Ed, please give some financial input - Posted by Bob

Posted by Ed Garcia on July 15, 2002 at 11:16:49:


Remember, each deal is different and will stand on it’s own merit, when you purchase a commercial property, you’re purchasing an income stream. There’s a deal, and then there’s a DEAL. Go to the success stories and look up an investor named John Butler. You will find that John ended up closing on a deal on a 24 unit apartment building with only 5% down that made him approximately $175,000 in equity when he closed.

The two main components in the deal was one, deal structuring, and two, the lender as well as John knew that the property had up-side potential in the deal based on market rents, and was worth the $175,000 more then what John paid for it.

I helped John get that deal down working with a bank I never stepped foot in. Originally John was TURNED DOWN by not one, but 3 different banks. The reasons were, He did not have enough experience in owning and managing a complex of that size, and the banks all required 30% down.

Had that deal been mine in my area, I know I could have 100% financed it.

Many times a deal speaks for it’s self. I’m, sure you’ve heard this said before, If you have a good deal, the money will come.

Ed Garcia

Ed, please give some financial input - Posted by Bob

Posted by Bob on July 14, 2002 at 18:50:15:

Ed, I know about creative financing on multy family houses. I would like to know instead of maybe finding those no money down deals, seller financing, etc. etc… Is the smartest way to purchase my first multy family property deal is to go to a broker and get approved for financing? Maybe a 90 percent loan and 10 percent down deal? What worries me is those big time investors who can get cash in a hurry and swoop down and take the deal away from me while I try to get financing. I want to be ready to go if I find a deal.And another question, do I use my equity in my first rental property to finance the second property? Or do I go back to the lender, find a deal , then finance the second and so on and so on??? Thank You for your input, I am new to this website and enjoy your experiences…Bob

Re: Ed, please give some financial input - Posted by alan

Posted by alan on July 16, 2002 at 20:26:25:


Although you could have been able to finance this deal at 100% (no down), I doubt that it would have still been a “deal” under present financial conditions.

ANYONE (almost) can get a 100% financing on an investment property. All it requires is 80% LTV @ 6.5-8.5% interest and 20% LTV @ 12-14%. The “problem” is that this financing structure would drive most to bankruptcy within a few payments of being missed. This type of “deal” would be an “aligator” for most investors.

So, my question is, how do you do “deals” in a red-hot So. Cal market where financing turns almost ANY deal into an aligator? Perhaps a nice purchase in Barstow or Death Valley should do the trick? Wait 100 years or so and the Los Angeles subarbs should be encroching! The problem: Unless there are significant changes to human longevity, I will be dead before my property in Death Valley appreciates.