All Forum Posts by: Terri Wyzkoski

Hi Steve, I'm don't know if you received my earlier reply or not. I included my email address, which I now understand is a no-no on this site. Ooops! Anyway, I'm a 20+ year veteran CRE lender by career, turned CRE Broker. I'm happy just to provide guidance. Let me know how.

Lauren,

I've been a CRE lender for more than 20 years, as well as a paralegal. That said, it doesn't matter if the property is owned by an individual or an LLC, as long as you don't use the property (owned by the LLC) as your residence. If the property is used as a residence and it's financed under an LLC, that's a big no-no. Only investment properties may be owned by an LLC.

There are two ways to get equity out.  But I'd have to ask a couple of questions to be precise.  But, I'll go with a few assumptions -- you a first mortgage on both properties, and that they are with different banks.

First, you could get a Commercial LOC secured by the 2nd DOT on each property, but the first mortgage holder likely won't allow it unless they approve it first. Secondly, another lender doesn't want to be in second lien position behind your first lender. So, you'd really need to use your first mortgage lender to get the LOC.

Secondly, you could refinance both mortgages with one bank, pull out some equity as long as the LTV remains at 75% or less, and rental income covers the proposed debt service.

If you want to discuss further, we can set up a call.

@Alysha Johnson

If you and your family purchased your home in DFW, does that mean you just moved permanently there from Atlanta? I manage a portfolio of CRE investors whose investment strategy is diversifying assets from the MidAtlantic region (very low cap rates in our area), to the midwest and south in search ROI and ROE.

That said, what's your overall strategy?  Are you seek to acquire an already-stabilized Class A or B MF asset? Or a Class B or C value-add MF asset?  Once you have that determined, then you can look at the inventory availability.

When you refinance at the end of the term, do not extend the amortization period.  During each term of the loan, you're paying both P&I, so you are paying down the loan.  Or, alternatively, if your cashflow is adequate to cover the payment, you could reduce your amortization at the next renewal/refi.  Does that make sense?

And, of course, you can always negotiate with the lender to allow you to make additional principal payments during each annual cycle without being subject to prepayment fees.

@Steve D. I'm late to the party. I've been a lender for 29 years, and now I'm a CRE mortgage broker. On a $3.2MM loan, $170k in closing costs does seem very high. Assuming you're paying 3% total to broker and lender, that's $96,000 in broker and bank origination fees. So, I could see closing fees, including the $15,000 attorney fees (which seems ridiculously high), being in the range of $30k, but not another $80k. Your broker should be watching all these costs and advocating on your behalf, especially on that 1.5% bank origination fee. That's crazy.