All Forum Posts by: Mandela Shaw

Mordy Chaimovitz is pretty spot on with his tips and insight into what to expect when dealing with Commerical Real Estate. I'm actually in the process of trying to get funded for a 12-unit building in Reading MA myself and most lenders will only do 75% LTV (few will do 80%). I'll also add that lenders will want the rent roll to be at an acceptable rate, otherwise they will require an additional amount of capital to be held in escrow until they are brought up to market. Keep that in mind when you are looking at potential deals to get into. Hope this helps. Good luck!

Have you or any of your business partners ever considered or attempted at seller financing via a master lease agreement? I found this channel the other day that has some really helpful videos. I haven’t seen many others but once I watched this one I started getting suggestions from other channels that talked about MSAs as well

0 Votes

Memphis, Tennessee

Quote from @Mordy Chaimovitz:

Here are some pointers in the CRE financing world.

1. You need to have a networth equal to the loan amount

2. You need to have liquid assets equal to 10% of the loan amount after you paid your downpayment and closing costs.

3 it is easier to get better rates and terms in a large market such as a big city as opposed to a small town.

4. On average you will need to have a dscr os 1.25

5 On average you will need to put down 25%

6. If you dont fit these criteria you can sometimes get a hard money loan with very high interest rates

7. If you plan on refinancing out of a hard money loan in the first 2 years after acquisition, you will only get up to 80% of your total costs, NOT 80% of the value (and its usually only up to 75% of costs)

8. Lenders look at your experience on the asset class when determining your eligibility for the loan.

there is a lot to learn in this area. Feel free to dm me for more details over the phone.

Thanks Mordy. These are some really helpful nuggets. If it’s ok with you. I’ll start by DM’ing you with some follow up questions to the above that we can discuss live over the phone. Happy holidays!

1 Vote

Memphis, Tennessee

Quote from @John Williams:

Mandela, I'd like to offer myself as a resource to you. If you'd like to bounce some ideas around and talk strategy, I think I can help with some of your questions!

Thanks John. I will be in touch soon

1 Vote

Memphis, Tennessee

Would you mind dropping links to any good threads that can help a beginner looking to invest in 5-12 units properties? Specifically, looking to understand the in and outs of:

-financing options (e.g., types of lenders, down payments, “creative” ideas, loan criteria, loan requirements, etc….goal for me would be to put 10% or less down if possible)

-advice on inspections and repairs required at time of purchase. (What impacts will these have on the different types of lenders?)

-advice on property management (fees, responsibilities, tenant screening, tenant placement, etc.)

-maintenance (how do you manage expectations and costs from repair men? I have 3 SFH rentals and I personally inspect any repair requests before contacting someone to fix. I do not have a property manager and I have not had to do this often. But this will obviously be a huge expense in a property this large.)

-utilities (I have seen some things about having utilities reserves. What are these? What utilities do you pay if any vs. what the tenant pays.)

1 Vote

Memphis, Tennessee

Shouldn't be an issue unless you intend on closing in < 30 days right?

Unless the downpayment amount is a factor, or unless you are adamant on staying in one of the units, you may want to shop around with some hard/private money lenders as well. Banks that finance qualified loans such as FHA and conventional loans will not valuate the property based on its income potential the same way a hard/private money lender will.

On the flip side, your downpayment will be higher. Unless you are securing the investment 25% or more under market. But at least the non-qualified lenders will not require that you say in it.

1 Vote

Wilkes Barre Scranton, Pennsylvania

All Forum Posts by: Mandela Shaw

Mandela Shaw has started 1 posts and replied 5 times.

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