All Forum Posts by: Tim Swierczek

@Malik Elate how did this go for you? Did you purchase this one?

Hey @Mike Funk There are books written on each of those subjects. It's much too tough to get advice with that broad of a question. I would recommend meeting with some local investors and narrowing down what you are interested in. You will get much more clarity that way. I'm happy to meet up with you on Zoom.  PM me if interested. 

 @Jeff Poupore Banks are federally regulated by the FDIC and the office of the Comp Controller. Those regulators will not allow the bank to lower your LTV below a certain level. Typically that is 20% but in many cases, commercial lenders look for 25%. That being said, you can get creative with seller carrybacks and or cross-collateralization. My wife brokers these loans and I have personally purchased properties using both techniques. PM me if you want to talk and I can make a connection if you want.

I think your broker is accurate when it comes to the loan type that is commonly called a DSCR loan. DSCR loans are subprime loans that were re-branded and the name was stolen from the commercial portfolio loan industry. Those loans are expense and I do not recall them going below 7%. I'm sure there will be one person with a perfect scenario including an unreasonably low LTV that will disagree, but I don't believe your asking for what is the lowest they can go in a perfect situation, but rather what is a realistic rate you can expect in the future and 7% is a realistic low end.

That being said you can get significantly lower rates and fees on a commercial portfolio loan that uses a DSCR calculation along with looking at your global cash flow. These loans require your personal "DTI" to be in order, but to put it in perspective I see those rates at or around 7.49% on investment LLC loans with 20-25% down and 2% or less in orignation fees. A few years ago I locked into one of these loans for 5 years at 4%, also on an investment property loan that wrapped two properties and pulled cash out to 75%. This is not meant to brag. It's meant to illustrate that if you're personal income qualifies you will be able to beat the "DSCR" rates in the future.

Hey, @Daniel Vikhtinski There are a lot of factors in what makes for fair compensation. In larger transactions, the role you are suggesting is called a KP (Key Principle). Those deals are typically in the multi-million range and the loans are typically non-recourse which changes the profit at a lower percentage and it changes the risk as being non-recourse. Your experience as the operator is another factor in what the split would be.  I'd be willing to talk and possibly buy the deal from you. PM me if you're interested in chatting more.

Hi Zach, I've syndicated 6 assets.  PM me if you'd like to connect.

@Mason Vitalis @Bill B.'s reply covered all the bases. Feel free to call me if you want to discuss it any further.

Great post @Jeff Schemmel Lots of great points. The most underrated is a tenant who pays by cash. It's a huge red flag.

I do think this will have an impact. I think it will be messy at first and eventually, the industry will fall into a new normal. However, in the short term here are the issues I see:

Some buyers will try to save money by going to the listing agent.  This will lead to buyers with less representation, and irresponsible offers without the guidance of a buyer agent I can see agreed-upon prices exceeding the compatible sales and deals that have appraisal issues, and/or buyers who agree to terms they would not agree to if they had representation.

Other buyers will shop for representation based on price. This should be interesting as better agents who have more business will naturally keep the firm at higher commissions, leaving less experienced agents with more low-priced business.

Uninformed sellers will push back on including buyers commissions in the sales price resulting in less competition and lower prices on those homes.

Uninformed buyers will self-sort out of the market unless they meet a great agent to explain their options. This will force some out that would have been purchased under the previous system.

In the end, I don't see this as a major problem but I suspect it will cause more friction and decrease the overall satisfaction of both buyers and sellers for the next few months as we get used to working in this environment.

 Hi Eric,  welcome to BP Twin Cites. Reach out if you want to chat about investing.