All Forum Posts by: Darryl Dahlen

There are a lot of ways to answer your post since this is an area where you can be very creative on how you raise the needed funds.

A lot of the loans I fund involve syndicated funds to close the loan. Typically, the borrower(s) raise the amount needed for the down payment, reserves, any CAPEX, and in some cases, funds to cover lack of sponsor liquidity. Obviously, the more you raise the more you need to be sure about the NOI and returns you an give back.

I've had loans where there were over 100 investors with each throwing in a small amount (10-30K) and loans where there were only a few investors. I've found the borrowers I work with tend to prefer more investors who will take a small(er) ownership/equity stake as they are easier to manage than a couple larger investors who tend to want to have some say.  Your operating agreement will set the tone as to what role the investors have, but it's just human nature to want to look after your investment so the more a person has invested the more they're going to be looking over your shoulder.

Normally, the amount of percentage of equity the investor receives is in proportion to the amount invested, but this is one area where you can be creative. You do need to be careful about the percentage of ownership you give though since the lender may require an investor become a sponsor if their ownership percentage is 19% or higher and that's usually problematic, but it can also help if an investor is willing to become a guarantor for a higher equity stake and they have good liquidity/net worth to help secure the loan.

That said, some lenders will require you to inject some funds of your own, but not all. As I stated, I've closed loans where the borrower injected no funds and didn't have the needed liquidity so he raised additional capital to offset that requirement which the lender held. There are also lenders who are flexible on the sponsor liquidity and net worth requirements. The general rule of thumb is that the sponsor(s) have 10% of the loan amount liquid and a net worth equal to the loan amount, but not all. 

Working with the right lender can really make or break a deal like this if you don't meet the "general" rule of thumb. I closed a 11MM purchase in Jan where the borrower only had 300k in liquidity and they didn't require any additional capital be raised so working with right lender can have a huge impact on the funds needed to close or even getting you to the closing table at all.

Saco Biddeford Savings, Bangor Savings, Optima Bank and Trust (location dependent) are some good choices. You were very vague in your post so it's hard to give you a good answer.

Here are the proposed expenses for the one-off loan program. It's not up and running yet, but should be inside of a month.

This will be a 30 year fixed  program with a 3 year PPP (3,2,1). I was told rates will be in the 6.5-8% range.

90 day seasoning for cash out and LTVs up to 75%.

• 1% lender origination for loans above $150,000
• $1500 for loans under $150,000
• $750 processing
• $750 to close in an LLC
• $500 to use own title company
• $488 for credit, docs, and appraisal (this is the only fee paid upfront)

Some good news is that you won't have to pay extra if you want to use a broker who has a good relationship with a team over there since they take care of us at no extra cost to you. 

I've used them before. Yes, their rates are higher, but their programs are usable nationally which is nice for those who don't know local lenders, which can be hard to find given there aren't many who do what Dwell does. Especially, in smaller markets. 

They also lends to foreigners and use the property's financials as the basis for the loan, not personal income. 

They're rolling out a one off program right now where you can finance individual properties instead of 3 or more.

Cap rate of 14%? What's the reason for that?

Most banks will require a personal guarantee as their loans are almost always full-recourse. When you start getting into agency loans (Freddie/Fannie/HUD) and CMBS/Life Company/etc. type lenders you find mostly non-recourse lending.

With your loan amount it's likely you will encounter a full-recourse lender as most of the non-recourse lenders prefer loans above 1MM.

Your friend has either cultivated relationships with lenders who will cater to his wants based on a long track record of permanence or he is playing in a deeper pool than you are currently where he has non-recourse options available due to higher loan amounts.

I wouldn't put too much stock in what he said as it's more common to get a full-recourse loan than a non-recourse one.

In that case, this scenario would be more of a blanket loan situation. There are banks who will do them, but you'd really want to get comfortable with their release clause policy in the event you want to sell a property and need it to be released from the collateral pool.

There are lenders like B2R and First Key who specialize in blanket loans, but their rates aren't the best. That being said, they will permit you to sell of properties and offer some decent loan options.

If you decide you need help I can be of assistance with either of those two lenders and can probably get you slightly better terms than if you were to approach them on your own since I've done business with both.

Are the duplexes zoned commercial and on one lot or are they residential properties being sold together? 

If this is a multifamily loan then you could feasibly obtain rates in the 5s with a 5 or 10 year loan with 25-30 year amortization. If this is more of a blanket loan then rates can be all over the place, but you'd still be looking at a 5 or 10 year term with a 30 year amortization.

Ideally, you'd want this to be a multifamily loan as the lending pool is deeper and the terms tend to be better compared to a blanket loan or residential properties funded as a commercial loan.

You need to talk to a different bank.