All Forum Posts by: Chris Ellis

Welcome and good luck on your new ventures!!! Real estate can be a very fun world. 

I think you should shift the numbers a little more in your favor. For instance, this 10% Vacancy that you are calculating monthly is generally passed along as an added cost to the tenant through a security deposit. Consider how long it will take to get a new tenant and charge accordingly. The easy way to scale it is one or two months as a security deposit. Then you back that money up with a breach of contract that protects that and even potentially charges more for violating the lease agreement. Have you ever heard of someone breaking their lease agreement and getting their security deposit back? Unless they paid all the fees to leave they would and the owner still has plenty of time to source a new tenant with the cash. 

If you are trying to close the deal, you need to make the cash flow look as strong as possible is the ultimate point. You can secure this statement through means like suggested. 

I believe you will run into complications getting rehab costs covered by trying to arrange as a personal property. Obviously a live in property can create savings on interest rates but lets be honest and consider the fact that it is a business considering the other units. I believe it is better to be listed on good terms with lenders and develop ongoing relationships. Disguising your true intentions can cause unwanted backlash in the future. 

Traditionally it should be approached as a business transaction and rehab. The potential exit strategies would be to refinance into a buy and hold property or sell. An interest only bridge loan would be the target. On average expect around 20% down payment but depending on experience can be negotiated down to potentially 10%. Then 100% rehab could be covered. 

There is certainly a difference between 4 and 6 units but it is also important to consider comps and the real value of the money injected. There will be more lenders interested at 4 but at the end of the day, if the numbers make sense, you can get someone to bite. 

I hope this helps and feel free to message me if you'd like. 

A hard money/private lender will also look for somewhere in the ball park of 20% down payment. Be AWARE of scams that will charge you money upfront that say they can do 100%. It is just not real. The only way to get to 100% is through creative financing, which is using a combination of a couple loans to get what you need. A conventional lender will decline if you go for a second loan to come up with the down payment. Only real option is a private lender that will accept a second source of coming up with down payments funds. 

Then this second piece of funding would come from a personal loan, business term loan, unsecured business lines of credit etc...

A HUD statement is what you need to show.

Get a good attorney to draft up documents to make sure you are protected. Then connect with individuals like me who help individuals connect with the right private money sources. Depending on your guidelines I may have a few projects for you right now. 

Yes that is perfectly normal. 

I would imagine that the lender will want cash. Meaning that the 401k would need to be liquidated. The fees associated with cashing out early and the potential benefit of the new property is what to look at.

Portfolio loans package the loans into one so the 10 becomes 1. This is how you get around the 10 mortgage limit. Notice how you mention mortgage and not property limit.

After you repair their credit, I will be happy to help them get funding.