All Forum Posts by: Michael Heisterkamp

Tyler,

Would love to learn more about your ideas for expanding and tackling bigger deals.  I have some ideas that may allow you to continue to control these properties while also extracting capital for new deals.

Michael

Chandra,

I know of a couple in the market, what kind of deal flow are you looking for?

Michael

This looks too tight for most hard money lenders, did you actually get any of them to consider the project?

There are a few more questions asked than a normal property purchase but as long as you have answers to those and can meet the financial hurdles you should be fine.  If you do not mind my asking are you targeting this land for self use or are you looking to turn it into a development.  I only ask becuase this may impact the view of the lending institution.

I'm not a huge fan of people who do this but sometimes it is justified.  You could list is as "rent to own", some people who do this are straight up theives who are looking to rope people in with realy stringient terms that basically amount to live here for 30 years and if you miss a single payment you lose your property and have to start over.  Now you can choose to be a more forgiving bank but it is a system that more low income people understand and it gives you more eviction rights than offering traditional owners financing.

Another point about Cap Rates, they are also a measure of ability to raise the price of the property for exit. To double the market value of a building you need to "decrease" the NOI at a proportionate level which is significantly harder to do at a 10% cap than a 4% cap. This sounds weird but in reality you don't actually decrease the NOI, you have to increase the value of the building so that the cap rate falls. The changes in market value are not linear when you work with cap rates so always keep your strategy in mind when you are picking a property.

I may be interested in the Florida property.  Direct message me some contact information and we can set up a time to speak.  

Depends on the lending institution.  Banks have regulations for this and it is generally 80% of the current market value of the property.  Private capital can do more, some do 100%+, some do 90%, some 85%, 80%, 75%, etc.  It really depends on the lender and the purpose of the REFI. This isn't an exact science, the estimating what lenders will max out at that is.  But, what ever that percentage is it is based on the current market value of the property.  That is established using a comp analysis.

This depends on the terms of your 401K. If for example you have a self directed 401K or IRA you can usually use the money directly with no loan necessary. This has multiple advantages including tax advantages to help shield growth in a traditional 401K or if it is a ROTH you can shield the capital gains at the sale. This is not really a question for an internet forum board because of the complexities of the 401K system, the various accounts types and the mandates of the fund managers. I would advise speaking with your 401K manager or a CPA who has experience in this area.

It really depends on the lender, the project and the relationship between the two parties.  We prefer to lend to entities however we have done both.  The advantages of having an entity are numerous many to which other have attested to above.  The biggets advantage of having a company is the ability to shield losses if that were to arise from unrelated issues such as injury.  If you would like additional information please feel free to direct message me.