All Forum Posts by: Ryan W.

I own three properties:

1. 4plex
2. SFR
3. Condo

These are all rental properties, fully-occupied, well managed for years, etc. The mortgages aren't at great rates, though, and I need to improve the financial situation of the properties.

These properties were all purchased and held in my name. I'm trying to refinance a couple of them and it's like pulling teeth because I'm self-employed and two of the mortgages are privately-held and everything gets lumped into my personal finances, etc.

I want to purchase more real estate over the next 18 months, though likely larger commercial multifamily deals, and I want to get away from the mess of personal real estate loans for investment purposes. How do I move these properties that I currently hold into an LLC and build credit in the LLC? I don't mind personally guaranteeing the loan, but it'd be nice if the primary borrower was the LLC, and I could personally have no real estate ownership, income, or expenses to muddy up my balance sheet and income statement, just the ownership in the holding LLC. Does this make sense?

Cornell,

That's pretty much the conclusion that I'm coming to. I'm working now on a plan to put together some private lenders and/or equity partners to fund deals. Would love to hear your extended thoughts :-)

Dick,

Thanks for the response. Got into real estate for several reasons:

1. My extended family owns hundreds of rental units in a small town in Indiana. Fifteen years ago, they were all working the graveyard shift at a potato chip factory (not kidding). Now they're millionaires. They're not brilliant business minds and haven't done anything amazing; just bought crummy-but-cashflowing rentals and kept on buying.

2. My dad is a general contractor and has owned his own small business for more than 10 years. He makes a decent living, but my parents have never bought real estate, not even the house they live in. They're getting close to 50 and have pretty much nothing to show for thirty years of very hard work.

3. My wife's dad is a very high ranking military officer. For the last thirty years, they've bought real estate in each of their new assignments and then kept them as rentals when they moved. They've worked hard to pay the properties off and now they've got a tremendous amount of equity and cashflow on which to retire. And it wasn't even that difficult for them.

All of these things have convinced me of several things:

1. Ownership and control of cashflowing assets is what separates the rich from the poor.

2. Real estate isn't rocket science; many ordinary people have achieved extraordinary wealth just by sticking to a basic plan over a long period of time.

3. Someone who started young and really put 100% of their effort and energy into this could *really* achieve extraordinary results. I'm not talking the 7-8 figure results that my extended family has achieved, but 9-10 figure results.

So that's why I'm in real estate :-)

Care to elaborate on what position one must be in to get financing? I think real estate is a great investment most of the time provided you can find the right deals and find a way to make them happen...more details would be helpful :-)

Good question :-)

I guess my main concern would be that the lending environment right now is making it really difficult to do deals unless you have a lot of available capital. I would also be concerned if the more experienced commercial folks on here felt that the market was unstable right now and it might be better to wait 6-12 months.

What are lenders out there offering for CLTV terms on multifamily 5+? Any chance at all of doing something like a 75/15/10 or 70/20/10?

Having an experienced mentor is a HUGE advantage. Soak up all you can and don't forget to pay it forward when you make it big and do the same for another young newbie :-)

California is rough...I feel your pain :-(

At least you're out there doing deals. It's true that you might be finding that they're not as profitable as you'd like, but the only way to learn past a certain point is to jump in and do it.

I kind of feel like most CA markets just aren't worth it, unless you're doing significant value adds through rehab, redevelopment, etc. I would love for someone to tell me I'm wrong and how it can be done, though :-)

Best of luck in your investments!

I've been doing real estate part-time over the last few years and I've got a few properties in Colorado Springs, CO that are doing well: 4plex, SFR, and a condo. I'm wanting to make the jump to commercial multifamily and just wondering if this is a great time, a horrible time, or somewhere in between.

I've got two primary problems right now: lack of good local opportunities and lack of liquid cash.

I live in San Francisco, so investing in the immediate area is out of the question. I can go a couple hours out and find better deals, but from what I've seen, nothing like what can be found in other parts of the country. Compensating for this somewhat is the fact that I'm a self-employed web developer, so I can do my work from anywhere. I'm more than willing to spend a month or two on the ground anywhere in the country finding and purchasing the right property, as well as flying out frequently to check up on it. Would love to hear people's thoughts on this, as well as what markets you'd recommend I look at.

The bigger problem is a lack of liquid cash. I've got decent equity in my three properties (around 20-25%), but with the current lending market, I don't see a way of accessing that other than selling, which I'd rather not do right now. Other than the real estate, I've got probably 20-25k that I could put into a deal. I feel like my options are therefore:

1. Try and find a lender and seller who I could put together a 70/20/10 deal with and buy something in the $200k range. Downsides seem to be that 200k doesn't buy a lot of apartment building in most parts of the country, and my sense is that more units would be more beneficial due to economies of scale, especially when out-of-state management is considered. This option also doesn't leave me with much cash in reserve. Is this even realistic?

2. Try and find something that's at a low enough price that I could pick it up with a hard money loan, rehab it, and then either sell or acquire permanent financing. Downsides here are the higher risk, higher costs of financing, and the limited supply of commercial multifamily properties that can be purchased and rehabbed for under 65% - 70% of ARV. Is this plan at all realistic?

3. Find an equity partner or two who will put up $50 - 100k for a property. Downsides include the usual downsides of partnerships :-) Also a bit unsure about approaching family and friends for this kind of deal in this economic climate. How to structure a deal like this? Split profits or preferred rate of return?

4. Wait until I have more cash. Ugh.

I would absolutely love to hear what anyone has to say about this kind of transition and how I can best plan and prepare. Thanks!

I'm a relative newbie investor with a small portfolio in Colorado Springs, CO (4plex, SFR, condo). I'm looking to make the jump to commercial multifamily, preferably something I can add significant value to over the next year or two. I'm a self-employed web developer, so I can go anywhere in the country in search of deals. Right now I'm looking at Texas, Colorado, and Ohio.

Enough rambling...looking forward to networking here :-)