All Forum Posts by: Marty Johnston

@Henry Centola how small is small? <$100,000? $250k? $500k?

@Monique Pett do you require the lender be physically located in Indiana or simply looking for lending options in your area? 

@Sandy Metivier I think you're meaning to say "Does the lender require me to be in the state of the property" is that right? If so, then the answer is "some will, some won't". There are lenders out there who don't mind if you're an out of state investor, many then will simply want to see that you have a local PM company in place and may want to vet them. But you should have options.

Feel free to DM me if you have more questions about this.

@Brian Falcon based on what I'm reading it sounds to me like you should have no problem approaching lenders now for financing without the need for a sizeable proforma - the As Completed Value is the big one. So long as you have the SOW, Plans, and the completed value figured (to be verified with appraisal of course) you should be eligible for funding (making assumptions  without knowing background, credit etc), especially if you start off with 1 or 2 builds for starters and work your way up.

Some lenders will want to see you've personally exited a project successfully (built and sold/refi'd) before they'll consider funding, but there are lenders out there who will take just your GC experience (for hire) into account and lend off that. They'll likely look to your GC licensed and reference pulled permits under your license to validate and confirm the experience.

In short, if you have a project ready to go now, don't let the lack for an in-depth proforma slow you down from getting started. 👍

Thanks for the details! Some banks can close in 45-days (most are 45-75) so you might be okay there! Your in a great price point so your options should be plentiful in the secondary market space as well, these are all your non-bank type lenders who usually like to see a minimum value per door of 50k-$100k  and loan amounts > $250k for best terms. Assuming credit is good too, the gates for lending options should be available to you!

@Shivi Thanapal you have options in the price point! When is your closing date? Do you have 30-days? The biggest thing is you'll want to ensure you have enough time for a commercial appraisal - these are much more extensive than 1-4 unit properties and cost 3-4x as much usually. They'll also need to be ordered by your lender (whomever you go with), so timeline is important!

1st question I always like to ask - have you approached local banks and credit unions? They will often offer the best terms, but expect the thorough underwrite (2-3 yrs personal and business tax returns, Debt Schedule, PFS, etc). If they say no, or can't meet your timelines, then looking at the secondary market lenders are gonna be your jam! Low-doc, asset based, and overall much easier mortgage process with faster turn times. The downside is rates are usually a little higher, but on the flip side too, you can also obtain 30-yr financing vs banks and credit unions who are often 25-yr ams, on 5-10 yr balloons. So even if higher rates, often times the 30-yr ams match up on cashflow vs the banks.

Let us know your timeline, who you've approached, and CONGRATS on your first Multifamily!

Unsecured Debt is a beautiful tool paired with real estate investing, however I usually coach most of my clients to only utilize it where they can force appreciation. Long-term, the numbers just don't pencil out, and the risk is significantly increased if there's a turn in cashflow or economic downturn, you could have a hefty, and ugly monthly payment to cover which could get you in trouble (depending on the terms of course).

That said, when used as a short-term product to leverage and scale up, it's about the best product out there (2nd to a HELOC IMO) to avoid giving up Equity, fast access to capital, etc. This is why it works so well with Rehabbers and Developers as they can exit the higher-cost note in a short period of time if needed. So long as 100% of the total project costs = 70% of the completed value/ARV, you can refinance or sell and payoff the note, or roll it into the next project and keep it working for you. 100% financing with ability to exit in 2-12 mos if need be depending on the project!

My $0.02

 DM sent!

 Sending you a DM!

So far so good! To help us better direct you, the below might be useful:

1) What kinds of deals are you looking at? I.e. Stabilized turnkey properties, rehabs/value add, new construction, etc
2) What property types are you looking into? i.e. Residential (1-4 or 5+ NF), Mixed Use, Retail, Industrial, etc
3) Where are you for Credit? (helps us determine if conventional or bridge to perm may be necessary)

Look forward to hearing more about your goals!