All Forum Posts by: Darryl Dahlen

You can get a rough idea of what the property is worth based on similar comps and price/door. You could also use the income approach once you have a good grasp of what the NOI is.

You haven't said what the value-add component is. Is it mainly replacing large CAPEX items or is it upgrading the units and increasing rents?

As mentioned, this size property is a completely different animal so you really need to consider how you would take this property down. Using any kind of financing, especially conventional, will involve the lender looking at your experience. Just because the current owner self-manages doesn't mean a lender is going to allow you to. They won't. The fact this is a value-add scenario means you need to have a solid grasp on how to do what needs to be done.  I see a tough road if you plan on using financing to any degree given you only own a 4-unit.

Is seller financing an option?

Here's the quick rundown of how the commercial loan process works.

1. Secure property and submit preliminary docs to secure a term sheet from lender
2. Accept terms and send funds for 3rd party reports and UW
3. Submit needed loan docs to underwriter and get corporate structure finalized/approved by lender
4. 3rd party reports are finalized, reviewed, and approved. Final adjustments are made based on 3rd party reports and could include adjusting the loan amount, LTV, and/or making repairs to the property or requiring funds be held back to conduct the repairs post closing
5. Pool the needed funds to close in preparation for closing.
6. Commitment to lend is issued and closing is scheduled and rate is locked immediately before closing.
7. Close.

That is the basic process no matter if you use a bank or a large CMBS lender. How many steps are involved in each component of the loan depends on a myriad of factors such as size of the property, type of lender, type of loan (bridge, mini-perm, perm), if there are loan/credit committees, etc.

Send me a PM. I can recommend a company that one of my regular clients uses for all of his properties. They manage thousands of units in the Dallas/Ft. Worth area.

Personally, I think the numbers are on the thin side. A lot rides on your ability to raise rents while keeping the occupancy high. What is the condition of the property? Any major CAPEX needed or on the horizon? You are already getting a solid offer of seller financing with only 75K down. You need to preserve some liquidity so you shouldn't inject every penny you have.

Perhaps the owner would be open to a staggered payment of 25K for 3 years? That may help him on the tax side, but you had better be confident you can swing those payments before making the offer.

I'd be interested in taking a look. I have the potential to bring 75% LTV with good rates/terms and low closing costs to the table if the property and borrower hold water.

I'd be happy to speak with you about the loan process and share my knowledge with you.

It's difficult to find because using the purchase price for the basis of the loan in the first 12 months helps to limit the exposure of the lender. If they allowed for the appraised value it usually means that the lender holds more/all of the risk since the borrowers equity is stripped out either in part or completely which leaves the borrower them with little or no risk or 'skin in the game'.

Wells Fargo Small balance program is one of the better lenders/programs for loans under $750,000. Flexible loan terms and low closing costs.

It's actually not that easy with 20% down as that's typically the max leverage for a lender and then you need reserves post closing.

At that price point Wells Fargo may even be an option as they have a good small balance commercial program with flexible terms and low closing costs.