All Forum Posts by: Sartaj G.

I have recently started growing my SFR portfolio in Houston area and now looking for a tax professional to help me with setting up an appropriate system going forward, e.g., correctly setting up LLC or partnership with my wife, other steps to help with tax optimization. Does anyone a good recommendation for a tax professional, preferably in Houston area? Any other recommendations/pointers for me? Thanks a lot in advance.

1 Vote

Houston, Texas

Quote from @Erik Estrada:

Quote from @Sartaj G.:

Quote from @Erik Estrada:

I would advise doing your due diligence on the lender beforehand. It is very common in CRE to bait and switch or have a loan denied and paying $2k+ for an appraisal and a 1% deposit.

It is not like 1-4 Unit Residential lending. It is very much about which lender can really close on the deal, especially on a complex deal like a retail building.

@Erik Estrada
Thanks a lot for the caution. This will be my first CRE loan and learning that they are more complex than residential loans. At this time I am figuring out where can I get best terms and then will do due diligence on the top few options. Please let me know if you have any recommendations

Where is the property located?

It’s in Houston , TX

0 Votes

Quote from @Erik Estrada:

I would advise doing your due diligence on the lender beforehand. It is very common in CRE to bait and switch or have a loan denied and paying $2k+ for an appraisal and a 1% deposit.

It is not like 1-4 Unit Residential lending. It is very much about which lender can really close on the deal, especially on a complex deal like a retail building.

0 Votes

Quote from @Brandon Croucier:

Hi Sartaj,

I would love to connect and see if it's a fit, I do a lot of commercial nowadays.

@Brandon Croucier sounds good. When are you available to talk? Thanks.

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Quote from @John Cardinale:

Quote from @Sartaj G.:

Hi All,

I am looking to buy a retail commercial property and looking for options for loan. I am planning on putting down 30% and take loan on the rest. I have invested in residential RE so far and understand financing options there but I am new to commercial RE. I looked at the "Find a Lender" here but looks like most lenders listed are active in residential RE.

Do anyone have any pointers / tips / cautions on the commercial loan world? Is yes, please do share. Thanks in advance.

Local bankers are a good place to start. Every local bank will have a commercial lending department from where construction & renovation loans, other commercial lending is initiated. They will like that you have the 30% to put down as well as any lenders on here (and they are here as well). I'm sure some will reach out to. You'll need to provide more info on the current financials of the asset you are hoping to buy to substantiate the loan amount and purchase price. You will need to have a personal financial statement prepared if you don't already have one. Also know that commercial values are determined by the assets existing performance via their financial statements using the NOI and cap rates, which differs a good bit from how residential real estate is valued using comparable sales. You may want to read up a bit on this topic before proceeding to make sure you understand the key differences. Others differences that jump out: loan parameters are stiffer (usually 20 terms on a mortgage instead of 30 year), commercial insurance will be more expensive, appraisals will cost a good bit more. To sum up, the overall lending environment (from my POV as a fellow borrower) for commercial projects is simply more stringent when compared to residential RE.

@John Cardinale thanks a lot for your input. I am educating myself on CRE. The assets I am looking at are around 7% CAP rate. I am trying to figure out what type of loan (e.g., DSCR, conventional, etc.) makes sense and at what interest rate I need to make the numbers work. I am not expecting to make much (if at all) cash flow right now but do not want to have a -ve cash flow.

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Hi All,

Do anyone have any pointers / tips / cautions on the commercial loan world? Is yes, please do share. Thanks in advance.

0 Votes

Hi all,

I am looking at some CRE and seeing that the Cap Rate in the range of 5-7%. Mortgage interest rates are around 7%. In this environment how are people doing the deals? Is it working only for cash buyers? I am willing to pay 20-30% down but borrowing at 7% to buy a property with 6% Cap rate does not sounds right. I was looking at retail properties. Am I missing something? Thanks.

1 Vote

@Bryson Rajendran I am also in a similar boat. Have a few single family homes but want to diversify into NNN commercial properties. Looks like many people are mentioning Crexi and Loopnet but my impression was that good deals get picked up before reaching those forums and the best way to get a good deal is via an agent active in your target market. Is my understanding wrong?

0 Votes

Cincinnati, Ohio

Quote from @Jay Hurst:

with all due respect, your lender should have already been able to answer all the above if he or she know what they are doing.

@Jay Hurst
These questions came after I analyzed the closing documents for my two recent purchases, one cash and one with mortgage. I wanted to have a strategy if/when I plan to buy the next house. I did not went back to the lender to ask these questions. I thought the group here can provide an unbiased answer and might give me a top or two along the way.

0 Votes

Quote from @Jay Hurst:

Quote from @Sartaj G.:

Hi all,

I am new to RE investing and recently bought a few SFHs from the same builder. I realized that builder gave many more incentives when I paid cash vs when I used an outside lender (builder’s price with their lender was much higher). I was wondering if I am in this situation again, can I pay cash (I have the liquidity) and then refinance after closing? My RE agent said it will not be possible but I have seen people mentioning this on the forum. If it is possible then what will be the pros and cons. I think there will be some additional cost to do refi and reissue of title policy. How much that should run? Any other thing I am missing?

@Sartaj G. yes, you can. It is called delayed financing. We do it often. You will just be capped at the price you paid for the property as your loan amount (which is not typically an issue unless you are buying well below market value.) so, if you can truly get a better deal on the property by paying cash it can make perfect sense. (and do not listen the average agent on financing options!)

@Jay Hurst
Thanks a lot for your response. I need to check delayed financing with my mortgage lender next time. What additional costs will be involved in doing delayed financing. I am assuming additional title policy cost to provide lender policy, closing cost by title company (again). Rest should be the typical costs for closing with mortgage. I am wondering how many additional $$ it will end up to figure out when will it mane sense.

0 Votes

All Forum Posts by: Sartaj G.

Sartaj G. has started 6 posts and replied 23 times.

Post: Tax professional recommendation in Houston area

Post: Loan options for commercial retail property

Post: Loan options for commercial retail property

Post: Loan options for commercial retail property

Post: Loan options for commercial retail property

Post: Loan options for commercial retail property

Post: Cap Rate vs Mortgage interest rate

Post: How to Find Commercials Deals Besides Relying on Brokers

Post: Paying cash and then refinancing into 30 years fixed. Possible? Pros/cons?

Post: Paying cash and then refinancing into 30 years fixed. Possible? Pros/cons?