All Forum Posts by: Account Closed

I used to do SBA 7a's. It's a very simple concept. Whatever your total project cost is, if the lender is requiring 10% down you just multiply the two numbers and you get your down payment or "injection". SBA leverages off the bank's loan policies. So, if the bank requires 10% down or 15% down that's what you have to comply with. Now I want to make something clear. Just because the bank gets a 75%-90% guarantee on the loan doesn't mean that helps you. In fact, the 7(a) guarantee has nothing to do with your financing package. The guarantee simply means if you default and the bank forecloses, once they sell their collateral if there is a deficiency or deficit, then SBA will pay 75%-90% of the deficit. The bank writes-off the other 10%-25% of the deficit. However, banks like to do these types of loans because it mitigates the bank's exposure. The lender should be putting together a total cost worksheet so you can review rehab, purchase of real estate, review fees, and origination fees. Also remember that SBA loans cost you as a customer a lot more than a conventional commercial loan. If you can get a conventional commercial loan then 8 times out of 10 they are cheaper in terms of fees. Having said that I believe the 7(a) is now waived so this could help with the costs. Good luck.

Let me know what you guys decide. I am always down for getting together.

Here's what I don't get. Why does it have to be Chase? If you don't like Chase then you probably do not like your banker. Because customers bank with bankers not the bank itself. The relationship I have with my personal banker from Chase is great. It's not that I love Chase Mr. Babiak, I'm just very pleased with the way my banker handles my accounts and credit. And frankly I could care less if I am the only one that feels that way.

J Scott has a good point. You need to look at statistics of your metro and your local area. What's unemployment doing locally? Growth expectations? New employers coming to your town? How many jobs will be added? Jobs create income, income creates wealth, wealth creates a better chance for a home buyer to get in a home, thus creating more sales. More sales translates to higher demand for housing thus driving the price of real estate up. It would also be a good idea to find some information on how many sub-prime mortages were made in your area. Not many in Texas compared to the nation. This will tell you if there was a local bubble that your town or city experienced. Foreclosures are a key indicator of this. Another way is looking at UBPR's of local community banks. If you have 3 or 4 banks with crappy earnings there's a reason for that. It's more than likely due to Asset Quality problems stemming from loan problems.

Please note also that these factors mean squat in small towns and cities that do not materially change when times are bad or good. To answer your question, do I know if we have hit bottom? The answer to that is no one really knows. Do I think we will rebound in 5 years? Have no clue and don't really care. If you have a positive cash flow what does it really matter? If you have negative, find out why and learn from it.

I actually like Chase. I bank with them now and have had no problems.

I agree with Chuck and I would be down to meet regularly and discuss real estate.

Bryan,

I'm sure you already know this but here are some ideas I have come up with. First off, why go through a broker? I just hate that you would have to pay a broker's fee which if passed on to the bank would ultimately be passed back on to you either through interest rate or an origination fee of some sort. As a banker I hated dealing with brokers. As an investor it may make more sense when the flow of credit dries up. So if this is the route you want to take here are some ideas.

1. Lifestyles Unlimited. I am a member and I have met many brokers here in San Antonio. I am sure there are plenty in Austin and I believe Austin has a Lifestyles chapter.

2. Talk to lenders and see if they recommend anyone. A good lender will refer you to someone if they can't get the deal done. I know I did.

3. Talk to investors. This may seem obvious, but there may be a real estate investor out there who has someone in mind.

4. Talk with Commercial Real Estate brokers. They will more than likely have a guy they send deals to.

5. SBA lenders at a community bank. The Small Business Administration does not do non-owner occupied commercial real estate loans, however, there are SBA lenders who like to deal with brokers because they keep deals flowing through and it is easier to pass the fees off to the customer. For example, I once saw on a Credit Report review fee for $1,000 on a Summary of Fees transcript. So be careful when you get an SBA loan!

Hope this helps man.

I really enjoyed Multi Family Millions by Lindahl. I like the part on how he explains to constantly be getting deals put on your door step.

I wasn't calculating my property management fees correctly for Year 2, 3, and 4. Good catch.

Jon I miscalculated.

Year 1 : $1,805
Year 2: $1,983
Year 3: $2,165
Year 4: $2,351