All Forum Posts by: Matt Concannon

Scenario:  3 properties cumulatively worth $750,000.  Remaining aggregate loan balances: $100,000.  

My wife an I bought and mostly paid off 3 multi-units over the years (I have some others with my business partner/brother....not discussing here).  

What would you do?  Here is what I am currently considering:  

1.  Pay them off - Our goal has always been to pay them off and benefit from the cash flow currently $5k/mo. after expenses.  

For scenario #2 and #3...

I talked to a lender yesterday...no doc LLC loan (appraisals and credit score), 30 year fixed, 5% interest with no origination or points if loan is above $300k. Costs are normal, including appraisals, standard fees, and escrow account set-ups. Payment would allow us to realize $3k/mo after expenses right now and give us $400k to work with. (we currently are cashflowing $2.5k/mo)

2.  Buy several multi-units that would cash flow after expenses an additional $3,500/mo.  Would take a little patience to find the right ones...probably 6 months to find them.  

3.  Buy one larger deal at $1.6 mil with ???? returns.  Challenge here is that this type of deal is very rare locally.  And I don't think I want to go to another market until I can do a bigger deal of like $5-7 mil.  

Don't tell me what I should do...tell me what you would do?  (for background sake....*I have other properties with my brother, and my wife and I also invest pretty heavily in the stock market.  We feel good about where we are, but are small potatoes in the real world.)  

I have heard some guys taking about 30 years on large multi-family.  I have some lenders wanting to cash out on some of my multi units in a 30 year fixed blanket mortgage.  Was hoping there is a product like that for commercial.  

Case study/Analysis:  

Commercial property:  40,000  flex space with limited bay door access.  Used as athletic space currently.  50% occupied with long term tenants with short term leases.  They all want to stay and would be negotiated into long term leases during due diligence.  

current rents: $10,000/mo, $120,000/year.

Vacant space is a little over 50% of the building.   20,000 sf @ $6 sf for the owner occupant = $120,000/year

Yearly Income: $240,000/year (with owner occupant) yearly expenses (waiting on full breakout...not NNN, but will negotiate with tenants before sale to include some costs): 20%?? approximating $50,000/year

projected NOI= $190,000

Using a 6% cap rate= current value:  $3,200,000

Current asking price of the building:  $2,700,000

My questions:

1.  Would a lender use the appraised value with the improved lease Income from the owner occupant?  

2.  Is there a scenario they would not require down money?

3.  What % down money/rate is needed with 30 year term?

4.  I am most worried about cash flow in the early years.  

Pennsylvania - I am in the beginning stages of engineering and township approvals.  There is water, sewer, gas, and electric in the street out front.  I am looking for a rough estimate for a 30,000 steel frame building 100x300 with 22' clear span.  Anyone have a back of the napkin, rough guess on construction costs?  Interior finish will have 1 office and 2 bathrooms for my business encompassing 16k sq ft.  And I will lease out 2-3 other units.  (don't worry about estimating excavating or township costs for approvals).  I will be trying to hire a GC who specializes in this type of building to handle the whole project.  

Raise buyer agent commission to 4% and lower the price $2500.  Do that for 10 days before going the more expensive route of staging.  You can always back off the commission.  Do not put "buyer agent bonus" in the listing.  Believe me, they will see the higher rate and want to sell your house over others.  This method is cheap and you can implement in seconds.  

If I live in a 2 unit, is there any seasoning requirements for a cash out refi?

@Cole Bigbee steel frame? Working on a 30,000 sq ft building in PA and waiting on some rough numbers. My business will take 50% of the space and leasing out the rest in 2-3 units. I know they are all different, but Any feedback on costs would help.

What are my best options to cash out refinance on a 2 unit rental? Good credit/good income. Owned for 15 years. What type of rates would I be looking at? Goal would be to take as much as 75-80% equity (or as little as 50% depending on rate) for a 30 year term (could go 15 if I had to).