All Forum Posts by: Zachary Dosch

Fellas -

I live, work, and invest in Bismarck so I will be able to answer any particular questions you might have.

Fire away!

We wouldn't make any money if there wasn't anything to worry about. Plan as best you can and whatever happens, happens.

Rich - Im available for adoption. Just throwing that out there. haha.

I have a feeling this will be a much bigger issue once the interest rates start going up and mortgage companies want to get out of these lower interest rate mortgages that are locked in for 30 years.

At least try to get below 80-75% LTV so if something happens, you can quickly refinance the loan. I have a property that is owner occupied financing but I did live in the property for over a year and I am around 65% LTV so if anything happened, I could quickly refinance if need be. Heck, if these interest rates continue at this trajectory, I might be refinancing again anyway.

The best route would to be upfront and honest with your mortgage banker even if your situation changes.

I have been coming across several companies that prefer to lease a building rather than own it for balance sheet purposes. In that case, they sign a triple net lease and all you do is front the down payment and its the easiest investment you will ever make.... if all the issues are addressed up front.

I may be a tad optimistic but I firmly believe that there is money to be made in any market - you just have to embrace what ever situation you are in. With principal reduction, I don't know how you can not make money in real estate over the long haul unless you absolutely have a lemon of a property or run into legal issues.

I think the 10 year term is the most interesting aspect. The ROE that the bank is earning can't be very high so I think you are getting a good deal.

Diversification of the types of units you own and staggering of leases, just like what Bill Gulley said.

Personally, I always try to be conservative with my cash reserves because running into a pinch would be a worst case scenario and if I find a new property I like, I want to be able to move quickly. I tend to buy newer properties with very little maintence in the first 5 years. Basically a way of hedging my bets.

This is where working with a good lender and bank is very important. You are most likely not going to have a lot of luck getting a mortgage from the big mortgage companies with out showing the necessary taxable income. If you know you are going to be purchasing a new home, you might want to save some of the expenses for the next year to show an increased amount of taxable income.

However, if we are talking about business loans, you can absolutely add back in at least all the depreciation. Commercial loan underwritting is a lot more logical and the loan structures are much more sound.

Personal mortgage underwritting is sloppy. Any company willing to lock in rates at 3.625% for 30 years is insane. No wonder the housing market crashed. Its a little better now than pre crash but not much. What's going to happen to all these companies when the rates go back up to 6%?

Im also an officer at my bank. I should be able to answer a majority of your questions if you guys have any.

Loc - letting them know that you are there if they want to foreclose on any properties is a good idea. It can definately give you an inside track on getting the first chance on some decent properties.

Also, depending on the size of the bank, ask if they are having any concentration issues with any asset classes or if there is any particular type of business they looking for. Don't push if he doesn't want to get into it as some CCOs are more liberal than others.

I would really try to go through your friend. I don't want to say ride his coat tails, but you don't have to reinvent the wheel, either.