All Forum Posts by: Ron Steele

I'm an investor here in Bham. I invest in sfh and small multi family. My email is [email protected].

Is that meeting in Vestavia. I'm going to a real estate investor meeting for the first time tomorrow at the Vestavia library at 5:30.

Joel,

Thanks for your response. That does make sense and I'm sure that the price is inflated with the seller finance. I have a little bit experience in single family deals but nothing like this so even if this particular deal didn't go through I really wanted the experience and learn how to put more creative deals together. I do get your point on the high debt load. The purchase price is low but I get the concept.

My question would be then how would you put these deals together just for future references? Can you get traditional financing for this? How do you get started with these deals to show track record, if you cant get financing on a small level to put one together. I own other real estate but just not commercial.

Most people would say is find a partner that can contribute more equity, which is always the goal to network and develop more relationships. But it does take time to cultivate those relationships and I'm very young in the real estate game.

I guess the question would be how would a more experience or savvy real estate investor put a deal like this together. Negotiate the purchase price down significantly and creating favorable terms (by having seller delay payments) were some of my ideas, but I dont have the experience that other men and women on this board have.

Again I am no way married to this particular deal, but wanted to learn some of the concepts and strategies of a creative deal structure.

Thanks for taking time out of your busy schedules to help and mentor a young, inexperienced, but ambitious real estate investor.

Thanks Bill. My plan actually is to acquire the HML and seller finance to get the property. Then use our cash to rehab the property. No banks would lend to us on an empty building that needs work. We would lease the office space and rent/sale the loft. My partner has a number of potential tenants that will occupy the office space.

We will get the space renovated and leased, and obtain a refinance form a traditional lender. Our plan was we stabilize the building show a positive cash flow a lender would refit into a long term loan. We would use the proceeds to pay off the existing liens. I can not remember if I added the plan in the initial description. This is a 12-24 month timeline.

I guess my main question is that will that financing strategy work. The combo of HML and seller finance at the right LTV. Our skin in the game is that we are bringing the rehab funds. I've used only cash and traditional before, but want to use creative structuring to secure more deals.

Thanks for the guidance.

Thanks guys,

I didn't know that you had to deal with the zoning requirements to sell the 3rd floor. Thanks for that info. What is the zoning difference of a condo and loft.

The original owner passed and they want to get rid of an empty building. They understood they would be in 2nd position as long as they can get a sizable down payment and get it off their hands.

So is the financing strategy solid or am I dreaming? Ive only ever dealt with traditional financing or all cash purchases.

Thanks

Thanks for the reply Simon. Too clarify I meant that we have the money to complete the rehab but not to purchase the property then do the rehab. The seller and HML are both interest only payments. The seller may be willing to delay payments for 6 months as they are motivated to sale.

Our goal is to sale the loft which is upstairs on the 3rd floor, but rent the office space on the bottom two floors. Is this a possible deal structure? Thanks for the feedback in advance.

I should clarify that we have current income, but the property does not produce any income. Also that I understand the seller would have to be in 2nd position.

Is this a sound investment strategy?

Acquire a building . We get a hard money loan for 50%-60%. We then ask the seller to carry a note for the other portion. Of course we will have points and other costs. We then use our equity to improve and building out the space (we are looking at office building and loft mix). My partner has potential tenants and buyer of the loft. We then get it rented and refinance the property to pay off the seller note and hard money.

The reason we need to get creative is that, no bank will lend without any current income and no much construction experience. We have the equity to do the rehab but just not the rehab and the acquisition. Do these deals exist or is it just wishful thinking? My thinking that the loft sale can return a good amount of equity back and the office space provides some good residual. At the price we are acquiring we would have a nice cash flow.

Thanks i'm a young investor and want to learn how to put creative deals together.

I'm looking to buy a commercial property via hard money loan. I'm going to improve a little bit and get the vacant units rented out. My goal is to then refi the commercial property into a traditional long term loan. Few questions

Do lenders have a season requirement like in residential. If so typical time?

Will they allow me to borrow 70%-80% of appraised value or is it a certain amount of time I have to hold

I was told its easier to refi a commercial property than acquisition. Is this true. This is only 8 units with good cashflow so its a very small property.

Thanks in advanced.

Bill,

Thanks for the response. I'm actually working with a partner who has a little bit of experience but he has always used cash no financing. Just wanted to educate myself. So what percentage of the amount will the lender lend? 100% 90%,80%???

Does the construction finance include the purchase price or is it a separate loan. Example building cost 100k and 50k to rehab (example only). The total will be 150k. Does my 20%-25% down include this total or only the acquisition cost?

Thanks

Hello all,

I'm a new investor. I've done single family but looking at commercial deals. I have a property for 20% down and seller finance the rest. We have a tenant downstairs and want to develop the upstairs into lofts or something. My question is how can we obtain construction financing.

Does the seller have to put their lien in second position? Is the construction loan separate? How can I put this deal together to get the financing. The upstairs are currently offices so that is an option to clean them up and rent them out, so both options are available. Thanks everyone in advance.