All Forum Posts by: Louis Bergman

To answer your question; Yes, you're on the right track as far as commercial properties go.
Everything will fall into place once you acknowledge that there is a learning curve on applying your tools and sharpening your skills.
You have to put in the effort and the hours to become a player.
It's not just about knowing the rules, but you want to practice the plays time and again every day to become good at it.

If you strongly feel you want to be on the field regardless, I suggest you team up in a small way with an experienced investor.
As payment for your time and good services you will get a piece of the equity of a particular property.
But more important, you will gain valuable hands-on experience and start seeing things through a professional eye.

I think that is the best of all worlds for you at this time.
Believe me, if you find a "good deal", you will have no problem finding such a partner and you'll end up right in the middle of all the action.
So don't give up on your goals; there's no good reason for that.
Stay focused on the steps you need to take to get there and you'll be just fine.

All of us will be here to cheer you on! :D

First impression is kinda sorta OK, and it'll get better the more you can negotiate down on the price.
Based on the available info I'd take the safe route and shave at least $150,000 off the purchase price.
If the seller stands hard on his price, you need to look at some additional items in order to make a qualified decision.

Here are some of the additional points I'd like you to consider.
--- How much is available for a down payment
--- Actual Rental Income/Pro forma rental income
--- Vacancy Rate
--- Average rent per unit
--- Management expenses/Fee
--- Estimated Appraised Value

These items will help to determine if there are any financial constraints on leveraging your purchase.
The good news is that the property might marginally qualify for a 85% loan, 35 years fixed @ 6.25%, non-recourse and no balloon.

My investment criteria would disqualify this property for my personal portfolio as I run my properties arms length; i.e. I do have professional management expenses as a result.
Also I do allow for vacancy in my calculations, so that brings my NOI further down.
However, depending on the real rent numbers, this property might just squeek by on the minimum DSCR required of 1.18.

But setting my personal opinions aside, and depending on your investment objectives this property could very well be a good fit for you.
And yes, I see possibilities to get some solid funding for it along the lines I mentioned above.
Help us with some more detailed numbers, and we'll gladly give this a second look.

Hope this helps a bit. :wink:

I look forward to that coffee.
There's always a lot to talk about.
Check my profile for my contact info.

Louis :D

Hey Jon,

I'll gladly take you up on that.
We're almost neighbors; I live in Weston.
Let me know when we could have a coffee and get something going.
My profile will give you some more info, and on my website there's a phone number.
And yes, I do pick up the phone.
Look forward to hearing from you,

Louis :D

What comes to mind immediately is to develop an "Age Restricted" Multifamily complex.
Check with your State or County officials to make sure there are no licensing requirements for that.
My guess is you should be just fine.

"Age restricted" is a great way to tap in to what is a growing and very lucrative market.
The Financing for that is a developers dream.
I'll gladly take you through that when the time comes.

Louis Bergman

If this regards a Single Family Home, it is a daunting task indeed.
I would suggest you contact the local REIAs in the area for some recommendations and take it from there.

In the case of a Multifamily project your fact-finding becomes a whole lot easier.
My first step would be to spend some quality time doing a Google search.
Alternatively your Lender may come up with some suggestions; they just love it when you tell them that you intend to put professional management in place.

That will narrow the field down to a handful of names.
Most of the follow-up interviews can be done by phone.
There are a lot of questions you want answered in those calls, and remember to ask for references.
And yes, do check those references out.

Hope this helps a bit.

Louis Bergman

Eric,

I would gladly do so, but I just found out that I cannot yet post there.
It will have to wait until I've posted at least 10 times on several other topics.
Rules of the Forum...

I will address the question as soon as I have the required number of posts.
Thanks for opening the discussion on that great opportunity though.

Louis

My name is Louis Bergman and I'm based in the Sunshine State.
Feel free to check my profile for more details.

Together with my son and his wife we run Hawthorn Enterprises LLC, which does Commercial Money Brokerage with as specialty Multifamily Projects.
For practical purposes we do not deal with individuals, as we prefer to work with non-recourse Loan programs.
We also buy for our own portfolio, or partner up with other Investors/Developers who want us to commit our financial expertise to their projects for a longer term.

We originally started out as "ugly house investors", and fairly soon evolved into the much more rewarding Multifamily playing field.
I'm very impressed with the positive way in which biggerpockets has developed itself, and it will be a pleasure to contribute to the membership whenever I can.

Thank you for having this great Forum, and I look forward to being an active member.

Gary,

If the location is good for a Multifamily project, you basically have 2 options.

You could design your project in such a way that it qualifies for your State's LIHTC (Tax credit) program.
It boils down to developing and building what is basically a subsidized lower income project.
As with all Government programs there are some very narrow restrictions there, but also some serious financial advantages.
What I personally don't like about it is that it is a cumbersome procedure, and the outcome is never certain.

Alternatively you could consider setting it up so it qualifies for a special Loan program that takes into consideration the value of the land once it is entitled.
In normal English that means that you would get long term, fixed rate, non-recourse financing.
So none of those F-words would apply; like FICO, Freddy, Fannie, etc.
And if done properly, you would most likely actually get a check at closing for some of the value of the land.

I will be more than glad to discuss further with you on the latter scenario.

Hope this helps.
Louis Bergman

I have to answer your question in a slightly different way, as in the case of Triple Net leases different rules apply.

The best financing (CTL financing) is available if you have an Investment Grade Tenant such as Walgreens and a remaining lease term of at least 10 years plus.
CTL financing is negotiable at 100% plus, but you need to know the "language" and the rules of the game.
There is no school where you can learn the game, and the insiders typically do not share their knowledge.

So CTL financing is determined by the creditworthiness of the tenant and the strength of the lease; not by the appraised value of the building.
With Non-Investment grade tenants you (only) have access to regular sources of financing, and the normal rules apply.

Hope this helps.
Louis Bergman