into buying a multi unit home with 25% down. I've since become more interested in obtaining a commercial loan with 70% non-bank lender, 20% seller carryback, and 10% down payment. I  figure if all works out my capital could do more for me this way. 

If you wouldn't mind giving me your opinions or advice on what to look into further, below is the current property/situation I've been interested in:

Park with an asking price of 800k

42 of 48 units occupied, Road is paved, units skirted

All units owner occupied, ave $300/unit

About 140k income with 35% expenses of about 50k

The realtor provides an Income/Expense NOI as 90k. (The mortgage broker I've been working with had me divide 90,000/.1 to get 900k. He says this is how the lenders would come to the value that they will provide up to 70% of.)

Positives:

Seemingly good cash flow 

Some room to improve occupancy while still being okay if I can't fill the last 6 plots

Seller willing to finance 75% at lower rate than non-bank lenders (I would only have 10% to put down here though so would still probably need to go with non-bank lender 70% and seller carryback 20%

Included in expenses is park manager (who is Certified WW and WS operator) and office manager

Realtor says fracking in the area is bringing more people who will need somewhere to live but I couldn't verify this anywhere online so I took it with a grain of salt

Apparent reason they are selling is because the park was inherited

Concerns:

Park is 40 years old and has private sewer and water system (about 10% of expenses go to this including the manager)

Park is in town with population of only 6k. About 20 miles (20 minute drive) of the county seat with population of 20k (large enough for a Wal-Mart). 20 minutes from another town with 20k population. Too far from too small of towns?

Seemingly great cash flow, self-managed and the seller is willing to finance up to 75%... Too good to be true? Why wouldn't they just hold on to it and keep collecting?

*Obviously I would need to confirm the given numbers, but assuming they're accurate any advice you could give a first time MHP buyer? Anything else to consider?

I had a couple other questions/concerns and I'm sure some more details I can give, but I have a flight to catch at the crack of dawn. I will be out of the country for the next week on business so thank you in advance to anyone who can send any advice my way. Hopefully I can access the forum while abroad!

Louis