All Forum Posts by: Jason Jones

Anybody know of a place to get some good financing?

I've got 2 properties currently waiting on financing, plus this 3rd prospect.

Verified income, credit scores of 800+/-, all units cash flowing, no personal debt, over six figues in retirement accounts, etc.

Countrywide is offering 90% LTV on investor loans, but I'd love to get 100% (or combo some loans to get there). I don't have a lot of capital since I'm just starting out, so I'm trying to limit what I have to put in the deal.

Any ideas?

#1 - This is NOT in California.

I have yet to find positive cash flow properties here, and that's with 0% expenses :), let alone 50% expenses.

I like what I'm seeing... time to see what I can line up on financing.

4-unit deal

Purchase Price $105,000

Unit 1: 425 2/1
Unit 2: 400 2/1
Unit 3: 375 1/1
Unit 4: 475 1/1

Monthly Tot Rent: $1,675

OwnExp: Insurance, Lawn, Maintenance, Taxes

Year Built: 1920

ALL UNITS HAVE BEEN COMPLETELY REDONE. A GREAT CASH COW! THINK OF THE INCOME POTENTIAL. ALL APPLIANCES TO STAY. COIN-OP WASHER AND DRYER IN BASEMENT TO STAY. 2 CAR GARAGE FOR EXTRA INCOME.

Yes, the biggest problem for me with this property is managing such a big rehab remotely. I'm on the West coast, this property is on the East coast. Estimates were provided by a contractor and currently in progress. It is 12 buildings, so you could start to rent them as each is finished. The estimate is about 6 months for all rehab and occupancy. I would have to float the property for those 6+ months.

I'll likely have to pass on this since I don't have the cash to float this property, unless I can get cash up front as part of the rehab loan (but I doubt that), or I can find a partner.

OK, so the units are currently vacant. I'm sure this will increase my carrying cost for the first several months until I can get them filled, but I'm thinking this is still a good deal.

Do you think this changes the deal much?

My thoughts are that after rehabbing, you'll have $600,000 in equity of which $200,000 could be "cash out" upon refinancing - Minus any overages.

That would easly cover the cost to float the payments until you can ramp up and get the units filled. It's about 10 miles from a major univeristy, but that might be too far away... not sure.

Any hard money guys reading this???

Hmmm... time to see if I can line up some financing...

My last loan was 7.375%, but that was using a standard mortgage that I quitclaimed to my LLC.

This will likely require a commercial loan. I'm thinking hard money to buy it using $0 down and cover the rehab cost, then refi into a mortage once complete.

I'm going to see if I can pull this off...

You are correct... not in California. I'd love to invest locally, but it's too rich for my blood this early in my REI career. I own, excuse me; the bank owns, a primary residence here in TO, but that's all I can do locally.

Here are the full numbers...

Income
Gross Potential Income 324,000
Other Income 6,000
Total Gross Potential 330,000
Less Vacancy @ 10% 33,000
Effective Gross Income 297,000

Expenses
Maintenance 30,000
Management 14,850
Taxes 15,240
Insurance 18,000
Utilities (Water & Sewer) 21,600
Reserves 12,000
Administrative/ Misc 6,000
Total Expenses 117,690

Net Operating Income 179,310

Less Debt Service 87,540
80% LTV 30 yr amort 6.75% interest

Less CapEx @ $200 / unit / year 12,000

Cash Flow 79,770

Purchase Price $856,000
Renovation Cost $550,000
Total $1,406,000

Q3, 2007 apprasial with quoted repairs $2,000,000

Expenses run 40%, plus vacancy (est. 10%).

Gross income is $330,000

Your thoughts?

If I'm correct, most comercial loans are 15 or 25 years versus 15 or 30 years for a standard mortgage.