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????

 

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...

 

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...

 

I agree with JScot.

what's the rate you are talking about here? private financing will probably be higher than bank rates.

 

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

 

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

M&T -

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.

 

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...

 

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.

 

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.

 

M&T - what are your current rates now? and what is your current LTV?

 

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.

 

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.

 

I would answer, but your hesitancy to answer makes me ask, why are you resistant to answering? It feels like you are hiding something.

 

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.

 

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

 

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)