All Forum Posts by: Ronald Rohde

Quote from@Ronald Rohde:

 It represents more risk than they need to take. unless its a gross operating business like multifamily or SS, single tenant has a lot of risk already.

 Ugh, more thing to deal with when I need to refi the property.  I'm pretty sure my current bank won't do it either since they're only doing $10m+ deals now.  I'm small potatoes.  And by the time I refi, I may be sub $1m or right around there.  

Dealing with commercial financing is such a PIA compared to a single family home.

@Trevor Finn yes, numbers look just about on point. Looks like you have done this a few times. :)

@Ronald Rohde yes, I can get a 5.75 -6% with my local bank. I use them for most everything. They will do a 75% LTV. And yes, biggest risk is letting it sit for 12 months. But, I can still pay the note even if it sits empty after the sale leaseback.

@Gino Barbaro going in cap rate will be 8.5%. After I add the outdoor storage lot I would be around 9.5%. It wouldn’t cost much of anything for my guys to grade gravel and fence the lot. What I really want to do is add 15k sf to the existing warehouse. I normally just do new construction on these pemb, so I have never done an actual modification of an existing pemb to increase the square feet. It’s more risk because no way I could have it leased before my 6 month leaseback is expired. But if I went that route I would add 15k sf to the existing warehouse, making it a total of 38k sf with office/warehouse. I would then try to find an owner/user that would want to buy it at around $225/sf. That’s the long “hail Mary” scenario. It’s a long shot, but if I did so I would have a cost basis of around 5.1m and sell for 8.5m. Take proceeds and 1031. 

My easiest and safest bet would be to just build the outside storage lot. I can easily do this while my leaseback tenant is still in the building. I would have the storage lot completed and have 6 months to find a new tenant. I would shoot for 368k NOI nnn on the new tenant. Would most likely hold long term in this scenario and refi if it made sense.
   

I don't have anything of value to add to this thread, but I was reading thru it as I will have a property to refi in about 5 years due to the loan maturing.

If I'm reading this correctly, the bank won't refi for longer than the lease length?  Why is that?  

I got a 10 year loan with I think 2-3 years left on the lease.  The tenant renewed, and we have another 5 years.  If we assume the tenant renews again, they'll have 2-3 years left when the mortgage ends.  I can't just refi for another 10 years?  Or is this simply the appetite for commercial loans currently?  

BTW, my 10 year loan.  Originally the bank offered 5, I asked for 10.  They offered 7, I asked for 10.  I got 10 as I just wanted to know what my payments would be for the next 10 years.  I wish it could have been longer, but 10 was the longest anyone offered!  My rate is like 3.75%!!!!

Thanks for the mention, @Gino Barbaro. There are some great answers in this thread. 
To defend a charge of acting as an unlicensed broker, you have to be able to prove you had an active role in management other than raising money, and that’s what you got compensated for. What’s illegal is “transaction-based compensation” based on the amount of capital you raise. The more GPs there are in a deal, the harder this is to defend. 

Further, you must be admitted to (or employed by) the company that is selling the securities, as the securities exemption being claimed, usually Regulation D, Rule 506, only applies to the “issuer” of the securities. 

Bottom line: make sure you have an active, documented role in management, and you don’t get compensated using any formula that plugs in the amount of money that you raised.