All Forum Posts by: Michael Henry

 There are many differences between the two in terms of property type, financing, and disclosure requirements. Residential property is 1 - 4 units (single-family, duplex, three-family, and four-family) anything above a 4 unit is considered a commercial property (which includes office, retail and industrial)  The transaction can take longer for commercial deals because of more due diligence of the property, financials, and tenants. It is customary for Sellers to give fewer disclosers if any, and many times the properties are sold "as is". Earnest money can be more than 1% of the purchase price. Attorneys are usually involved in larger purchases. 

If you are purchasing a commercial property you will need commercial financing. Commercial financing is harder to get and you need a 20% - 25% down payment. The loans will be amortized over a 20 - 25-year period. Loans terms are normally 5 years.   

This is a start. Let me know if you have more questions. I hope this helps. 

@Eric Sims when getting a commercial loan anyone with 20% or more interest in the company needs to be on the loan application. A lot of time many investors will use a normal consumer loan, where one of the partners do the application individually. Then put the property back in the LLC name after the mortgage has been recorded.

@Alan W. we need more information to properly advise you. Right now in Milwaukee prices are up on residential homes and multi-family is more expensive. The 20 units should work but most of the 20 units in Milwaukee are in the not so good areas. Which will be a lot harder to manage than the duplexes but it sounds like you are overpaying for those too. 

@Michael Falchi Their are a lot of things you can do before you turn 18 years. The biggest hurdle you have is signing contracts, you will need a guardian with you to do that on your behalf. I believe it will be very hard (not impossible) to get winning offers under these conditions. So you can focus on lead generation, website, and SEO, etc. All the things you would need to do if you were of age and need to promote yourself. With the leads, you can sell them or ask to shadow the investors to learn more. If you add this kind value investors will be willing to work with you. 

@George Rodriguez The interest that the lender wants to charge and what you can afford to pay are two different things. All things being equal, the going rate for a private lender is 8% - 10% but this rate is based on the investor's experience. If this is your first deal (it sounds like it is) you might want to offer your lender a higher rate if the deal can afford it. You want to issue a promissory note and a mortgage to ensure your lender's investment is secure. In terms of a guarantee, if you will need to pay him/her back if the deal goes bad is all up for negotiation. The less secure the investment the higher the risk, the higher the risk, the higher the interest rate. If you want to be successful in real estate you need to make sure that your lenders get repaid. If you can't build a referral base of lenders you will always be at square 1. 

@Account Closed did the appraise value match the ARV?

@Nick Liaskos The main idea behind the BRRRR is to refinance to get your downpayment back so you can repeat the process. You can BRRRR a multi-family too but those deals are probably rare. If you know someone with cash, see if they will loan you the money for the BRRRR and do the buy and hold on your own.

@John Terry from my understanding their monthly P&I payment would not be less than their rent payment. So you can adjust the interest rate or purchase price to get to the higher number. The real downside is that you have no idea where the market will be in 5 years. It is foreseeable that we might be in a downturn market and your property underwater wishing you would have sold. On the other hand, if the tenant never refinances out you will look like a genius. 

@Austin Minor sometime all the banks need is the lease as proof your units are rented. Check with the lender you plan on using. 

You could partner with someone one a flip, rental, or loan.