All Forum Posts by: Matt Fish

@Silas Johnson You will find that it is pretty common for commercial loans to be amortized over a shorter period and have balloon payments due. A standard home owner personal mortgage can be amortized over 30  years with no balloon payment, where as commercial loans are generally amortized over 15 or 20 years and the remaining balance must be paid in full or refinanced after 5 to 7 years (a balloon payment). 

i should have specified that the loan I described above is amortized over 20 years and after 5 years I have to pay in full or refi. 

Matt

@Silas Johnson Great question. The best answer I can give you is to talk to a few potential lenders now, before you find the property. That way you know what their lending standards are and what properties will qualify before you go out and find one. 

Different lenders will have different requirements. Some will require you to season the property for a certain amount of time, others will require tenants in place for a certain amount of time, others cash reserves, others will not require any of that.  Different commercial lenders and portfolio lenders have different requirements. So meet a few, and see what they can do for you.

Best I have found so far from a commercial lender is 80% LTV, no seasoning requirement, 5 year balloon, around 5% just as an example.

Best of luck!

I have left a potted plant or flowers with a welcome card. It is very inexpensive and my tenants seem to really appreciate it. I don't know that it makes them take better care of the unit, but for $5, it can't hurt and its a good way to start out the relationship.

@Tracy D. I agree that the thought of living somewhere without paying is unimaginable to you and I, but it isn't to everyone. As Tim and Mike have also pointed out, once you are faced with a tenant that isn't paying, you have to make the best business decision. For us, that is to give them a little money to leave quickly and quietly. Avoid more missed rent, avoid potential damage to the unit, avoid headaches. Of course if they damage the unit, you can go after them for damages, but now you are looking at more time, more lost rent, contractor issues, scheduling, more headaches. Less money lost and less headaches most of the time outweighs the thought of paying someone that doesn't deserve it.  

It just makes financial sense to give them a few hundred bucks to get out to retain a few thousand in lost rent and legal fees. Yes, it is frustrating to think about, but it is not about teaching them a lesson as much as it about making the best financial decision. 

Hi Adam. Welcome to BP. I am a fellow Delaware investor and Delreia member. Check out their meetings and make lots of connections. Ypu will find me there each month. Best of luck and keep up posted as you go.

Matt

@Jared Irby Wow Jared, that is great. At that price, I could fly the whole company that worked on yours to Delaware, pay them to do the subdivision, and fly them back for far less. haha. 

@Karen Margrave Hi Karen. Thanks for the insight into CA. Yes, both companies I have worked with so far have been civil engineering firms. As far as I know, they are the only ones qualified to do all the testing - soil, water, traffic, etc. - that is required. 

I wonder at what point all these tests became necessary. 

@Barbara G. Yup, I do plan on getting more estimates, but even at half the cost of the current estimates, it would still be 7 or 8 times more than my highest guesses. I am curious to know if other places across the country are more/less than here in the Delaware / Philly area of the east coast. 

I recently put a property under contract that was on a 1+ acre lot. I had a meeting with the country and they said that it appears that I am able to subdivide the lot into 3 lots - keep the existing house on one and create 2 additional. First, I would need to submit a minor subdivision plan to them for review. I had two firms come out to view the property and put together a proposal. Never having pursued a subdivision before, I had no reference for what the cost would be. Here was my thought process - get a survey, draw some extra lines on the plot plan, submit to the county and pay their fees to review and record = $3,000 tops. 

I am not sure I have ever been more wrong about anything in my real estate investing career. Both proposals were a few bucks apart and right around $40,000.  That's forty-thousand. My heart only just started beating again after reading through the proposal. Is this not insane? There is a price breakdown showing the various environmental studies that would be done, but am I crazy to be shocked by that number? Others that have never investigated a subdivision before, would you have guessed that amount?  Is this a comparable price to what others are seeing in other parts of the country?

Please let me know your thoughts and help bring some clarity to a situation that my brain just isn't able to understand.