All Forum Posts by: Scott Schultz

@Jeffrey Zientara. Most small banks will do in-house/Commercial, or construction financing, and then you can go secondary market after 6 mo. (Vested in your personal name) as long as it’s over $50k, but the low dollar ones the cost may be prohibitive to go secondary, you can just do a commercial note with a balloon as long as you keep your LTV low to insulate from a downturn.

Rates will depend on your PFS, Personal Credit Score, Income, Experience, and LTV, the Lower the risk, the lower the rate. Expect Prime +.5-3% depending on your specifics, thats the thing about Commercial financing, its the banks money, so its not standardized like FNMA. Acquisition vs Refi sould be the same if the LTV and condition are the same. but there are a lot of variables.

Mortgage Brokers tend to be expensive, I recommend building relationships with Local Commercial Banks, In Milwaukee Check with Peoples State Bank, I work with them up north, but they have a branch in Milwaukee, and they are very Commercial Focused, especially Small Commercial, like you described. 

In IL they are waiting for the Gov to sign a bill that specifically names and describes Wholesaling and will make a Brokers License required, the fin is to be $25,000

@Nathan Atkinson consider getting your Real Estate License, and sell while in school, focus on investment property, and investors, you can make nice commission, run lots of numbers, meet key contacts, and watch what other investors do on their dime, see what works and what doesnt, and you can do it part time any time. Pre License is like 32 hours and a test, pretty easy.  I am a Wholesaling Hater, I find it to be Shady, even if done legally it is very easy to inadvertently break the law in wholesaling, BUT as an agent if you do decide to wholesale, you can offer an additional option to sellers, Listing! there are plenty of times what you can offer as a wholesaler will not meet the sellers needs, but if it was listed on the open market, you could find a buyer that will meet their needs, and still earn a commission vs walk away from the deal. Also consider, the market is saturated with WHolesalers today, its a really hard road, Legitimizing as an agent can set you apart, and you can learn from real Pro's in Real Estate.  

not to many NOO 80% out there, BUT you need to consider if it is smart to do 80% on a 5-7 year ARM, especially with a 30 year amortization, Keep in mind your principal pay down in 5-7 years is very minimal, and you will need to refinance. So your value will need to be the same or greater at that time. Consider a change in the economy, what position would you be in if your value came down say 10-15% requiring additional funds to close the new loan? Example: value today $100K loan 80K at 5% for 30 years amm starting today. in 5 years your balance would be $73,600 so if values dropped 10% you would need to bring in $1,600 plus loan costs just to renew your loan to 80% LTV 15% market value loss you would need to bring in $5,600 plus loan costs just to get to 80% LTV, Not saying this is going to happen, BUT I have seen this happen before and investors lose everything because they grew a portfolio this way, and a small market change wiped out their equity position, and no one would refi them. Personally I never borrow over 60% LTV on any one property unless its fixed for the full term of the loan, and never more than 40% LTV across my portfolio, and no more than 15 year Amortization, this provides significant insulation from market changes.

I practiced as an REO Listing broker since 2006, I have seen this play out many times, I know many investors that lost entire portfolios, even after tapping retirement funds to try and keep it afloat, losing that money as well. really consider your position, especially consider what can happen in 30 years, Personally Im not confident the Real Estate Market will be the same 5 years from now as it is today, I hope Im wrong, but I would never bet my financial future on the market always appreciating.

it depends on what you want to do, if you want the space, then its probably worth it. I would also be very careful taking the inspectors word, I would suggest getting it in writing if you plan to tear it down and rebuild, personally I would repair it if you want the space. Sometimes the decision is not 100% financial regarding property value, your needs and desires play in as well. 

it depends on what you want to do, if you want the space, then its probably worth it. I would also be very careful taking the inspectors word, I would suggest getting it in writing if you plan to tear it down and rebuild, personally I would repair it if you want the space. Sometimes the decision is not 100% financial regarding property value, your needs and desires play in as well. 

Fannie Mae has a Small balance program up to $5 Million, they also have a scattered site program so you can treat residntial like a multi family when locations are not all adjoining. you will need an experienced multifamily lender that understands these programs. 

There must be another reason the Commercial lenders you spoke with wont touch it, either the bank is not interested in the type of asset, the deal isnt that good, or they dont like your situation. remember its not always you or the deal, every bank has a plan of what they want on their books, and it can change as well. I know lenders that dont want any residential real estate on the commercial  side one time, but other times cant get enough of it. shop some more and you will find them.

I suggest having a good plan to present, be thorough at your meeting, Have 3 years taxes, a PFS, a layout of your past projects and outcomes (success and failures if any, it shows you are humble and how you deal with problems) and your plan for this asset, and BE CONSERVATIVE, never puff the numbers, if you need to puff the numbers to make it look good, its not a deal worth doing! 

@Jonathan Marcus Just because a property fits in "residential" doesnt mean you have to finance residential, most of my Single family and duplexes are on "commercial" notes because of my low balances and ease of doing the loan sometimes it just makes sense. 

did you get a special assessment letter and check with building inspections for open orders from the city prior to closing?  and what @Jay Hinrichs said about title insurance. I have never known a municipality to push through a raise order if you have a plan for renovation, but the sale may complicate things.