All Forum Posts by: Mike Garland

Welcome Edward.  You have joined a great community.   Update that profile pic!  Makes a difference.

@Donald Cooley - One more very important thing to remember and @Brandon Turner has mentioned this in podcasts:

When you go to a community bank for commercial financing - go in with loan folder, nice and neat with labels including the following items:

1.  Details on you loan request and the property being used as collateral - address,          size, cost, etc.

2.  3 years business tax returns

3.  3 years personal tax returns 

4.  Current Personal Financial Statement (less than 3 months old)

5.  Some analysis on the property - Use the BP Calculators!  The generate great looking        reports.

6.  Bio or resume on yourself

7.  A real estate portfolio Spreadsheet on your properties (Addresses, Costs, Values, Loan            Balances, Equity, Gross Income, Expenses, Net Income, Loan Payment).

By doing this, you will be providing something that 85% of all people that go into a bank looking for financing DO NOT BRING.  I would fall outta my office chair if someone came in with this information initially without me asking for it.  Seriously!

Good luck, feel free to PM me.

@Donald Cooley - Really it depends on who you go to for commercial loans.  As a commercial lender for a community bank, I have a bit more flexibility than a commercial lender from a big box bank - not regulatory flexibility, but just more "out of the box" approach.  

Here is what a commercial lender is looking at:  Sources of repayment:

1.  Primary - If it is an investment property, does the net operating income from the asset being used as collateral cover the payment at least 1.25x or more?  The higher the number, the better.

2.  Secondary - Guarantors - Do the people involved in the deal have the financial strength to cover shortfalls if the primary source of repayment is not cutting it?

3. Tertiary - Liquidation of the Collateral - What is the loan to cost (LTC) on an acquisition deal? How does that compare with the Loan to Value (LTV)? The lower these %'s, the less risk to the bank, the better the terms.

Commercial lenders do not focus a lot on credit score.  While this can be a deal killer on a conventional loan, a commercial lender will typically allow you to explain any credit issues (divorce, sickness, etc).

I would also look for commercial lenders who will allow terms that do not have a short term balloon (5 years or less).  See if they will go out further on the maturity date, even if it involves rate adjustments every 5 years - at least you are not sweating the upcoming 5 year maturity and whether or not the bank will renew your loan.  Also, renewals costs money.  And if it does get renewed, you get whatever the market rate is at the time.  So ask for longer maturities, but accept 5 year rate adjustments.  This protects the bank on interest rate risk.

Feel free to PM me with any other questions.  

Mike 

@Marcus Jackson.  Plug some numbers in the Flipping calculator on BP.  Think you will find there is not much meat on the bone on this house.   Also, just based on the area, I think for the state it is in, it is overpriced.  

I know two very good ones.  PM me.

I have a client who goes to each one and has told me that there are very few deals to be had.

A good idea would be go down and observe and meet people.

Welcome aboard Tyler!  Make sure you listen to the Podcasts as well.   Local real estate investor meetups are also a good way to connect.

Kristina,

Unfortunately so is everyone else!  Most of those type areas are already experiencing high price increases outside your price range, as well as some of the surrounding areas which do not warrant those kind of prices.

You may want to look into Denver Heights, just south of Dignowity Hill.  Still a rougher area, but there are big development plans for that area.  Prices are still manageable there - maybe in your price range.

Suzanne, don't forget the Podcasts!  Invaluable.  Its your free real estate investing course from those who have done it, and there are over 180 of them and counting.

My comment will be to make sure you really understand the Dignowity area.  Lots of houses on the east side are being marketed as part of the "Eastside Revitalization"  i.e Dignowity Hill - but really not in Dignowity... and truth be told, you would not find me anywhere near some of those areas when the sun goes down.