All Forum Posts by: Darryl Dahlen

Hi Fred. I haven't kept pace with the lending atmosphere for ALF's in recent years so I'm not the best source to offer you viable advice. My focus these days is centered on more traditional investment properties (multifamily, self-storage, mobile home parks, retail, etc). Best of luck, Darryl.

I'm working on a Freddie Mac multifamily loan now for a client where the PCA identified the presence of aluminum wiring. The acceptable remedy is to change out those outlets to Co/alr outlets which saves the borrower a lot of money.

I agree that you seem to be getting favorable terms. Balloons can be scary, but they're the norm in the commercial space. As long as you do your part to be a solid borrower, keep up on the repairs of the property, and keep the financials/income on track you should be fine when the time comes to refinance.

CAP rates are all over the place in some markets and the affect is bleeding into the lending aspect. I closed a Class C property in Dallas that had a CAP rate in the 5s, but that's only because the price/unit is so high there that it's driving down CAP rates as most multifamily properties there are at or near market rents.

As far as using actuals vs proforma, you want to buy on the actuals and use the any financial upside as your "meat on the bone". The lender will use actuals and any future financial gains, whether they be through made through rehab/upgrades or through increasing the NOI, are speculative.

What percentage of ownership will the investors receive? To keep them from having to be guarantors, you really should limit their ownership to less than 20%. A bank may still want to vet them to make sure they're not a liability no matter their ownership level.

As stated, Wells has a good small balance program and is currently waiving their origination fee. Their program is credit score based though and like a minimum FICO of 700.
There are other lenders who can help of state borrowers as you are correct in that local banks really don't like to work with absentee borrowers. Some will, but they're not easy to find.
If you need help I too am willing to talk with you. I have over 10 years experience closing multifamily loans and mostly work with absentee/foreign borrowers so I know the lay of the land pretty well.

What leverage are you seeking here? Banks allows 2nds as do some others, but they still require a capital injection from the guarantors.

You can include properties that are owned outside the US in the REO section of the PFS. Freddie or Fannie is going to want a PFS so they can at a minimum see your liquidity and net worth.

FWIW, Fannie has been giving push back as of late on inexperienced borrowers who live outside of the subject market. Not saying they'll give you a hard time on your deals, but my primary Fannie lender, who is a delegate lender, notified me to be careful of loans with borrowers who lived out of state. This may make Freddie the better candidate.

If you have any questions please don't hesitate to ask as I use these programs regularly. If you're not comfortable talking to your broker about this then perhaps you need someone you can trust and be open with.

How much money do you have to inject into this transaction? Do you have solid liquidity/net worth? I have to ask who do you think will finance this? Two SFRs as rentals isn't comparable to owning a 44-unit so that's going to be a tough barrier to cross even with a good property management company. Some lenders/programs have a lower bar when it comes to experience, but there's still a bar that you have to hit. 

I hate to rain on people's parade, but I think it's important to look at things from the lending perspective. Experience is a critical component. Down payments can be raised via a myriad of ways, but raising those funds, no matter how, hinges on the numbers working and, you guessed it, experience.

To a point, you can rely on a solid property management company to help keep the property from going off the tracks, but they're not the guarantor so they only count so much in a lender's eyes. 

I think you'd be better off partnering with someone who has the experience and financial muscle to do this deal and learn from them while getting a piece of the pie.

I can't help on the fix and flip side, but there is financing available once the property is rented out. Lenders like B2R and Colony will lender to foreigners, but they require the property be leased out before they'll look at it. I think B2R will use the appraised value after 90 days seasoning which is a plus.