Someone I Need Help

has done this with loan please tell me how you did it. Thanks

types of hard money lenders out there right now. One is the type that will pay X% of the purchase price today; another will pay X% of the appraised value today; and the last will pay X% of the ARV. You need to determine which type of HML you have. If it is the former, you have a problem. If it is the second or third, it should work out fine.

So far the ones I have found pay 65-70% of 2 and 3. Where I am confused is, am I suposed to submit my loan for the full value of the property and let them say they will only pay the 65-70% or am I supposed to ask for the 65-70% right from the beggining? If this helps it's for commercial properties.

Ok....sounds as if the only workable structure would be going with the #2 HML. Therefore, you will need to work off of the 1.4M value now and ask for 65 to 70% from the beginning. HML #3 is going to work off the purchase price.(Which will not create a no cash out of pocket scenario for you.)However, keep in mind some hard money lenders ask for the borrower to have some skin in the game for risk purposes. They will definitely tell you this if they notice it's no money coming out of your pocket.

Anytime you have structure issues email me. I've been in the industry over 20 years. Ive originated, invested, structured, sold as a licensed realtor, held private notes, structured private notes, and am currently an mortgage underwriter.(I've underwritten hard money deals as well).

Good Luck!
ShayShay

I appreciate the help. One thing I have found a lot lately, is lots of people say they are willing to do the loan but want the underwriting fees before closing. One lender said beware of anyone asking for more than 1/2% upfront because the chances are the loan won't close, then you are out thousands.

In a case like that, would it be better if they want 12k in underwriting fees upfront to ask them to take it out at closing, then put that amount into the escrow account?

Anne,

This seems like a good deal and I think some other options should looked at other than HML.

Commercial properties can be funded upon their own support with no money down and push payments out 30-60-90 days would enable you to pocket some real cash if you will close on the 3rd of the month. Pro-rate rents, deposits in your pocket and not have 1st payment for 30,60 90,days. You would leave the closing with a big check. Do the math.

How can I do that with bad credit or no money? The person I got the property from had an actual underwriter look at the property to get his opinion of the value of the property and he said 1.2-1.4M easily.
I pulled the tax value, it only showed 2010, but it said 1,613,900.00

Remember you purchase a commercial property based on how it is actually performing. If an under writer tells you the property is worth 1.4 million and it's NOI is $35,000 per year is it worth 1.4 million? What is the actual cap rate? Cash on cash return? Deferred maintenance? How did you find this property,(pocket listing hopefully)) where is your competition at $875,000 if it is worth $1.4 million?

Michael Mangham
MD Home Acquisitions LLC

Cap rate is 10 or 10.5%
GOI annual is $302,244/yr
NOI is $87,940/yr
the rents are conservative - 650/month 2 bed and 499/month 1 bed. Most tenants are section 8, some aren't and have higher rents.

Repairs
Mostly cosmetic stuff, the most major repair needed is rust proofing on the stairs and new paint.
20 units are vacant, need painting, carpet, stoves and refrigerators. Can do the painting, stoves and refrigerators ourselves - just need someone to install the carpets.

I got the property from an acquaintance that works in a mortgage company that is a wholesaler too. The purchase price is actually 850,000 plus 3%

Hi Anee - just curious if you got this deal to work out or any update? Wishing you good luck!

- Tom

Sorry "Anne", not "Anee"!

We are getting ready to close, I am JVing with someone who was buying the property anyway. His loan had fallen through - Don't use A-Z funding, they didn't show up at closing.
A friend of his got their bank to do the loan as a favor, and I brought in the rest of the "skin in the game" he needed to close the loan, thanks to my funding partner. We will be closing today or tomorrow - the loan will be deposited in today, but the paperwork end will take a few days for escrow to close completely.
His company will get paid 50% of net income, then we will split the other 50%. Not bad, I get to make money and own half the building and not have to do much really. My funding partner is going to make 25% for his help.

in getting this property under contract and closed. On to the next phase where you add value and flip for profit.

Hey, this is WONDERFUL to hear! You are on your way to becoming a millionaire!

PS, I did get your email, I will be emailing your a little later this evening. Things have been very busy non stop since Friday, but I did not forget about you.

This property we will be holding for at least 5 years, then if it seems like the right time and the numbers are really good we will be selling, otherwise hold a little longer. We also have it so if one wants to sell but not the other then that one can buy out the other half.

I have 2 more I am working on - 1 is a sweet property. The rent vacancy average in this area is 2.6%. The value today is 4.6M, but the appraisal last year was actually 3.6M. I am getting it for 2.4, the seller is carrying 30% ( he was going to carry 70 but I told him that the lender was going to want first so he agreed to carry the 30%. The lender is actually going to do the loan for 2M and he is carrying 720k. Once I have completed the acquisition I will refinance. This property is already stable and was recently completely rehabbed making it like a new building. The seller could have kept it, he didn't mind. He got it for a good deal because the previous owner was pocketing all the money through hidden accounts and not paying any of the bills for the property.
He bought it, rehabbed it, and rented it out. He is a conventional lender. I got it from his friend. No one really knew it was for sale. After debt service and all the operating costs I should have about 7k in net income. There is a repair account with funds in it as well.

The other one hit a bump for the moment, we have to do a new purchase agreement because we went out of contract. On the other hand I did bid a tad bit too high. But I did throw the property into short sale.

I have been swamped getting all these worked out. My goal is for my company to have a cash flow of $700,000 a year within a 5 yr period, but I would like to do it as quickly as possible. One thing I still need to work on though is to slow down and look over all the documents and income statements and stuff slowly, and not just listen to what a realtor says.

on getting it all put together.

ALWAYS read the contracts-people will SLIP something in on you.