All Forum Posts by: Stuart Udis

Why do you need partners in transactions that require 0% down.....

There is one other explanation, being over extended. Although that would be looked down upon by a lender as well because of the inherent risk of lending to someone who has too much on their plate. 

@Michaela Hayes What about these projects would make it compelling for a lender to offer 100% financing? Lenders look at creditworthiness/balance sheet/track record and the collateral in determining the leverage they will offer. You will have more success finding LP partners to fill the rest of the capital stack alongside of the construction debt.

Everywhere I turn all I see are pitches for affordable housing and the same (not so) compelling arguments regurgitated by syndicators, capital raisers, brokers etc. for the investment strategy....strong returns...lower volatility....supply (huh?) and demand....yet today was a first for me. I was sent an offering memo by a broker selling a multi-family building in an area no reasonable person would even consider affordable housing material yet the marketing materials made a point of emphasis to detail how the property would satisfy the need for affordable housing. Have we gotten to a point in this industry where a property is more attractive by short changing the true fundamentals and classifying the property an affordable housing opportunity? 

@Jerry Velez Familial relationship wouldn’t have any bearing. Follow the local licensing and disclosure laws. They seem to be quickly evolving across the country…but this should be secondary. Why even concern yourself with the legality if it’s self serving and harmful to your family member?  Just as bad as the posts you see from time to time of the grandchild wanting to work out creative financing to buy their grandparents house below fair market value.  

@Jerry Velez Your latest post reads like the script every other wholesaler uses..... Do what's best for your family members and point them in the direction of the best representation. 

What does owning 30 units accomplish? Especially if they are units in markets with poor fundamentals. Focus on acquiring quality real estate in markets with strong fundamentals and don't put a clock on when they must be acquired. Putting a clock on the timeframe in which units must be acquired does nothing but force bad decisions. 

 Do you believe you can achieve a better result for your family member trying to sign an assignment contract over retaining the best real estate broker in the market with a robust marketing package while leveraging the sales professional's relationships? Seems self serving.....

@Mario Niccolini There's quite a few asset types and strategies that fall between SFH's and 20+ apartment buildings. You can also diversify and acquire multiple asset types. Since you have capital, focus on the market fundamentals and quality of the real estate. Most get cornered into purchasing specific property types because its what their resources allow. Consider that an advantage you have over most others. Also, if you focus on the fundamentals of the real estate, particularly with SFH's the cash flow is truly secondary to other benefits. Last piece of advice is to surround yourself with quality service providers (real estate brokers, lenders, accountants, attorneys, PM's, Contractors, Insurance Brokers)., They will be instrumental to your business.

Most lenders release as improvements are made. That's how lenders protect their collateral. I would place greater emphasis on finding lenders who offer the best construction loan administration experience (those who process and release draws quickly, those who will release for materials on site as opposed to installed, those who don't hold back retainage). I would much rather have that for the life of the project than a lender who may release some money up front (which is  unlikely) but otherwise provides a difficult construction loan administration experience.

For some of my larger projects I will transfer some of the project management/overhead fee to a "mobilization fee" which is paid out on the initial draw and my lenders have always accepted this. However I only include this in my larger new construction builds, not smaller rehabs. It may be a way to advance some of the loan proceeds earlier in the project. You can also gross up some of your earlier trade line items such as demo, framing etc. and decrease back end items like kitchens, appliances to access some funds earlier. I used to do this with my earlier smaller rehabs but it's more difficult to do this with larger projects because my  lenders typically want to receive copies of all major subcontract agreements.