Financing a portfolio creatively - Posted by CRE Lurker

Posted by CRE Lurker on March 01, 2009 at 05:48:17:

Do you know anyone doing 70% LTV 1st loans in WA? I can even pledge
clear title to a fully loaded 2005 Yukon Denali as extra collateral.

Financing a portfolio creatively - Posted by CRE Lurker

Posted by CRE Lurker on February 27, 2009 at 03:22:23:

Quick scenario. Could use some of the great advice you are all so good at
giving. Just trying to add a few more brains to the storm I have going.

I’m looking at a portfolio of 12 properties, 15 units (a few duplexes in the
mix), and the owner is willing to finance at 6-6.5 %. The package is FMV of
roughly $1.9 MM. Owner’s equity is 60-70%. Rather than take a discount off
each property I am leaning towards paying full, or more than full price on 10
properties and asking for clear title to the other 2 properties at closing.

The purpose here is to generate cash to bring to closing in new 70% LTV
loans on those 2 properties. On the owner financed properties I will only
make payments on X units the first year, and a few more the second, and a
few more the third. This will provide great cash flow to knock down the loans
on the 2 cash creating properties, as well as make needed updates/
improvements. As a general contractor it should be easy to sell the value of
having the properties securing the debt be in much better shape and at
higher value at the cost to seller of temporarily reduced cash flow.

This is a comfortable, but burned out landlord. The units have nearly a 100%
occupancy rate due to a very high demand that will not change for solid
reasons. ( near something that demands housing and can’t go out of
business) Rents could be raised $50-75 at renewal of leases, or more with
updates. Great cash flow currently though.

Other than 12% and 5 points hard money, where could a 600 fico get me a
cheap 70% LTV with a 5 year ballon these days? I’m not sure which of the
properties I would use, but they range from $150K - $260K each FMV. I think
I am after about $350K.

Thanks for reading this, even if it was just to stir your own thoughts as I
usually do. For those of you offering insights, I will continue give back to the
community as thanks.