All Forum Posts by: Darryl Dahlen

Without knowing who the tenant is or the terms of the lease, I can only speculate as to what is possible.

I think 80% financing is a little too aggressive. Would an offer in the 70-75% range be a deal killer?

Do you know if the seller would hold a second? Might be worth exploring.

What sort of property is it and what is your intention with it? Lenders look at the use of the property along with the value.

For example, a gas station is hard to convert into anything else versus say a banquet facility that could be turned into office space, a restaurant, day care, etc. The later makes the property more marketable thus more appealing to the lender.

If the property is vacant your are in trouble if you need 80% financing. In that scenario, hard money is almost your only option, and for a vacant property you would be looking at an LTV of 50-60% if anything at all. Without LOIs from credible tenants, or you having an established business that can service the debt, most real lenders would pass on the deal.

I think I can safely say you won't find anything above 80%. There are a few programs where a higher LTV is possible, but they are government backed programs and it doesn't sound like the property you are looking at would fit any into any of them since you mention you need money for repairs.

SBA 7a loans do allow for TI upgrades, and the 504 allows for even more rehab work, but those loans are only for owner-occupied properties that can debt service at 1.2 or better. Even then, you would almost certainly be looking at a best case of 80%. More than likely, it would be in the 65-70% range. This of course is your experience, and the financials (yours and the business) qualify for an SBA loan.

As a general rule, most conventional lenders are comfortable with an LTV of 65-80%.

Thank you. It seems like there might be a market for someone to fill. I'm sure a lot of people in the real estate sector would find value in a site that has reliable information about the current, and future, state of real estate in the major major markets.

Thanks for the link.

I understand that there are a lot of variables with any market. That being said, I think there should be enough information to make educated short-range predictions based on recent sales, foreclosures, trends in rent, etc. Isn't there?

If I were to looking to buy a property in another state where would I go to find reliable information that would tell me which direction the market is headed in terms of property value and rent? Does such a place exist?

I'm looking for sources of information that cover real estate rents and property value trends. Ideally, I'd like a source that covers the different states by city, but if that's asking too much I can live with information that covers just the state.

This is to aid me in putting together information that will help investors looking to buy rental property (typically rented SFRs and town homes) in various states.

Good thread.

Finding a good source who knows the lay of the land when it comes to lending can make all the difference in the world. With lenders being so tight with money, it is important to ally yourself not only with a lender who is lending, but is doing so in a fashion that won't put you through hell with never-ending stips or underwriting times that endanger your rate lock and/or purchase contract.

A knowledgeable broker can take away a lot of the stress that comes from kicking the tires with lenders since they're in the trenches and rely on getting paid by closing deals. Time is money to us brokers so there is no benefit to sending deals to a lender who isn't performing.

For residential deals, you could also check with the local title companies. Since they're the ones closing the loan they should be able to point you in the direction of a capable broker that meets your specific need (Short sale, rehab, investment, etc.)

They might even know who the players are for credit unions and smaller portfolio banks.

Can't hurt to ask them. They'll certainly appreciate the opportunity to gain more business.

I can't believe the banks you talked to asked for what they did.

In most cases, that is the banks way of saying "we're not lending right now, but we'll make an exception if you can meet this ludicrous requirement".

To be frank, what happened to you is a prime example of why a knowledgeable broker can really help you. Knowing who to go to is just as important as knowing who not to go to right now.

Many banks are still frozen and will turn away solid deals either because they're in trouble with the FDIC, are swimming in red ink, or quite honestly, are stupid.

I suppose I should point out that over 150 banks closed last year. More than any year since 1992. I bring this fact up since I think it is important to let people know we are not out of this mess by a long shot and that banks are still dealing with crushing losses and toxic paper. Like I said, it really helps to know who's lending, and who isn't.

Regarding the O/O, N/O/O issue; while there are always exceptions to any rule, when it comes to commercial property, most lenders prefer non-owner occupied properties over owner-occupied ones. Simple reason is that if you're living in a unit it isn't generating income. Of course, SBA loans are not included in this statement since they only consider O/O property.

If you would like help with your 9-unit purchase, please email me.

I have a good program for deals under 500K, and there will not be any off the wall requirements from the lender.

Rate for a 5/30 is in the mid-5s right now, fixed and the closing costs are very low. The lender lends up to 75% LTV and is a national bank.

That is why it is important for a borrower to decide what their intentions are with the property.

I know that with a lot of my conventional (bank) lenders the rates can get ugly if a borrower wants a long term loan. The difference from a 5 year loan to say a 20 year loan can be as much as 3-4%. That is of course if the lender will even offer a long term loan.

A rate in the 5s versus a rate in the 7-9% range can really impact a deal.

It really boils down to lender risk and how they can mitigate it.

There are so many moving parts to commercial loans (property value, property maintenance, changing market conditions, occupancy issues, rent, etc.) that lenders "usually" want to re-evaluate a property every so often.

By issuing notes that balloon in 1-5 years, lenders can re-underwrite a file to either refinance the property or call the note and make the borrower go elsewhere.

There is also a smaller issue that lenders like to diversify their portfolios. What is good today, may not be good down the road.

For example, hotels are now considered a bad bet and are very hard to finance due to falling values and high vacancies, but 5 years ago, they were in much better shape.

So, most lenders are trying to get most hotel loans off of their books. If lenders issued 10-30 year notes, they would be swimming in toxic paper. Well, more toxic paper.

Make sense?

NOTE: As Bryan eluded to, there are long term loans out there, but those are almost always loans that have a government guarantee (SBA, HUD, Fannie/Freddie, and USDA). That guarantee makes it possible for the lender to put their money out there for 20-40 years.

Some REITs, Insurance companies, and pension funds will also do long term loans, but those loans are for very experienced borrowers that usually have a portfolio of performing properties.