All Forum Posts by: Morris Cohen

I have done a bunch of flips in Indianapolis, but I have never done ground up before. I just came across a great deal on land where I was able to purchase the land at a 30% discount for what similar lots were trading for. I needed to get a variance, which is almost complete and I have my architectural plans, roof plans, site plans, etc fully done. I have foundation quotes, but I'd like to take the next step and get some quotes to frame the house. Has anyone used a modular home in Indianapolis before that they can refer me to? I'd also like some general advice specifically when it comes to ground up single family construction should someone have some. I've done every aspect of rehabbing a house, so I don't view this as that big a jump for me. 

@Jason Lee the best mortgage broker in NYC already posted on this forum! :)

If you want to speak to someone who knows why they are doing and did over $100 million in loans in 2018 look no further!

This is going to be a problem. Most banks don't lend on investment co-ops and the ones that do likely won't take second lien position. The only way this works would be to go back to your current bank who holds the first mortgage. The issue is a legal one. When you purchase a co-op you owns shares in a corporation that own the building and a proprietary lease to occupy one specific unit. The banks collateral is by filing what's called a UCC1 against the shares, which is really no different than a mechanics lien. The bank also holds the stock certificate and the proprietary lease, which gives them that extra protection above and beyond any type of ordinary lien. The issue with second mortgages and HELOCs specifically on co-ops is that there is only one stock certificate and one lease to hold. With real property each lender will get a deed of trust, which is not possible for co-ops. You are already looking at a small pool of lenders that will do investment co-ops and a small pool of lenders that will investments on HELOCs getting those two to match up is going to be VERY challenging. My advice would be to speak to your current first mortgage holder and if that doesn't work to do a cash out on your first mortgage. The rate on a cash out investment co-op is going to be very high, but that's likely going to be your only route in order to get cash out of that property other than liquidating the property. 

You can probably get a line of credit at a variable rate of prime plus one assuming the existing cash flow is sufficient to service the debt at a 1.25x DSCR. There is no way to avoid the point on commercial financing.

Feel free to PM me as I am a residential loan officer. My team and I have done over $100 million in loans last year most of which was in the five boroughs. 

Regardless of who you use, make sure they know what they are doing and understand Co-ops. The best way to do that is to ensure the person you work with is local and based in NYC. 

Lastly, what the loan size? I can tell you that anything below $484,350 will likely have the same rate due to the fact that everyone will likely be selling the loan to Fannie or Freddie. 

I can help you obtain a loan if you’d like. You would get a construction loan since any other commercial loan would likely come with a hefty prepayment penalty. Rates are high on construction loans (6-7%) and will typically require points, but will provide you with the necessary funds for construction. Keep in mind you will need to tell the bank what work you plan on doing so having your architect and GC involved sooner rather than later is adviseable. Feel free to PM me if you want to discuss further. 

Thanks a lot @Andy Rumple and @Jaron Walling! I will look into those places. I really appreciate the advice!

I have ramped up my business quite a bit this past year. Although I am sure they are happy for the extra business, I'd like to get my real estate broker, property manager and contractor a holiday gift as a token of my appreciation for the work we have done together this year. I am an out of state investor and I don't know the good bakeries, etc. in Indianapolis. I am open to ideas as to what to get them. Does anyone have any good suggestions? 

There are obviously a lot of moving parts. I don't know your rate or have all the information, but I see options. If you have been in the loan for a while, you may be able to do a rate/term refinance to lower your payment. Even if the rate is higher, by refinancing you will extend out the 30 year term by starting a brand new 30 year loan thus giving you more cash flow. I would do this now before you move out so that it can be considered a primary residence and as long as you have consistent income (once you leave your job that can be a problem for a lender). 

You can also do a cash out refinance on your current SFR (though the rate would be higher) in order to utilize the money for a down payment. You typically can only cash out up to 80%, but you can likely get a HELOC up to 90% or even higher to allow you to buy the new co-op in cash.

From a cashflow perspective, one way to maximize cash flow in NYC is to use Roomeze.com. Instead of renting out the whole house, they match up roommates to sign a lease together. Each person pays by by bedroom, which will yield a higher return than if you rent out the whole house to one tenant, but won't be as much work as doing an airBnB. 

The way I see it (depending on what your property taxes are) there are a lot of options here. I would schedule a time to speak to your lender to go over your options as I am sure there are options I am not mentioning here. If you don't have one, I'd be happy to speak to you. I see no reason why you can't keep your current property and buy your next residence in cash. Just make sure to keep in mind that the co-op will still have maintenance fees and depending on how financially sound the building is large assessments or increased maintenance costs can be a consistent increase in cost that's out of your control. 

Good luck! I hope you have the opportunity to chase your passion!

Do you know anyone that lives in the building? It may be tough to get information out of Fannie Mae, but by law the original owner signed a recognition agreement with the Co-op. The Co-op likely has more information so if you know someone who lives in the building they may be able to press the management company or the Co-op board for more information.