Financing Help/Advice Need Lender - Posted by Robert _WV

Posted by Patrick S. Lawson on September 22, 2005 at 14:34:43:

What’s the sale price?

Financing Help/Advice Need Lender - Posted by Robert _WV

Posted by Robert _WV on September 22, 2005 at 13:08:42:

Just got turned down by local bank for not enough liquid asset or liquid downpayment. My score 723, wife 656. Any help would be great.

I read a while back “If the deal is right, I will find the money”,

I feel I have a great deal here, there is great NOI and good equity improvement. Below is the deal I proposed.

This proposal is to do a blanket loan for both properties in which the funds requested below will be placed on the apartments at 2024 -17th St
And the Terrace Hills Trailer Park will be used and held as collateral against the apartments.

I believe if the Bank will join in this venture, I can improve on the property and increase the cash flow of each property by 10%, excluding appreciation.

The proposal is as follows:

The property at 2024 ? 17th Street shows an appraisal in year 2001

Appraised 2001 - $215,000
A conservative 4% appreciation $249,000
Based on 12% CAP $247,000
Based on 10% CAP $296,000
Property value based at 75% $186,750 to $222,000
Gross Annual $51,700
NOI $29,600
DSCR 1.90
Loan Proposal $190,000

The above loan proposal purchases the 17th St Apts. along with the Terrace Hills Trailer Park, which will be held as collateral on apartments.
The figures based on the Trailer Park show the NOI as $25,367 based on averages of 2003-2004 expense years. The gross on this property is
$55,952 for the averages of 2003-2004 years.

17th St. Apartments Terrace Hills
Gross $51,700 Gross $55,952
10% Vac/Mgt $5,100 10% Vac/Mgt $5,595
Expenses $16,948 Expenses $24,990
NOI $29,600 NOI $25,367
DSCR 1.90 DSCR 3.51
12% CAP rate $247,000 12% CAP rate $211,391

As you can see by the above figures the Apartments can easily carry the loan on their own.

There are also needed repairs needed on one building of the apartments. I estimate this cost to be between $18,500 - $22,500. We are well qualified to do this work. On our first project we paid $15,000 and at last appraisal three years ago was worth $105,000. The second duplex we
Just completed we paid $27,000 and just appraised at $75,000.

Based upon the above requested amount of $190,000, We will at closing place $25,000 into an escrow account to be used to bring the building in question into rent ready status, which will bring the property back to previous appraised value + appreciation.

I believe this proposal is a win/win proposition.

If for any reason the bank would need to take property they would be holding a note for $190K on a property worth between $247K - $290K which could easily be sold and still retain a clear title of Terrace Hills

Re: Financing Help/Advice Need Lender - Posted by Ed Garcia

Posted by Ed Garcia on September 23, 2005 at 11:34:21:


The first thing I?d like to say is that when asking the bank to do a deal outside of their normal lending guidelines, you must have a relationship and track record.

Secondly, your deal is mediocre at best and looks good because you want to make it look good. Id say it?s OK, not a deal that I would lose any sleep over.

When you look at the $190,000 financed balance, and then see that you have to put $25,000 into it totaling $215,000. At a 12 cap which depending on the area, could be a good cap rate making the building valued at the $247.000 that you?ve suggested. You?re at an 87%LTV, what?s so great about that?

Although I?m not as excited about this deal as you are, here?s how to do it.

You either Lease Option or buy the property getting the seller to carry-back the purchase amount. You put your $25,000 into the property getting it rent ready as you put it. Get it up and running, and then you do a refi in the amount depending on your appraisal. Once you get it to cash flow, show the repair money you?ve put into it plus, you can then go back to the same bank or any bank and they will do it for you. Done right, season will not be an issue.

Ed Garcia