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REAL ESTATE Looking for private financing...

M&T

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Oct 2, 2007
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Hershey, Pa.
Wanted to see if there was any interest with some of the investors on this site. My wife and I have 7 properties. They cash flow well!!! But the problem is my financing package we have on them. I don't keep much profit at all. I know there are investors that hold notes, also there are people that like to invest but do not want to deal with tenants and phone calls. I don't mind paying for my financing but come on we need to also make a living.
Anyone know the best way to go about this and where to drum up some contacts?
Thanks in advance.
M&T...
 

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CarrieW

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If they cash flow well why cant/dont you keep alot of the profits. I thought cash flow was after any and all expenses. So wouldnt that stand to reason the cash flow is the profit????
 

JScott

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It sounds as if M&T is using the term "cash flow" when he actually means Net Operating Income (NOI). NOI is the income the property produces after all expenses, but before debt service is considered.

M&T - Some general suggestions/thoughts:

- How is your credit? If you have less than stellar credit, this can affect the rates you're getting on your loans. If you can improve your credit (see another thread on this topic that Diane Kennedy started), perhaps you can get your loan rates down.

- Do you have long amortization schedules on your loans? Can you get longer amortization schedules to reduce your monthly payments (assuming it still fits your plan)?

- Do you have all your loans through a single banking institution? By consolidating you loans to a single bank, perhaps you can get your rate reduced.

- Can you refinance any of your loans? Interest rates are dropping again, so it may be possible (even with points/fees) to get a better deal now than you currently have.

- Have you examined the income line items from your properties? Is there any way you can increase income (increase rents, charge for separate garage usage, add amenities that you can charge for, etc)?

- Likewise, have you examined the expense line items from your properties? Can you reduce expenses (appeal for lower property taxes, shop around for cheaper insurance, decrease utility bills, find cheaper contractors/maintenance personnel, etc)?

- Are you getting the maximum tax deductions on your properties? Decreasing taxes will increase your profit.

Just some thoughts...
 
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M&T

M&T

New Contributor
Oct 2, 2007
169
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23
Hershey, Pa.
I guess I could have been more clear. We are switching all properties over to electric heat- tenant paid. I have been improving the properties and increasing rents.So on and so on......
My question was is there anyone that is interested in making a profit on holding notes? OR can anyone direct me to someone that would be?
I do not want to deal with sub-prime mortgage lenders or banks. I would like to deal with private investors...
I feel we could do more deals and private lending is much less restrictive.
Thanks for the sugestions, but we are a little past that stage.
And yes they cash flow well. The point of my question was to keep MORE of the profits.
Thanks again ,
M&T...
 

JScott

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Just a guess, but you probably won't be able to get someone to hold an existing note for *less* than what you're getting from the bank...especially in today's market...

If you're trying to get new loans for additional investments, and hard money is your only option, you'll likely end up paying more as well.

If you're looking to structure a deal that's more than just a hard money loan, perhaps you could be more clear about what you're offering and what you're bringing to the table...
 

andviv

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I agree with JScot.

what's the rate you are talking about here? private financing will probably be higher than bank rates.
 
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M&T

M&T

New Contributor
Oct 2, 2007
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Hershey, Pa.
Total loan amount each month is $8,800.00 , some escrows are included some are not.Just an example-at 6% and no escrows I would pay $5,300.00 per month.Now that is just an example! So if I would go hard money of course the financing would be higher.So going back to my original post , there are people that would like to invest but do not want to deal with the head-aches. What I would offer is someone to refi-buy-hold whatever works best, and I would pay them on top of that.They get a check each month and I do the work. Why would I do that? I build equity, I make more profits, pay the property down faster and have the ability to do more.
Sound like a plan?
 

kurtyordy

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Aug 28, 2007
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I posted this in your greeting thread. Where are your props? Are all in Hershey, or are they spread out?
 

phlgirl

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J Scott - great questions/suggestions in your first response here. ++++

M&T -

Thanks for the sugestions, but we are a little past that stage.
What do you mean by this??

In our searches for private money, we have found that the best way to generate leads is to get the word out. Decide what type of return/equity you are going to offer (or at least where you are going to start the negotiation) and start telling people about the opportunity.

Call your CPAs, Attorneys, Bankers, Realtors, Financial Advisors, etc. Anyone you know who would likely have clients who might be interested in this type of thing.

That said, J Scott is right. I would think the chances of your finding someone willing to loan you money for 6-7% (when they can get almost the same in a money market) will be slim to none. You might do better if you also offer a portion of the equity on the back end, as a kicker. That might increase your chances of getting a lower rate up front.

Just a thought.
 

Adam

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Aug 12, 2007
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Minneapolis
M&T, I think everyone is confused here. I don't think that we quite understand what you are trying to accomplish?

As far as financing goes, banks and institutional lenders are always the cheapest source of money and typlically have the fewest convenants and restrictions once the deal is funded. The secondary market (the ability to securitize the notes) allows for the lower costs of funds. Bank funds are in the high 5's right now.

Generally speaking, private money/investors are the most expensive way to get money. Having a private investor with cost you a minimum of 20% or more (up to 50%+).

Give us a little more info and we can more than likely point you in the right direction...
 
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M&T

M&T

New Contributor
Oct 2, 2007
169
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23
Hershey, Pa.
Adam. Let me ask you a question. Do you own properties right now? Also, have you gotten financing recently? I'm just a bit curious.
Thanks M&T...
Kurt,
They are not in Hershey, but in the surounding areas.
Phlgirl,
Meaning we already cut back on expenses, fixed up and increased rent.Having said that we are ready to move on to the financing.Past the previous stage.
 

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Adam

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Aug 12, 2007
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M&T, I was trying to help you. Don't take it the wrong way.

To answer your question, yes. Both residential and commerical.

I have been extensively involved in financing, I am currently in the process of purchasing some class A office space, a small multi-fam complex and a strip mall. Hopefully these projects will be completed by the end of Q1. Thank you for your concern, I hope I was able to ease your curiosity.
 
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M&T

M&T

New Contributor
Oct 2, 2007
169
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23
Hershey, Pa.
Adam,I think you took my question the wrong way. I was asking if you currently own properties and if you have gotten financing lately because of the current market conditions. That's all. What I have run into at least in my area is people telling me it's nearly impossible to get financing for multi units. Also the more buildings we have the harder they say it is to get financing. The banks in central Pa. that I deal with are all sitting back watching CNN and not wanting to get into the real estate so called meltdown. At least that is my assertation.
That's why I was asking.
It seems that I developed a good track record with the sub-prime companies but if you want to deal with the local banks they are hard pressed for what they require.
The thing that fustrates me with my post is I asked if there was any investors or if someone could send me to some private lending people. You can read back and see what I have gotten. No offense to anyone that replied. I know some people would need more info to see if they were interested but I don't think that's what it is. I think some people want to post their opinions. Honestly I didn't ask for alot of that. I was just asking if anyone was interested or knew of someone that was.No offense to anyone but im trying to get to the yes person.I want to get "past the secretary and into the office" if you will.
Thanks for the help Adam, and please don't take it the wrong way.
One thing I would like to ask you now that I know your expertise is how would an investor like me move from multi units up with the big boys in commercial?Do you sell off what we have take equity and plunk it down or do you leverage that equity ?
Thank you ,
M&T...
 

phlgirl

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Aug 29, 2007
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Anyone know the best way to go about this and where to drum up some contacts?
Oh, my apologies...... I was attempting to answer this question. Having just been through a 6+ month seach for private money, I thought I might direct you to where we had success. We are paying less than 15%.

In response to your other question - No, thank you, but I do not currently have any interest in holding notes for your properties in Central, PA.

Best of luck to you.
 
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M&T

M&T

New Contributor
Oct 2, 2007
169
19
23
Hershey, Pa.
Randallg99,
Hello,
We are all over the place. The first mortgages are anywhere from 6% up to 9%. The second mortgages are killers one is as high as 15%. We got 1st and 2nd so as to not have PMI which I was told most people do.
LTV is 80%
That is just our investment properties.I didn't include any equity in our primary residence.
I have put alot of time and money into them. Our biggest building w just upgraded to 400 amps service and put electric heat in. Most are tenant paid heat but a few are still our responsibility.This area has not been hit reall bad as far as the downturn on the market. Prices are holding steady.
What part of Jersey ya from?I was just in Union City for a wedding. We went to the liberty House in Liberty park for the reception.
Thanks
M&T...
 

randallg99

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Aug 9, 2007
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how did you get stuck with a 15% rate? is this a hard money loan?

you say your LTV is at 80% right this very minute, but you may be at risk of a depleted appraisal value and not many banks will help.

if I were you, I would just call all of the current mortgage companies holding your notes now and tell them you want to combine the second notes into them and reduce the rate...

I am assuming these are single family homes (or at least smaller than 4-units) and your credit is better than 680 and you do not have any exotic mortgages with IO/Adjustables/etc although having these kinds may actually have worked into your favor since there is a sympathy built in that mortgage companies are responding to...

anyway, just call current banks/ mortgage companies, tell them the quandry, but most importantly, let them know its a win-win... the company you roll into will will collect more interest....

just spoke with my wells fargo rep and he can get <6%/30yr fixed/no pts for investor properties. (3 unit or smaller) Now is perfect opportunity to just call the banks and get it done.... we have a deal on the table currently for dozens of properties (about 30 units) and Wells Fargo is working aggressively to get them all financed.

going further- with prices being accepted at year 2000-2002 levels, and rates at low points, the real estate investor arena is probably as awesome as it gets. Appreciation will take some time, but getting paid via cash flow while you wait is the perfect strategy in my book.

lastly - I am from Hunterdon County, about 1h10m from the city. Some of my trucks would go pick up cargo from the ports near Union, but I personally have not been there in years.... I understand it has undergone some rejuvenation.


good luck - let us know how it goes and/or if you have questions going forward.
 
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M&T

M&T

New Contributor
Oct 2, 2007
169
19
23
Hershey, Pa.
Randallg99,
Thanks for the info! I will do that. The 15% was the last deal we did.Not hard money. But they changed the deal at the last minute. We bought all of these in one year. So by the last deal I was getting pretty crappy financing, because of all the action on our credit. We had a blanket mortgage all set to do with our bank but there was a total of $20,000 pre payment peenalties. So all we had to do was wait 6-8 months and they were gone.While we were waiting the market took a dump!!! Now banks will not touch a blanket for us.
They are all 4 unit except 2two that are 2 unit.I do have one interest only loan and two that are adjusting.We knew they were not the best deals at the time but like I said we fully intended to refi.
I hear a lot of people saying this mess is people's own fault. They do not take into consideration small investors like my wife and I. We didn't buy too much house like a lot of people did. We just want to make more on our investmens but because of a lot of aggressive lending and people getting in over their heads, it makes it harder for people like us to do what we want.
Thank you for the help, that is some good info for me to work on.
 

kurtyordy

Bronze Contributor
Aug 28, 2007
2,375
279
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PA
M&T-

Surrounding areas is quite vague. I only deal with local banks and have no problems. Where are your props located? This will be a very important piece to solving your financing problems. I am not looking for streets, just towns and are of the towns.

What rate are you looking to pay on a blanket loan? When did you buy these props? What cash reserves do you have?

"I hear a lot of people saying this mess is people's own fault. They do not take into consideration small investors like my wife and I. We didn't buy too much house like a lot of people did. We just want to make more on our investmens but because of a lot of aggressive lending and people getting in over their heads, it makes it harder for people like us to do what we want."- your current loan situation is noones fault but your own.
 
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M&T

M&T

New Contributor
Oct 2, 2007
169
19
23
Hershey, Pa.
Kurt,
Are you asking because you are interested?
 

kurtyordy

Bronze Contributor
Aug 28, 2007
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279
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42
PA
I would answer, but your hesitancy to answer makes me ask, why are you resistant to answering? It feels like you are hiding something.
 

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kurtyordy

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Aug 28, 2007
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wow, just reread everything. I missed that fact that you are looking to only pay 6% on the money borrowed.

You say you came here looking for a yes man. Instead we (others more than myself) spent the time to give you information and guidance, and you get frustrated.

A few things you need to remember-
1. this is the fastlane, most people here would spit on 6% return. That is peanuts.
2. most of us, if we found 6% money with as easy as or easier than a bank, we would jump all over it ourselves.
3. sometimes the answer we need is not the answer we were looking for.

Don't mean to sound cruel, but with the tone of some of your later posts, I thought I would help you out a bit.

To answer your original question, network in your local community for people looking to lend money. I put together a 6% finance deal private once, no money down, but the buyers were owner occupied. Investment props are a whole other ball of wax. A good place in our area to network would be the Sertoma club maybe, but walking in day one and asking for the loan will not get you what you want. Another resource is the deeds office in the county, look for private lenders. Another source, Harrisburg has some hard money lenders running around, but as others have stated, you better be ready to bend over and take it.
 
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M&T

M&T

New Contributor
Oct 2, 2007
169
19
23
Hershey, Pa.
Wo, wo , wo,
Hang on Kurt.If you re-read my original threads I said 6% is only an example!!! I am surely not looking for someone to plunk down almost a million bucks and only take a 6% cut. Holy cow. I used that as an example to show the differance that can be made each month just by a change in financing.I even said this is only an example....
Second, I'm fustrated because at fist all that I go wa a few people that totaly took this post in a different direction. Oh, believe me I have received some valued info, and I thanked those for it. also thanked you as well!! Look back you will see.I am not asking something for nothing.
Also I am hesitant to give out certain info cause this is for all to see. Even a few in central Pa. I am not about to give personal info on the net-sorry if that sounds old fashion but that is just not smart! That's why I asked you if yo are interested. Again looking for the yes man... If that would be you then I would go private e-mail or phone call.
Oh and I never got mad at the last post that ended with " your current loan situation is no ones fault but your own". That was a bit of a shot! If yo re-read the original post I am looking to make MORE money back . It's not a situation but a desire.
Look Kurt, I'm not trying to offend, but I think you are taking this the wrong way.
Again thank you for the info. I do thank everyone for their advice and time . I have said this numerous times and I mean it. There are a loy of fine people on this site. But sometimes there are others that like to give advice and we do not know if they are even qualified to give it. Not meaning you! I have found that where we get our advice is very important. Another reason why I said I was looking for a yes man. Cut to the chase. Tried to keep down on the opion posters that jump on a thread a hundred times before you realize they are not serious about a deal . sort of like" If yor not part of the solution, then maybe your part of the problem". Again not meaning anyone in particular.
Hope that clears up my position.
Still friends I hope?
M&T...
 

kurtyordy

Bronze Contributor
Aug 28, 2007
2,375
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PA
Sorry man, did not mean to offend. Some of your posts just had a bit of an edge to them.

To answer your question, no I am not interested. However, I am well connected in the area, and that is the reason behind my interest in what areas the props are, to see if I could give more clear direction. If you tell me N. RR St in Palmyra, I would say good luck with that. If you told me South side of Palmyra, then I may be able to give you direction. This goes for the other towns in the area as well, I used to sell real estate, so I know the good the bad and the ugly.

Again, I have never had a problem with local banks. Last month I got a investment prop LOC prime plus .25 with 96% LTV. The difference is, I have banked at this bank my whole life, and have relationships. A friend just sold a prop and the buyer financed through Jonestown Bank almost one million at around 7%, of course they had 20% down.

Banks and private lenders want either great credit, or great equity, or both. If you cannot deliver these, then you will pay a premium
 

randallg99

Bronze Contributor
Aug 9, 2007
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today's 75pt cut will put pressure on the long bonds.... you are really in a good position if you need to lock in a long term fixed rate (15-20-30yr)
 
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M&T

M&T

New Contributor
Oct 2, 2007
169
19
23
Hershey, Pa.
Hey Kurt,
Man you do know the area! I don't have any on railroad. HAHAHA That is funny.Which agency did you work for. We probably know each other or have at least crossed paths.Do you have props in Palmyra? Good town!
Some of my posts may have come off strong"sorry" but man look at some of the stuff ya run into. Not trying to hurt anyones feelings but what a run around.
Randallg is right on point with the rate cut. I did want to go private if I could. But now I think I'm just gonna go local and get the best deal I can.It is a good time.
Kurt do you still have your license-if I may ask? Do you live in the area?
hey thanks for the info. I used to live in Jonestown and did my banking there for years. Switched when I came to Palmyra. Any good people to deal with there these days?
Thanks again.
M&T....
 

kurtyordy

Bronze Contributor
Aug 28, 2007
2,375
279
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42
PA
I was with Brownstone. Dropped my license over 2 years ago, one of the best things I have ever done.

I have 2 props right now.

I would shop jonestown and fulton banks. Both have been good to me over the years.
 

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