All Forum Posts by: Darryl Dahlen

Don's insight is spot on. It's great to have an ambitious spirit, but I'm amazed by the false information that's out there that puts young borrowers on the wrong track.

Lenders want to see capital be injected by the owner AND that you have experience operating similar properties. Yes, you can syndicate funds, obtain seller financing, and use mezz/equity financing, but at the end of the day you need to bring something to the table.

Usually, only banks will allow 2nds. You can't use 2nds in the CMBS/agency world. Beyond that, it can get stick very fast as the more creative you try to get the more expensive the money gets. As far as syndication goes, why would I give you my money and take all the risk if you're not putting your funds into the deal? I wouldn't. Not unless I was taking the lion's share of the profits. Truth be told, I'd likely give you a finders fee and simply do the loan myself. I've seen syndication work where the borrower put no money into the purchase, but their track record of running properties was impeccable. They brought experience to the table in lieu of funds, but they still had the reserves and income needed to qualify for the loan.

Equity and mezz lenders are going to be even more picky than the 1st position lender is about your experience, your financials, and the property. 

Point being, keep being ambitious, but keep yourself grounded as well. Reality is often quite different than the picture books would have you believe.

Since you're from Detroit I'm going to assume that most any 5-unit is going to be a small loan. As such, anything recent that I've closed in that realm, that was bankable, had rates range from 4s to 5s, 75% LTV, except for one that was 70%, recourse, and had 5-7 year fixed-rate terms with 25 year amortizations. All had 0-1% lender origination.

I'd be willing to help you if I can get this in with a bank I use for small balance commercial loans. As Joel stated, small(er) loans aren't what most of us shoot for was they're almost always more work than a larger loan, but I'm sure we can work something out if there's a loan. 

I only get paid if the loan closes so I'm no interested in wasting your time or mine. PM me if you want to talk further.

Do you have any funds to contribute or property management experience to entice someone to bring in that kind of money? If not, then the honest question is what value do you bring to the table?

It's certainly ideal for both you and the lender to have 1 year leases, but I can't remember a time when the terms of the leases had an adverse impact on the loan. What's of more importance is the rent the tenant pays and if it's at or near market rent or not, the vacancy rate, and utilities paid or not paid..

If you are in need of a professional management company that is based out of Dallas let me know and I'd be happy to refer them to you. They manage thousands of units and some of my clients use them exclusively and they're experienced when it comes to value-add scenarios.

The 50% rule may apply on smaller units, but I can't see how it applies to large(r) properties. While a lot depends on the class of the property, market rents, and market in general. I feel an owner is doing well to operate at 55% expenses on a Class C property, but I've seen more than a few properties running at 60-65% expenses that still debt service very well and make money.

The lender should be giving you instructions on what coverage you need or are you not using a lender?

Providing you are looking at bankable properties in that dollar range I'd be more than happy to help you. I have more than 10 years experience funding commercial loans and am well connected in the lending space. Feel free to send me a colleague request so we can connect talk further.

I'd advice against going with a 30 year amortization. Very few banks offer them and this is without a doubt a bank loan. Most banks offer 25 year amortizations with a 5 or 7 year term. Occasionally, you can get a 10 year term, but not likely.