All Forum Posts by: Mike Garland

Welcome David!  Best of Luck!  Feel free to connect.

Graham, will Fannie or Freddie lend to business entities?  What are typical terms on a solid deal?

PM me RJ

Where is the subject property located?

Leland did a good job on those definitions

My recommendation is to reach out to local community banks in your area.  Stop by and visit with a lender.

Banks do not look at all deals the same.

I would recommend putting together what I call a financial packet on you and your partner.   This will include:

1.  Personal financial statements (less than 3 months old) that are detailed and complete.  Make sure the math adds up.

2.  Three year personal tax returns - personal and business

3. A real estate portfolio spreadsheet with the following info: Property: Address, Cost, Value, Mortgage, Income, Expenses, NOI, Loan payment.

4.  Bio's or resume's on yourself.

5.  P&L and Balance sheet on your business - something current.

If you go into a bank with this information, you will be ahead of 90% of others looking for financing.

Like Mat said, a lot of investors utilize A-D ratings, so it is good to understand it at that level.   You have the actual property rating, but should combine it with an area rating as well.  

Jason, welcome aboard. I am new as well to the site as well as REI. Definitely listen to the BiggerPockets Podcasts! I listen to them whenever I am in my car. Great information.

Also, next Tuesday there is a meetup at the Big Hops at Huebner and I-10.   You can find it on Meetup.com.   

http://www.meetup.com/Craft-Brewed-Real-Estate-of-...

Hopefully I will see you there!

Castle Hills is a great area, especially since they opened up the Wurzbach Parkway.   There is an area I would put on the last to look in Castle Hills and that is the area around West Ave and Blanco.  Good retail, etc, but that area took a downward turn a number of years ago and is still kind of recovering.  PM me if you have any further questions.  I used to live there.

Monday - The contractor I took out to the site last Thursday called me to let me know some of his subs could not get in the house to look at the job and give a quote.  I figured this since I took my wife out to see the house on Sunday morning and the keys in the keybox opened the deadbolt, but not the lock on the door handle.  I am pretty sure I locked the door handle 2 days before after inspecting the property with the contractor.  Lesson - make sure the keys fit the locks and if they don't - don't lock em!

I had not yet received a detailed estimate on the repairs from the GC, so I asked him for a ballpark figure.  My seller was wanting to get this wrapped up.   So the GC threw out a ballpark of $25-$27k.  This was pushing past the $20k I had planned on.

One of my investor friends showed up and I took him out the property to get his feedback (by then the door had been unlocked).   Here is what I found interesting:  The approach the GC had was one of optimism, which I could understand since this was our first meeting.   The approach my investor had was straight talk about the numerous issues he saw, some of which were not mentioned by the GC:  foundation, water damage that may have come from the outside, perhaps from the runoff from the neighboring property, rotted base boards in the corner (water damage) that could mean deeper issues.   He did mention items the GC noted:  Old Fuse box, aluminum wiring, bathroom and kitchen overhaul, new windows, etc.

At the end of the inspection I asked him if he would purchase the property for a flip.  He said no way.  I asked if he would purchase it to fix up and rent.  He thought about it and still said he would pass.

He advised that for a first deal, this one would be challenging and would more than likely break the numbers on the project.

I asked him on a scale of one to ten, 1 being a full blown tear down, 10 being a coat of paint, where did this one fell.  He said around a 4.  I asked him for his projects what kind of deals did he look at.  he said 5-6's.  For a 4 scale property, I needed to be getting this cheaper than what I was.

So I decided to trust the numbers, the ballpark costs of the GC and the advice of a veteran RE investor.  So I passed on this deal.

The good thing is this has turned my focus to working with a friend who has experience buying and fixing properties, both SFR, Multi and commercial. We already have some targets in the cross hairs and are seeing if we can put a deal together.