All Forum Posts by: Nat Rojas

Hi BP!

What Baltimore City, MD small local banks / credit unions have you worked with for blanket loans?

Completely understand the current times and am still willing to engage in setting up a phone call to discuss my file, what I'm looking for, and how we can help each other's businesses.

Who would you recommend I connect with?

@Jaysen Medhurst, the Terms I’ve found so far are 5, 7, or 10 year fixed 30 year amortized for portfolio, while if I continue individual commercial loans, (pre-COVID-19), several lenders were offering 30 year fixed. I’m not focused on interest rate as much as, in my eyes, that’s the cost of doing business and there are many more benefits that outweigh the cons.

I suppose the longer the fixed term the better? What terms should I be aiming/negotiating for? What am I missing?

Thanks so much for the response, Jaysen!

If I’m understanding correctly: a commercial lender is not always a portfolio lender. Therefore I’m searching specifically for a portfolio lender as they don’t follow the conforming loans placed by Fannie/Freddie? If so, that makes sense! Thank you!!

Great point regarding the risk tolerance of too many properties in one LLC. Sounds like it's depending on the bank whether they'll allow either one LLC or many LLCs within one Portfolio Loan.

Yes! The broker’s I’ve spoken with so far explained the origination fees is sent to the borrower: 1% to Broker, then 1% to Lender.

BLUF (Bottom Line Up Front): Using BRRRR, for Properties 11 and greater, what is the best strategy to refinance out of Hard money / Private lending?

I utilize the BRRRR strategy and will shortly be at 10 residential loans under my name.

I've heard rumors and conversations, but don't have the black and white and full understanding. Hopefully you could help me out or point me in the right direction?

Hypothetically speaking, an ideal candidate provides a portfolio lender with 10 properties (currently all with Residential Loans) and requests to refinance under one or different blanket loan(s). All the properties meet the criteria for commercial refi.

Does this mean that the ideal candidate in this hypothetical has essentially 0 residential loans under his name? My understanding is that the commercial loan is under an LLC which removes the debt from the personal credit report?

If so, the process is:

1. Buy distressed property with Private Financing
2. Refi with residential loan
3. Get 10 rentals with residential loans
4. Refinance them under 1 or more blanket loan(s)
5. Repeat at #1

Or, the process is:

1. Buy distressed property with Private Financing
2. Refi with residential loan
3. Get 10 rentals with residential loans
4. Buy distressed property with Private Financing
5. Refi with commercial loan (Ideally 30 fixed, if possible. Understand they’re unicorns)
6. Repeat at #4

I’ve been reaching out and speaking with different Mortgage brokers and commercial Lenders. After scouring BP, it seems like the Broker route is the way to go?

Also, I understand COVID-19 has changed current lending. I’m just planning for the future

Attempted to provide high level info with just enough detail to start the conversation. What other info do you need from me?

Any assistance, advice, opinion, or recommendation is greatly appreciated!

Thanks so much, Stephen!

@John Warren brings up a solid point regarding distress. There are 3 different types of distress: Market, People, and Property distress. 

To touch on the property distress, the more obvious opportunity lies in the truly distressed property. Within reason the more distressed the property, the more opportunity to rehab to drastically increase the ARV.

David Greene author of the BRRRR book talks about upgrade hacks. For example, If the flooring already needs to be replaced in the bathroom, use higher quality tile for a much greater value in both ARV and Tenant quality.

I had two different PMs with two different management fees - 5% and 8%. That 3% was a significant difference in systems, customer service, communication, etc. As mentioned above, dig deep to truly understand each of the differences.

I actively worked with different PMs to better understand each PM and the business as a whole. After that  experience, I have a greater sense of what to look for and an appreciation for quality in a PM.

I will gladly pay more for a high quality PM as it is the life and blood of a Buy and Hold investor.

Following up on this post - any further recommendations for a Portfolio Lender for the Baltimore MD area. Thanks!

 This is exactly what I was looking for, Thomas S. I'm looking log term for my rentals. I believe the total cost will be cheaper for tenants wear and tear on LVT vs refinishing (a limited # of times) and waiting for the sale

Thanks!

Thanks for sharing. Had an eviction scheduled for 24 March. Let's see how this unfolds