All Forum Posts by: John E Ceisel

I understand that it's all easily discovered with a property tax search, record of sale, etc. Most people who ask won't make that extra effort. Here are just a few examples of issues I come across: 1) Tenants asking how many properties you own (invasion of privacy and gauging finances). Subsequent resentment for raising rent and/or security deposit deductions. 2) Older husband comes to see a property with his wife. Decides he doesn't want to rent from a guy 10 years (or whatever) younger than him. You'd be surprised how often this happens. Most people cannot afford to buy in San Diego so there is frequent "renter resentment." 3) Then there is just the general liability of people understanding you have wealth. You can unfortunately become a target for frivolous lawsuits, etc. The question is how to maintain personal privacy, asset protection, and a high standard of ethics while keeping it about business. I am all for using a DBA. There are just concerns that I have on the legality of responding "the property is owned by ____ entity" and I work for "XYZ" when "entity" is a trust (and I'm the trustee) and "XYZ" is the DBA (for my name). My personal preference based on experience is to keep my ownership anonymous. It tends to do more harm than good based on my experience. However, my clear priority is not to break the law. I plan to consult a lawyer. Property management company is definitely the best way from an anonymity standpoint, but I self-manage to avoid the cost. I'm surprised people don't ask about your investments. Almost every single one of tenants (before the DBA) asked me and also most applicants still inquire about the ownership.

Hello BP!

If you own properties in your own name (or a trust that you are the trustee of) is there a legal conflict managing and/or operating the properties under a DBA?

This first came up when prospective tenants would ask if I own the property during showings.  Due to my young age, the next question would always be "how many properties do you own?" 

I saw establishing a DBA as a way to cut this by saying I simply work for "insert DBA name" and that the property belongs to a legal entity. However, since being a property management company in the state of California requires a broker's license I'm a bit unsure if this is OK.

Also, is not disclosing that I own the property unethical?  I simply don't want applicants invading my privacy and asking about my finances.  Has anyone else had this challenge?

Hello BiggerPockets!

I live in California.  I understand a brokerage license is required for property managers.  However, if you are self-managing your own properties (either "owned in your own name" or a "trust)" is a brokerage license or any other type of licensing required?  

Appreciate any insight you guys have!  Thank you.

Namely bc the valuation approach for commercial (capitalization approach) yields a higher equity and reflects more of the true value of the property based on the income potential.

Hello BP!

I have 2 condos in San Diego that I'm looking to do a cashout refi for. I own 3/9 units in the building and already had a local credit union do a portfolio loan for 1 of them (30 year, 4.25% fixed, 75% LTV).

However, I'm having a tough time finding other portfolio lenders who will offer similar terms. Mostly, I'm getting offers for a 5/1 ARM. Since I've already done 1 of them, I know it's possible to get a fixed loan.. any advice on where I should be looking or other strategies for these 2 condos I'm working on? Thank you.

Hello,

I recently acquired a triplex located on land that is zoned as mixed commercial/residential.  I renovated the property and leased all 3 residential units.

The appraised value is at $1 million if we're talking residential comps.  

That said, if you were do to a net income capitalization approach to the valuation it's worth closer to $1.5 million.

Given that the current zoning is commercial/residential, should I be able to get obtain a commercial refinance loan for it even though there are only 3 residential units (less than 5) on the property?

If no, what about if I did some development to convert the 3 car garage to a coffee shop (or similar).  At that point, does all income (both the residential units and commercial space) apply for the property's commercial valuation?

I appreciate any insight/feedback that you be offered.  Thank you!

Bill,

Thank you so much! You hit the nail on the head. I discovered pretty much everything you were saying about the blanket loan. As a better alternative, I'm in the process of identifying a reputable lender to refinance each condo individually. FYI that even with cash out, I'm seeing rates for 30 year fixed in the realm of 4.5%. LOC probably would not work for me given the rates.

I appreciate everybody's help!  Thanks again.

John

Thanks Justin.  I own 3 out of the 9 units in the building so not sure if I can get financing under conventional FNMA guidelines.

With the blanket loan, what types of terms do you normally see?

Hi BP!

I have 3 condos in San Diego that I'd like to refinance and take equity out of (to pay down debt). I estimate their combined value based on the current market to be around $900k.

The goal would be to extract max cash out. There is currently $428,000 in combined mortgage debt + a HELOC on the properties. The 3 condos are under-rented and cash flowing at about $1,800/month combined positive after all expenses today.

At 75% LTV... refinancing the condos alone (assuming a value of $900k) would put the cash out potential amount at $247k. I'm shooting for a 30 year fix loan w/ low interest rate.

My questions are as follows:

1)  What is a typical interest rate that one could expect on a blanket loan similar to this one?

2)  Do lenders typically allow cash out's ($247k seems like a big number) on blanket loans?

3)  Who would be the best lender/entity to approach for this type of financing?  Could I do it with a conventional lender using a 30 year fixed? 

Anyways, I appreciate any insight/guidance you guys can offer.  Thank you!

Thanks everyone.  I spoke with some hard money lenders and the condo doesn't pencil out using hard money based on what was offered.  Given that it'd be challenging to refi once the purchase was complete (not warrantable), I'm pushing the lease option with a guaranteed monthly for the seller.

John