All Forum Posts by: Tim Swierczek

 I highly recommend @Brad Schaeppi I have used him for multiple different real estate-related legal matters.  

@Eric Hempler , I've done both Syndications, which entails an equity partnership, and debt which is what you are describing.  Getting a loan from individuals.  Many of the posters assumed you were offering equity, but that is clearly not what you are suggesting.  If you do offer equity, the rules and ballgame change, and you must have an SEC attorney and know the rules before you solicit funds.  

That being said, it's unlikely the terms you suggested will gain anything more than very casual interest. On small debt deals, I typically pay between 8-12%. At the low end of the rate range, I pay points at the high end no points. You may find a few low-level investors who would bite at 4-6% without points, but you're not going to get a scaleable figure. People that have the kind of money that will bring you to scale have options. Besides, you lose if they only invest once. I offer 8-12% because I want people who benefit from investing, lending, or partnering with me. Let's say I convince someone to loan me money at 6%, and then I find another deal. Am I likely to keep their interest? They can match or beat that with another investment that is safer or more liquid from a known company operator. Over the last three years, my partners and I have raised a little over seven million, offering COC returns of 7-8% and projected returns in the 15% plus range. The people I talk to would not even return my call at the terms you are suggesting.

To put it another way, you may raise enough for one or two very small deals, but you will not create a real business offering those terms. Your competition is not US Bank Savings accounts, it is people like me, other syndicators with a decade of experience, the stock market, cryptocurrencies, and other alternative investments. I'd be happy to discuss it over coffee or zoom.  PM me if that interests you.

 Hey Justin,

I apologize for not replying earlier.  For some reason, my BiggerPocket notifications stopped working, and I missed this mention. I generally do advocate for using equity to grow your portfolio.  Each situation is different, but it's typically better long term because the cost of financing is cheap, even at today's rates (Sept 16, 2022).  One issue you will find is that most lending programs do not recognize immediate equity.  For example, both Fannie Mae and Freddie Mac do not recognize increased equity for the first six months of ownership.  If you want a conventional loan, you must own the property for at least six months before they base your equity on an appraised value that exceeds your purchase price plus any documented repair costs. I have seen many alternative lenders offer shorter "seasoning periods" in the past, but since COVID started, I have seen those programs die, and most alternative lenders and loans want one year of seasoning, hard money and private money loans excluded.  I would recommend you shore up the properties and wait until you hit the six months of ownership mark before you get serious about a loan.

PM me if you care to chat more about it.

@Brian Sparks I have found immense value in networking at Meet-ups.  They can be hard to find since they are not visible unless an event is on the books.  I have a list with links to find them.  We are not allowed by BP to post them so please PM me and I'll send you the list.

@Jeff Schemmel Boom! Those are the numbers I like to see.  Way to go.  You will be an asset to house hackers for decades. 

@Brad Schaeppi can you add any insight on this topic for @Bowman Klinkenberg?

Hey @Gloria Stonelake great idea.  You could work for a Real Estate office, but if you want to learn a lot about investing I would try to get a job at the office of a property manager.  They will have 100's-1,000's transactions a month.  There is a lot to learn from a property manager that has a lot of properties.  Either would be a good step. 

@Jeff Schemmel great tips.

 Hey Ryan,

By gut check I mean, you should apply for a loan with the general parameters of the delay you're trying to do. For example, if it costs $400 to build plus $100K for the lot, ask to be pre-approved for a construction loan at those parameters. If for example, they require you have more down than the value of the land you need to know that, or if you have DTI issues and you don't qualify for a $400k build price you need to know that.