All Forum Posts by: Matthew Dunn

Originally posted by @Brett Goldsmith:

Are you planning to act as the property management? If so, you can have the partnership pay you a monthly PM fee for handling the affairs. Or you can charge the partnership a finders fee for brinigng the deal.  Or you can have your step father potentially act solely as a "lender" and not be a partner. 

I think this is a personal choice on what you think is fair and what is agreeable between you both.

 Thanks Brett, no we will be using a property management company. He wishes to be a partner, but we agreed I'd be running everything since I have the experience and he's not located in the US. Yes it is very personal decision, I just felt the original setup of him providing all costs and us splitting the cash flow 50/50 was fair all round. But with me fronting 50% of the costs, it didn't feel right to me to still split the cash flow equally since I'm doing all the acquisition and day to day. 

Originally posted by @Carter Crowley:

Hey Matt, currently have 2 loans going on like this right now on flip properties that my business partner and I are doing. Both projects the lender is financing 100% and we only have to pay closing costs.

This can help level up your business a lot and I would highly recommend. However, they do typically use low comps so just be aware

 That's great to hear! Can I ask if the terms I mentioned are comparable to what you have? Did they start you at 100% financing or did you work up to that with the lender throughout prior deals? 

Originally posted by @Calvin Lipscomb:

Originally posted by @Matthew Dunn:

Hey BP,

I was listening to a podcast recently by Dan Lane from the Rental Income podcast  and he interviewed a gentlemen who was using credit unions to invest in value add buy and hold deals. I was intrigued by this as these credit unions were providing commercial loans up to 80% of the projected appraised value. At the closing this investor was in most cases not needing to bring any of his own capital, instead he would get a check for the rehab and more often than not would have some left to put into the next deal. 

I've since found a couple credit unions in FL where I reside and have also found two credit unions that will do it. I'm seeing terms of 5 years fixed interest rate of around 5.4%, 10 year fixed term or a 15 year balloon with a 20 year amortization. I realize these are commercial terms and I would need to refi at around the 5 year mark (I think I can negotiate this longer), but for the above investor it allowed him to buy some great properties with no money down. 

Anyone have any experience of using these loans?

Thanks!

Matt

 Thanks for sharing this.  I am curious about how did you go about approaching these credit unions.  

 Listen to episode 144 of that podcast and he explains it well. I called around 6 credit unions in my area, 2 of the 6 were open to it. I started the conversation with I was looking for a commercial loan for my real estate business. 

Dear all, just wanted to provide you all an update on this. Its been a very drawn out process this refinance. However we finally have a closing scheduled for next week! I ended up using a conventional 70% LTV 30 year lender. The first appraisal came in light at $375k, after my current loan and closing costs, I'd of only had around $43k in cash out, we contested it, as both myself and the appraisal management company agreed they didn't do the best job. They offered to pay for a second appraisal! We just got that back this week and it came in at $405k with around $66k in cash! That will more than pay for my rehab costs, yes it increases my payment by around $500/mo, but the HELOC I used to fund the rehab was running me $300/mo so for $200 extra per month I still will cashflow at $1,000/mo and have my HELOC @ $0 plus extra to fund the next deal.

Some takeaways I learned; I put together a comprehensive appraisal info packet for the appraiser to take away, showing all the capital improvements, financials, before/after pictures, comps of area etc. The first appraiser barely looked at it and took some bad pictures, made some scribbles and left. The second appraiser; night and day better. He invested himself, understood multifamily and what I was trying to do, was interested in my info packet and to top it off I shared with him a deal my wholesaler gave me as he was looking for something I was just sent that day. It pays to get that extra appraisal if you have to!

Dear BP,

Quick question on partnering with a family member. My stepfather is really interested in partnering capital towards a buy and hold deal. He purely just wants a passive ROI once per year with no involvement in the daily business as he lives overseas. He's seen me recently successfully BRRRR a quadplex and get cash back out and I would like to put his cash and mine towards a small commercial multifamily.

We originally setup a partnership agreement last year before I had my cash out where we would buy a small multifamily using just his capital for the downpayment, closing costs and rehab, I would do all the work and we agreed to split the cashflow after the rehab 50/50. However, that purchase didn't come to fruition.

Fast forward to today and I'm now looking to provide around 50% of the upfront capital for a commercial deal, he will provide the remaining 50%. I'm now trying to decide what a fair cashflow split is, since i will still be doing all the work and he will be effectively a silent partner?

Thank you,

Matt

Hey BP,

I was listening to a podcast recently by Dan Lane from the Rental Income podcast  and he interviewed a gentlemen who was using credit unions to invest in value add buy and hold deals. I was intrigued by this as these credit unions were providing commercial loans up to 80% of the projected appraised value. At the closing this investor was in most cases not needing to bring any of his own capital, instead he would get a check for the rehab and more often than not would have some left to put into the next deal. 

I've since found a couple credit unions in FL where I reside and have also found two credit unions that will do it. I'm seeing terms of 5 years fixed interest rate of around 5.4%, 10 year fixed term or a 15 year balloon with a 20 year amortization. I realize these are commercial terms and I would need to refi at around the 5 year mark (I think I can negotiate this longer), but for the above investor it allowed him to buy some great properties with no money down. 

Anyone have any experience of using these loans?

Thanks!

Matt

Dear BP, I've gone through a number of searches here on the forum, but couldn't find this answer.

I'm really interested in learning more about if I can use a Supplemental Loan program through Fannie Mae to cash out on our existing value add quadplex. I heard about this method after listening to Rod Khleif's podcast episode # 209. But two lenders I've spoken with locally (including my existing lender) have little to no knowledge and are just trying to sell me conventional refinance. My initial thought was this was only available to commercial 5 units or higher, but my lender did tell me this is available to residential. So I'm confused. Any tips on where to go to get information would be appreciated.

Thanks!

Originally posted by @Andrew Postell:

@Matthew Dunn some pointers here on what to look for:

1. chances are that each lender will require a different appraisal.  Some small banks might not need an appraisal if you use their "portfolio" loan.
2. Getting an 80% cash out loan on a multi-unit property would be very challenging.  I think you could possibly find one at 75% but I just don't know on the 80%.  AND if you do find one at the 75% "loan to value" that means it has to be a "portfolio" loan.  Which also means your rate is higher, maybe even variable, and it might only be a 15 or 20 year mortgage which would make your monthly payment higher...and sometimes all 3 of those.  If you are cash flowing well on this property maybe receiving one of these types of loans isn't a bad idea but you would have to call all the small banks in your area. Or maybe a mortgage broker - a broker has relationships with several banks.
3. Closing Fees - I think it would be safe for me to say that all banks will require title insurance on the property.  I would also guess that out of those $6k in fees that probably $1000 or so was from the lender itself.  Which means that $5,000 was from other parties?  I'm guessing here but always ask for a "fee worksheet" with every quote you receive. Then ask the lender which fees are their's.  Underwriting/Processing/Points/Application fees are all lender fees but they might call them something different too.  On a home in this price range I would be quoting about $4500 in fees without an escrow account.  Maybe something else is needed in there?  Just ask for a fee worksheet so you can see the numbers.

Hope this helps.  Thanks!

Hi Andrew, this is great info. Thank you so much! I'll circle back around once I get some quotes on what ended up working for me. 

Dear all, 

I have searched the forums and have spent some time calling property management companies, but have yet to find a good fit. Basically I have been self managing our fourplex in Clearwater for the past year with a good amount of success after reading the BP managing rental properties has helped tremendously. But with a second baby on the way and a desire to buy more, its time to hand this off. This has produced a couple opportunities:

1. I somewhat know what a good property management company looks like.

2. We will be doing a cash out refi very soon to release some equity to buy another property. However finding deals right now has been proving very difficult with many people over paying. I'd love to find a property management company that also work with their landlords with future acquisitions. 

Home River group do both of these and they are on my short list, but they don't do a lot in the multifamily space which is what we are looking for. Can anyone recommend a good firm that would fit this profile?

Thanks!

Matt

Hi folks, a short update here. We are almost done with all the rehab! Whew what a lot of work!! I've approached a few conventional lenders for a cash out refi and so far they are capped at a 70% LTV and have some quite inflated fees. Closing costs in the $6k range which I thought was excessive. I'd like around a 80% LTV at least. What other cash out options should I consider? I thought about a HELOC but I'd prefer a fixed long term rate as we won't be refinancing this property again and it'll remain a buy and hold play. Is it worth approaching some local community banks? Also since appraisals are so expensive, is it possible to buy one appraisal from one source and use that across the board? Thank you! Matt