All Forum Posts by: Ryan Fortier

@Justin R.  I just found an independent guy on Craigslist.

@Katie Magoun  I used Knight for a multi family I owned in Westbrook.  They were fine for the first couple of years, but eventually they forgot to show up at the beginning of the winter and I would have to remind them. Then eventually last winter they stopped showing up completely and I must have left 5 voicemails and 3 emails to them with ZERO response. It was so bizarre and frustrating. I always find it odd when a business doesn’t want want my money. Anyway, that was my experience with them.

@Conor Freeman Because I have 1031 money I can't have a different ownership structure of my sold and newly purchased property. My partner does not own the property that I'm selling, just me. That's why we are going with the separate TIC structures, to satisfy the 1031 requirements. I will have my own TIC and my partner will have his own TIC. The lender at first said we have to have a SAE(single asset entity) LLC on the mortgage/deed as the purchaser, but my exchange guy said that will not comply with the 1031 rule previously mentioned. Then the lender came back and said we don't have to have a SAE. Very simply there will be the two TIC's on the mortgage and deed. I will put down 95% of the down payment and my partner will put down 5%, so my TIC will have 95% ownership and my partner's TIC will have 5% ownership. The lender said they will include both of our net worth's. This is how I understand it up to this point and hopefully I'm explaining it back correctly. I'm guessing maybe the mortgage broker was saying in order to include an investor's net worth they have to have at least 5% ownership? I'll check with him again. Thanks for the information so far, very helpful!

@Conor Freeman @Jared Rine

Not every investor has to be a key principal, right? If myself and a partner are investing in a deal, we will both have our own TIC. I have 1031 money, which is why it will be structured this way. Both TIC's will be on the mortgage and deed, however my partner is only going to put down a small amount of money, let's say 5%. He doesn't have to be a key principal, he is just an investor? That's what my broker said who confirmed with his Fannie contact. An investor only needs to put down a minimum of 5% and key principals 20%. Sound right?

I'm looking into a Fannie/Freddie commercial mortgage for a new purchase and have been speaking with an agency lender and a commercial mortgage broker. I received different information from both regarding required ownership percentage for anyone who will be on the mortgage. One said anyone who will be signing on the mortgage(and using their net worth) has to have a minimum of 20% ownership and one said only 5% ownership is the minimum.  Does anyone know the answer? Thanks!

I'm mainly looking at Freddie/Fannie commercial loans. I just spoke with a lender and he said commercial loans are typically not reported on credit and if an LLC definitely not. It sounds like there really is no personal risk if there is a default and doesn't affect your ability to borrow personally moving forward.

@Michael Le Great, thanks Michael.  I have a friend who would possibly go on a loan with me to help with the net worth requirement on a new purchase multifamily.  I told him with a non recourse loan, in the case of default, the lender can only go after the property itself and cannot touch us personal. Also, as you confirmed, this does not affect his credit personally nor will show up on his individual credit report.  Is there anything I'm missing as far as any risk to him? Any websites or resources I can point him to to help with his concerns? Would a real estate attorney be knowledgable on this topic and be able to confirm this information? Thanks.

Do non-recourse commercial mortgages show up on your personal credit report?

If you get agency debt they will mainly focus on your net worth being equal to or exceeding the loan amount. Your personal income won't be a factor at all, or a very small piece of the underwriting.  They will mainly look at the financials of the property as opposed to your income.

I'm looking into purchasing a larger commercial property and the net worth requirement I heard from a couple of commercial lenders.  These were brokers who quoted Fannie/Freddie products.  I also spoke with a small, local bank who offered a commercial loan without the net worth requirement, but they could only offer a 20 year amortization.  Fannie/Freddie were 30 year amortization with interest only options at great rates. I guess it just depends who you are dealing with or what commercial loan program they are offering.  

5-6% doesn't sound terrible. I'm currently getting 3% return on my equity and looking into refinancing to pull money out to reinvest.