How to Refinance Your Multifamily Property!

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Ever wonder exactly how syndicators find off-market multifamily deals? Learn how on today’s Money Monday$!

VIDEO TRANSCRIPTION

00:00
money money mondays come to
00:03
money mondays yeah we have now we are
00:05
now past the election so now
00:07
we can start to focus on real estate
00:09
again so thank god
00:11
man that was a freaking buzzkill
00:14
but hey we’ll see we’ll we’ll see what
00:16
the next year holds hopefully a lot
00:18
better things than 2020. a lot more
00:20
acquisitions with boys
00:22
god willing hopefully a few more
00:24
stimuluses in there there’ll probably be
00:26
a couple more i think i i think you know
00:28
ultimately there are some people that
00:29
are that are
00:30
and needed that and you know i’m in
00:32
support of that to an extent
00:33
right you know you guys got to be smart
00:35
about it but anyway
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your hosts ben ferris disrupt tv studios
00:41
right here in houston texas
00:42
and once again this is money mondays
00:43
when do we do this man every monday 3
00:46
30 central so for those of you just
00:48
tuning in it is 3 30 central so we try
00:50
to keep it in 30 minutes everybody we
00:51
don’t want to waste everybody’s time we
00:53
want to get 15 20 minute presentation
00:54
and 10 minutes q a yeah we love the q a
00:56
we like it to be interactive
00:58
we want you guys to ask questions you
01:00
know make comments right
01:01
you know you could say hey i think
01:02
that’s bs or yeah i totally agree with
01:04
that right we want it to be interactive
01:06
we’d also like you guys help too give us
01:08
some stuff that you guys like to talk
01:09
about right
01:10
we don’t have to just talk about
01:11
multi-family yes that’s where uh you
01:13
know obviously our background is in real
01:14
estate
01:15
but we can talk about a lot of different
01:16
things right we talk about other real
01:18
estate
01:18
we can talk about being a business owner
01:20
or being an entrepreneur
01:21
so but today what’s today’s topic man
01:24
today’s topic we are talking about how
01:26
to refinance your multi-family property
01:29
why are we talking about that ben
01:30
because we just did one
01:32
this is about as fresh case study as
01:34
we’ve probably ever done
01:36
um so we closed on it not this last
01:38
friday but friday before that
01:40
right it’s a little bit over a week and
01:41
a half ago you know and it was a little
01:43
bit more of a challenge
01:45
than i think we were expecting you know
01:47
i think we we thought it was one of
01:48
those ones but we already own it so it’s
01:50
just gonna be real easy
01:51
but uh you know at the end of the day it
01:53
was like a full-blown acquisition
01:54
minus the equity rates so people just
01:56
need to understand that that’s kind of
01:57
how it is right don’t
01:59
expect that the refi is just going to
02:00
coast on through just because you own
02:02
the asset
02:03
they’re looking at every little thing
02:04
and so we’re going to get into the good
02:06
the bad and the ugly so
02:09
for people that don’t know this story
02:11
already that aren’t our investors or
02:13
maybe our close friend
02:14
family and friends what’s the name of
02:16
the property where was it at man
02:18
alamo oaks apartments 282 units five one
02:21
one northeast
02:22
i think that’s right i’m just totally
02:23
guessing it’s pretty good of san antonio
02:26
is it 1451 four no four five one one
02:30
it’s in northeast san antonio so for
02:33
people that don’t know maybe you’re out
02:34
of state right san antonio’s about two
02:36
and a half hours west of us
02:38
off of i-10 you know and so we get out
02:40
there pretty frequently and this is one
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of two assets that we own out in san
02:43
antonio we love the san antonio market
02:45
you know you have to you have to realize
02:47
that it’s different than all the other
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texas markets right it’s all got
02:50
everyone every one of them’s got
02:52
uniqueness and
02:53
good things going for it and challenges
02:55
you know this is like no other right but
02:57
san antonio
02:58
reason that i like it on a cost basis
03:00
you’re usually going to get
03:02
a lot better of an asset for a lot less
03:04
absolutely on a basis price points make
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sense
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nice growing economy you know that’s a
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place that we do like it’s
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it’s more of an operator’s market but
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hey that’s that’s the opportunity for us
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so what does that mean right you know
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you have to really be tight on the
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management side of this right you have
03:17
to watch your rent you have to watch
03:18
your expenses you have to be
03:20
this is not going to be one of those
03:20
deals you’re just going to coast into
03:22
appreciation it’s not going to be like
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an austin or a dfw deal
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where you’re hoping to sell it to the
03:26
next guy or gal for a lot more money
03:29
don’t get me wrong there’s appreciation
03:30
that’s happening in san antonio but you
03:32
got to force that right and you can only
03:33
do that through tight operations like
03:35
ferris mansion so let’s talk about some
03:37
of the numbers man
03:38
you know so what do we buy it at so
03:40
maybe a couple things so i mean
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we bought about 18 million yeah a little
03:44
over 18 million and but let’s talk about
03:46
what happened during closing right so on
03:47
this
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deal get into that right all right you
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know this is where ben and i
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unfortunately we probably have phds
03:53
and lending you know we’ve we’ve
03:55
experienced a lot we’ve seen a lot and
03:56
that makes us stronger and we make sure
03:58
not to make any
03:59
you know we know what to look for on the
04:00
future that’s right but essentially on
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this deal what ended up happening is
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right before closing we had to jump
04:05
shift and go to a bridge right yep
04:07
we were a week or two from closing and
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basically the lender made a mistake
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and they didn’t realize that you know
04:13
two three years prior previous ownership
04:15
didn’t do a great job at the property
04:16
right and so that really messed up
04:18
things and so we had to go pick
04:20
one who was on a watch list it was on a
04:22
fan so that’s what everybody needs to
04:23
understand right if you’re not looking
04:25
this stuff up right
04:26
you know that you could be on that that
04:28
black ball list that fanny or freddie
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might have of deals that
04:32
maybe they’re tired of maybe they don’t
04:33
like maybe they
04:35
something had happened in the past so
04:37
just a real quick story on what happened
04:38
this was a california group they owned a
04:40
billion in assets right so this was just
04:42
one of many
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it kind of been the forgotten deal you
04:45
know in a lot of ways they didn’t really
04:46
pay attention to it they didn’t really
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have a whole lot of assets in san
04:49
antonio
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and you know the the time that fannie
04:52
had come out
04:53
they’re already kind of operationally
04:55
challenged but they were also going
04:56
through a big rehab and the roofs were
04:58
being replaced and so the property just
04:59
looked horrible
05:00
whenever fannie came out there to do
05:02
their annual inspection which they do
05:03
then they’ll do it randomly
05:05
and so that plus the operational
05:07
challenges that they were having
05:08
got them put on this fanny watch list
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well unbeknownst to us
05:12
supposedly unbeknownst to the broker too
05:15
and i have to believe him take him as
05:16
word i don’t think he knew either
05:18
you know um the sellers did know but
05:20
they thought that the deal had been
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taken off the watch list once they had
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kind of turned the ship around
05:24
but it hadn’t if annie’s got a long long
05:26
memory right
05:28
and so and you know and ultimately and i
05:30
get it i get why fannie was concerned
05:32
right so we have to go do bridge pick up
05:34
the phone call every single investor
05:36
yeah tell them the deals changed luckily
05:38
pretty much everybody stayed in
05:39
yeah and we did bridge and that gave us
05:41
an opportunity to do this refi right
05:42
because really at the beginning we were
05:43
contemplating
05:44
do we just do agency do we do whatever
05:46
you find because we knew we got at a
05:47
good price point
05:47
yeah and so you know really this the
05:50
deal was
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buy the deal spend a year a year and a
05:53
half get the deal reposition
05:55
spruce up the income and do the refi
05:57
yeah and so ultimately we went through
05:58
that it was definitely there’s
05:59
challenges along the way
06:00
every deal has challenges but you know
06:02
being resilient working through them and
06:04
kind of you know i remember say eight
06:06
months ago it was like man
06:07
you know we felt so far away from doing
06:09
a refi covey and everything kind of
06:11
going on but
06:12
luckily he kind of worked through it
06:13
worked through it worked through it got
06:15
the property
06:15
95 occupied humming along doing really
06:18
well
06:18
now we’re 96.79 i mean and you know
06:22
getting we’ve pushed income
06:23
significantly and more importantly we’ve
06:24
pushed dna
06:25
yep right and so fast forward to now
06:28
we’ve reached a lot at the end of the
06:29
tunnel
06:29
and we got the refight on last week
06:31
right so you know with that
06:32
right during the refi basically there’s
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a step where they do an appraisal
06:36
right and you know we basically increase
06:38
the value of the property based on the
06:39
appraisal a
06:40
significant amount right 44 so you got
06:43
to do the math right 4 million on a
06:45
18 million purchase that’s more than
06:47
22.5
06:49
probably somewhere around there so
06:50
significant right so we did the refi
06:53
and that’s in 18 months right and in the
06:56
meantime there wasn’t a ton ton of
06:58
appreciation obviously texas is
06:59
appreciating right
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but that really wasn’t what happened
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here right we boosted the noi
07:04
through the operations right and so we
07:06
forced appreciation in this property
07:08
and on top of that we had put about a
07:10
900 000 into it yeah 100 000 into it so
07:13
delta’s about three you know so yeah so
07:14
you we had put some money into it we had
07:16
gotten the noi up and that’s
07:17
ultimately where we were able to get
07:19
that that uh that higher value
07:21
you know for the refinance but i want to
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point one thing out because before we
07:24
got all the way from there
07:25
just to get into the deal it was not
07:27
really a great bridge man we’ve had
07:28
better bridge products
07:29
i totally agree you know i think this
07:31
was a deal that kind of the this bridge
07:34
loan got kind of crammed down our
07:35
throats because of the timing of the
07:36
situation
07:37
and you know ultimately the term was
07:39
very very short it’s only 20 months
07:41
which is not great right two months i
07:44
think i’m out
07:45
i was 20. i don’t know whatever it’s
07:46
still not it’s still not great
07:48
once you really just as a rule of thumb
07:50
everybody should at least try to
07:52
negotiate three years with two one-year
07:54
extensions right yeah so we had the
07:55
extensions we did we did
07:57
that we could pay for but those aren’t
07:59
free they’re not free in this case it
08:01
would have cost us another 150k which
08:02
you do not get back it’s not like one of
08:04
those things that gets refunded to you
08:05
it’s just a fee
08:06
right so we were hell bent on getting
08:09
that noi up
08:10
and getting this thing refinanced before
08:12
what happened
08:13
before what happened before govind
08:15
before the election election sorry
08:17
that’s what you’re talking about
08:18
yes before the election no from you yeah
08:20
we want to get three fights drinking
08:21
some more of that cost well no you
08:22
confuse me because you said
08:23
increase in the income yeah you mean
08:24
just get the whole refund done yeah we
08:26
were before the election
08:27
we went to school and i wanted to see
08:28
what the ten year looks like so okay so
08:30
folks what was happening right is that
08:32
you know you have we were
08:33
we were humming along right covet hits
08:36
you know the world’s falling apart
08:38
we had this whole plan since the
08:39
beginning since we bought the thing
08:41
right that we were going to do this
08:42
in this fall right and we were still we
08:45
were still hell-bent on getting it done
08:47
so we threw some more money into it we
08:49
got all the operations you know
08:51
where it needed to be for the refinance
08:52
and we were able to kind of get it
08:53
across the finish line but
08:55
the the challenge really was was the
08:57
timing of the bridge
08:58
right you know and so you want to try to
09:00
see if you can get
09:02
a little bit longer of a term give you a
09:03
little bit more runway to increase the
09:04
value even more
09:05
right because ultimately i think it’s
09:06
worth even more than than when it
09:08
praised at
09:09
but you know for what we did in 18
09:11
months it still felt pretty good oh yeah
09:13
you know so what did we get on the
09:15
interest rate man
09:17
3.29 3.29
09:19
good interest rate you know and 12 year
09:22
note on a 3.29
09:24
you’re not going to get this type of
09:25
debt well maybe for the next few years
09:28
let’s see what the world looks like yeah
09:29
that’s right you know everybody just
09:30
kind of did it two years later you’re
09:31
never going to get this kind of
09:32
no but but seriously two years ago
09:34
though we weren’t right we were
09:35
underwriting it probably five and a
09:36
quarter
09:37
you know and so you know right now
09:39
you’re at 200 basis points lower than
09:41
what we were underwriting this deal at
09:42
right yep you know and so and you top
09:45
that off with a little bit of cap rate
09:46
compression
09:47
and you got a good you got a lot of good
09:49
deals right that are happening right now
09:51
and so you know but that was the only
09:53
thing so we’ll kind of go through the
09:54
whole process right so
09:55
ultimately it’s like an acquisition so
09:57
if for the folks that haven’t done one
09:58
yet
09:59
right it’s a lot of paperwork right
10:01
you’ve got to provide
10:02
your ben hates people i hate despise
10:04
paperwork i tell ben don’t say no to
10:06
things just because there’s there’s more
10:08
work involved then do
10:09
let’s do the thing that’s right i know
10:10
it sucks i know that this one’s tough
10:12
though because it’s just like it
10:14
you have to pull data in from all over
10:15
the place right so it keeps us it makes
10:17
us
10:17
organize that right you have to have
10:18
your personal financial statement so you
10:19
have to have all your stuff up to date
10:21
right
10:21
how much net worth and liquidity do you
10:23
have and and anybody that’s trying to do
10:25
deals should have this up to date at
10:26
least once
10:26
it’s easy just go ahead and keep it up
10:28
to date keep your bank statements fresh
10:30
so whenever you do go to buy a deal
10:32
refinance a deal you already have that
10:34
all cued up right he’s a lot more
10:35
organized about that stuff than i am
10:36
that’s why this stuff makes me upset
10:38
but on top of that we have to sign about
10:39
a hundred thousand different documents
10:41
right
10:41
and most of this stuff you cannot
10:43
docusign so
10:44
we try to docusign it and then you know
10:46
see if it flies most of the time you got
10:48
to print it out it has to be in blue ink
10:50
right you have to get a ton of stuff
10:51
notarized luckily sharon here at our
10:53
in our office is a notary so that made
10:55
things a little bit easier this time
10:57
but it’s funny it’s like on any other
10:58
acquisition the lender knows about this
11:00
thing for two months
11:01
and they wait until the last two weeks
11:03
to really push things through
11:04
right but ultimately the lender got it
11:06
done we got a great interest rate
11:08
yep you know um the one thing that i
11:10
want to point out though
11:12
is that refinances are a little bit
11:13
different than they might have been back
11:14
in the day
11:15
now post covet or during cover whatever
11:17
we want to call this stage of
11:19
that we’re in right you have to have
11:21
escrows now
11:22
and the escrows can be anywhere from
11:23
nine to twelve to be clear you’ve always
11:25
had to have other escrows but there’s a
11:27
new escrow right right right
11:28
new escrow right so you always have
11:29
escrows for for taxes and insurance
11:32
and you always have some kind of a
11:33
replacement reserve escrow right those
11:35
are always mandatory across any deal
11:37
no matter where we’re at the cycle right
11:39
now what they’re doing after covet hit
11:41
is that they’re making operators put 9
11:43
to 12 months worth of pni
11:46
in an escrow even if you’re an
11:47
interest-only loan even if you’re an
11:49
interesting pni
11:50
full pni and they’re doing that as a way
11:53
to essentially kind of mitigate their
11:54
own risk right whereas
11:56
maybe covet hits again we have a second
11:59
wave things get shut down
12:01
income drops you can’t cover your note
12:03
guess what you tap into that escrow
12:05
for people that have done a bridge
12:06
bridge loan it’s kind of like an
12:07
interest reserve account almost
12:09
right but you ultimately don’t want to
12:10
tap this right because this is money
12:12
that
12:12
we earned as a property and we want to
12:14
give that back to our investors right
12:15
yeah so hopefully in nine months we can
12:17
submit a request to get that money back
12:19
they’ll do a little bit of a stress test
12:21
ben thinks it’s 12.
12:22
everybody for the record ben thinks it’s
12:24
12. i think it’s luckily i read the loan
12:26
documents it clearly says nine
12:27
but then doesn’t believe the lender so
12:29
we’re gonna find out in nine or twelve
12:30
months we will find it is but
12:32
if it is and i’ll be pleasantly
12:33
surprised right now nine months we’ll
12:35
submit
12:36
to do the stress test they’re gonna do
12:37
this test make sure i think it’s like
12:38
1.3
12:39
one debt service coverage ratio or
12:41
something like that so financially you
12:43
know property needs to stay strong right
12:45
and we will get that chunk of money back
12:47
in nine months and then that’ll be
12:49
essentially one nice big distribution
12:51
out to our investors
12:52
yeah yeah no i mean so it’s a it’s a
12:54
good fair amount of money
12:56
that unfortunately is kind of parked on
12:57
the sideline it’s not some
12:58
interest-bearing account it’s not making
13:00
any money it’s what kind of stinks
13:02
right but i get why they’re doing it
13:04
right you know they had obviously there
13:05
was a lot of people that took
13:06
forbearance there’s a lot of challenges
13:08
that are that our industry and
13:09
commercial real estate in general had
13:10
over the last 12 months
13:12
and so fannie and freddie until further
13:14
notice are making everybody do this so
13:16
don’t think that
13:17
oh well i’m going to be able to just not
13:18
have to do that it’s mandatory across
13:20
all deals for fannie and freddie and
13:22
fannie and freddie both have different
13:23
rules about it um this is a fanny deal
13:26
so the rules that you know might apply
13:28
for us might be different for a freddy
13:29
so look into this
13:30
but that’s probably the biggest caveat
13:32
that i’d have to tell people to look
13:33
into whenever they’re going to do a
13:34
refinance is that you will have that
13:36
money wrapped up
13:36
yep no no totally agree so what else man
13:40
come on
13:40
and you have to pay your eidl loan if
13:42
you have one okay yep that’s another
13:44
thing right
13:44
you know actually that’s a really good
13:46
point right so on top of things that are
13:48
owed right
13:49
the sba you know obviously some folks
13:51
took out eidl loans
13:52
you know some people took out ppp right
13:54
ppp is not as
13:56
not a big deal right because most of the
13:57
time your property management company
13:58
would have done that on your behalf
14:00
and that’s what happened here you know
14:02
but we did take out an eidl loan
14:04
right one of the property management
14:06
companies that we had taken over from
14:08
had left the property and with a lot of
14:10
ap yeah
14:11
you know i mean so you get stuck kind of
14:13
like holding the bag
14:15
you know covet hits the world’s coming
14:17
to an end the sba has the eidl loans
14:20
so we took one out right but it’s a
14:21
30-year it’s a 30-year loan beautiful
14:23
loan beautiful i mean
14:24
i think the interest rate was like use
14:26
it to nuke the ap and get everything
14:27
caught up and cleaned up and the
14:29
property is killing it now but it’s just
14:31
you know that’s 500 000 we were going to
14:32
walk away with that closing and then we
14:35
need you guys to pay that now and so i
14:36
mean it’s it’s six and one and a half
14:37
dozen you’re gonna have to pay it one
14:39
way or the other folks right you know
14:41
it was you’re never gonna just be able
14:42
to ride that out for 30 years
14:44
i was going to write it up he was going
14:45
to write it out i wasn’t going to ride
14:46
it out you know so
14:47
we either got to pay it at closing when
14:49
we sell or
14:51
unfortunately we had to pay a little bit
14:52
earlier but it’s all good
14:54
right you know and we were able to bake
14:56
that in and we got it we got it across
14:57
the finish line we still have a chunk of
14:59
money
15:00
that our investors are going to get in
15:01
the next 9 to 12 months so
15:03
you know that’s kind of one of our deals
15:05
it’s really our it’s our first refinance
15:07
yeah
15:07
yeah you finally got a refund right we
15:09
tend to want to sell instead of refi
15:12
we also have a deal right now that we we
15:13
contemplated refined but i think we will
15:15
sell
15:15
right hopefully yeah i’m hoping so that
15:18
deal is literally
15:19
hopefully we’ll sign the psa in the next
15:21
week or so yeah yeah so i mean
15:23
most of the time we’re gonna we’re gonna
15:24
take the money and you know go reinvest
15:26
that into another asset or maybe three
15:28
right but in this case this is a nice
15:30
big deal in a market that we love
15:32
and then we think the deal has a lot
15:33
it’s gone away that’s a lot of potential
15:35
for our investors we felt like was the
15:36
right decision right the deals got more
15:38
runway
15:38
and now we kind of passed the push at
15:41
the beginning and now it’s just kind of
15:42
you know fine-tuning yeah
15:44
yeah and so you know i mean we had
15:45
challenges like every other deal right
15:47
the rehab you know we had almost like i
15:49
said about 900k that we had to do so we
15:51
did
15:51
about 105 um unit upgrades and this was
15:55
full blown
15:56
flooring paint appliances backsplash
15:59
you know the whole shebang clay night
16:01
cabinets luckily not cabinets we’ve had
16:03
some deals
16:06
and really they take that into
16:07
consideration right a lot of what the
16:08
lender is looking for is
16:10
you know um how are you increasing the
16:12
value right
16:13
because you could say well i spent five
16:15
hundred thousand dollars on roofs
16:17
that’s not necessarily increasing the
16:18
value they just expect that to be done
16:20
and to be looking good and to be
16:22
functional right just like hvacs that’s
16:24
not necessarily increasing value
16:26
now if you’re adding amenities if you
16:28
are
16:29
upgrading units that are therefore going
16:31
to drive rental revenue
16:33
the the lenders are going to look at
16:34
that very very closely but i was gonna
16:36
ask you man what was the other thing
16:37
that they’re really paying attention to
16:39
because of coven just cash collections i
16:41
mean well cash collections and
16:43
delinquency folks
16:44
you know that’s important right you have
16:46
to understand
16:48
that right now during covet the lenders
16:50
are going to be looking at
16:52
every month week to week how much are
16:54
you collecting how much delinquency do
16:55
you have right
16:56
they’re really really paying attention
16:57
to this because what people aren’t
16:59
really telling you
17:00
is that there are there are some folks
17:02
that aren’t paying the rent
17:04
and unfortunately because of the
17:05
eviction moratoriums that used to be our
17:07
checks and balances as operators right
17:09
somebody doesn’t pay the rent
17:10
they’re going to get evicted now if
17:12
somebody pays their rent we can’t
17:14
necessarily a victim
17:15
it doesn’t mean that we won’t be able to
17:16
evict them later on but
17:18
currently in a lot of jurisdictions san
17:20
antonio included
17:22
you can’t evict anybody and even when
17:24
you were able to there’s going to be a
17:25
backlog for the next probably three to
17:27
six months
17:28
yeah so it’s a little bit of a fine it’s
17:30
a little bit of a massaging process
17:31
yeah you know so you just need to be
17:33
aware of that that they’re going to be
17:34
looking at that when you go to a
17:35
refinance
17:36
yeah so those are tuning in right monday
17:38
mondays either every monday 3 30 central
17:40
kind of usually it’s 30 minutes all in
17:42
20 minutes ish of present presentations
17:45
10 minutes of q a
17:46
yeah so if anyone has any questions
17:47
please go ahead and leave the questions
17:49
we’re happy to talk to them we’re pretty
17:50
candid guys
17:51
pretty open guys uh but kind of running
17:53
through a few of them so chat
17:54
hello hello chad iggy hello hello long
17:57
time no talking
17:59
let’s see savion says really to stop
18:01
owners operators from going into
18:02
forbearance a lot of properties went
18:03
into forbearance during covet
18:05
yeah i mean i think part of it is
18:06
apparently they did i mean we didn’t
18:08
but i mean i think that there was a lot
18:09
of people that hopped on that bandwagon
18:11
maybe prematurely because you know
18:15
i think back in march and april nobody
18:16
knew how bad it was going to be or how
18:17
long it was going to last right i think
18:19
everybody thought that the world was
18:20
coming to an end and us
18:21
we were concerned too but we ultimately
18:23
looked at the forbearance agreements
18:25
and decided that the strings that were
18:27
attached to that were just not worth it
18:29
yeah i mean you know and in this case
18:30
he’s doing fine it is
18:32
forbearance i guess some maybe there’s
18:34
two schools up some
18:35
properties were severely already sucking
18:38
wind before kovid yeah i think that’s
18:40
probably i think those guys
18:41
went for forbearance because it was the
18:42
only out issue then you had other
18:44
properties where you just don’t know
18:46
what the future holds and maybe you’re
18:47
humming along but if forbearance has no
18:49
stipulations hey why not right
18:50
but then kind of once you dig in you
18:52
realize actually it doesn’t make sense
18:53
unless you actually need it
18:54
and the one thing to point out too folks
18:56
is you know on a forbearance agreement
18:58
that was all very franny or fannie and
19:00
freddie driven right
19:01
not all the bridge lenders offered
19:03
something like that
19:04
so rock what are you doing back there am
19:06
i even breaking stuff come on
19:09
don’t worry about it man don’t worry
19:10
about it so
19:12
um so mainly it was a fanny and freddie
19:14
because don’t worry about it it’s not
19:15
your phone
19:17
you got the autobox on it you’re good
19:18
you’re good so
19:20
not all the bridge lenders including the
19:22
bridge lender that we had even offered
19:23
forbearance
19:24
but what we’re talking about is we’ve
19:25
seen it we saw it on other deals i
19:27
wanted to review it
19:28
but you have to what you have to realize
19:29
about forbearance is that you’re one
19:31
step away from being a default of your
19:32
loan yep
19:33
you blow that forbearance agreement
19:34
you’re screwed and so people need to
19:36
take that stuff very very seriously and
19:38
don’t just
19:39
rush into some kind of an agreement like
19:40
that you know realize the ramifications
19:42
that if
19:43
things get worse you’re probably going
19:45
to lose the property
19:46
and ultimately also when you do do that
19:49
and you go to another acquisition or you
19:51
go to another refinance and they’ve
19:52
noticed that you’ve taken forbearance on
19:54
just one one deal maybe you have 10
19:55
deals
19:56
you’re taking four merits on one it will
19:58
be a black mark against you
20:00
on acquisitions and on refinances so you
20:02
need to take that very very seriously
20:04
so but good point yeah there definitely
20:05
was plenty of those
20:07
so what else we got so let’s see so
20:09
sargon continues to say
20:11
makes sense for lenders to find a way to
20:13
cover themselves and be able to
20:15
keep the note performing the reason
20:17
being because those are federal loans is
20:19
that why you have to pay back
20:21
although no so i mean it’s part of any
20:23
loan agreement there can’t be any loans
20:25
now that said
20:26
the thing we’re trying to argue is that
20:27
the loan is not securitized by the real
20:29
estate
20:30
it’s not it’s securities they’re legal
20:33
just was pretty stupid yeah i mean it
20:35
was it was securitized by us and disrupt
20:37
equity and i i
20:38
you probably could have made a case but
20:40
you’re also rushing against the clock
20:42
too right you know you
20:43
do you really want to get this thing
20:44
jammed up in some kind of legal
20:46
proceeding
20:46
trying to fight fannie mae and you know
20:49
ultimately after you know kind of
20:50
talking with our legal counsel he’s just
20:52
like hey this is what i’m hearing
20:54
that they’re pretty much forcing
20:55
everybody to do this and so just
20:56
everybody just needs to realize that
20:57
because we do
20:58
we know a lot of operators that did take
21:00
out one you know so if you go to
21:02
refinance
21:02
obviously you’re gonna have to pay that
21:04
off right you know
21:06
so but yeah all right let’s see
21:09
we’ve got more questions kathy says love
21:11
watching you guys thank you kathy
21:12
appreciate it yeah thank you savion says
21:14
how soon should you start discussing
21:16
refinance with your laundry
21:17
good question sooner than later i
21:20
remember whenever we started it i was
21:21
kind of telling we should probably start
21:22
it now and we really
21:23
hadn’t realized that we were kind of
21:25
already there right it was good
21:26
you start to realize like we knew when
21:28
we wanted to do it but it takes time to
21:30
ramp up get going
21:31
it doesn’t get going it does right
21:32
especially if you’re kind of if you’re
21:34
repositioning you’re rehabbing the
21:35
property right
21:36
it’s it’s kind of maybe just having
21:37
those discussions pretty early on with
21:38
your lender saying
21:39
where do i need to be to exit this deal
21:41
right and they’ll give you guidance
21:43
right the bridge lenders don’t want to
21:44
get stuck with your deal
21:45
trust us folks so they’re they’re in
21:47
they’re trying to position that deal
21:50
in the best possible light so they can
21:51
so you can refinance out and pay off
21:53
their
21:54
the note that they have on it right so
21:56
we did that
21:57
and you know the luckily the bridge
21:59
lender that we used was also the
22:00
permanent debt lender so
22:02
it was they were incentivized obviously
22:03
to get it done too
22:05
so they got their best guy on it and um
22:07
you know and it was actually ultimately
22:09
it was it wasn’t too bad of a process i
22:11
think we were just
22:12
it was interesting because once again
22:14
you don’t realize that it’s going to be
22:15
almost like an acquisition minus the
22:17
equity raise
22:18
and we didn’t realize we’re going to
22:19
have to have all this paperwork done and
22:21
all these things right you know but hey
22:22
you live and learn nothing got screwed
22:25
up and we got it across the finish line
22:27
and
22:27
want to give a shout out to anton matli
22:29
peak financing
22:30
he did a great job kind of positioning
22:32
he’s a best guy in the business when it
22:34
comes to
22:34
under promising and over delivering you
22:36
know and so you know he definitely got
22:38
this one across the finish line with our
22:39
with our lender and we appreciate your
22:40
help
22:41
absolutely so let’s see who else has
22:44
questions so for those of you tuning in
22:46
monday mondays is 3
22:48
30 central yep right usually about 20
22:50
minutes presentation 10 minutes or so
22:52
q a q a is the best part because i think
22:54
it lets people ask what everything
22:55
absolutely
22:55
it doesn’t have to be about refinance
22:57
maybe that’s one other thing you guys
22:58
can ask us anything you want to know
22:59
yeah right we’re pretty ganded guys
23:01
happy to talk about anything that’s
23:02
interesting so
23:03
let’s see sesame on says great info guys
23:07
thank you you’re welcome so thank you
23:09
for uh being a trooper and kind of
23:11
always catching the show yeah for those
23:15
of you that don’t catch the show
23:15
consistently should put it on your
23:16
calendar it’s one of the best things to
23:18
do at 3 30 central
23:19
uh you know on a monday afternoon he
23:22
wants to get bombed on emails all day
23:23
come on
23:24
i mean we try to keep it light and
23:25
bright folks you know as you guys can
23:27
probably tell right we’re very very
23:28
candid we’re open we have nothing to
23:30
hide you know so we’re just kind of
23:31
shooting it straight with you guys about
23:32
the things that we’ve done and seen and
23:34
heard but in the meantime if you don’t
23:35
get any more questions
23:36
what’s coming up next week man well it’s
23:37
coming up all right underwrite and
23:39
multi-family deal with us whoa whoa whoa
23:41
whoa whoa whoa whoa
23:42
who came up with this i’m gonna get the
23:44
let’s get the whiteboard in here and
23:45
just have a roll we might take it we’ll
23:46
take the day off
23:47
rock all right you’re up buddy you’re
23:48
gonna you’re gonna you’re gonna guest
23:50
host some of this
23:50
all right so we are gonna we’ll we’ll
23:52
take a deal so we had one question come
23:54
in as well persona i said do you guys do
23:56
your own property management
23:58
yes we do have our own management
23:59
company and it also does third party
24:01
management as well
24:02
so again for us it’s been property
24:04
management we thought was a dated
24:05
industry we’ve been kind of rethinking
24:06
that business what’s it called
24:07
disrupt management there we go we’re
24:09
very creative on the name we we just
24:11
disrupted it so we care a lot about it
24:14
just like this
24:16
it’s critical so that business has been
24:18
growing really word of mouth
24:19
and so yeah we do have our own uh
24:22
property management company and that’s
24:24
been that’s been huge and i’m actually
24:26
basically
24:26
on our deal yeah i was gonna say i’m
24:28
glad that we did this um
24:30
before cobid because if covet had
24:32
happened and we were still under with
24:34
the other management company that was
24:35
already screwing us over
24:36
you know it would have been probably
24:37
pretty bad you know so we were able to
24:40
be more nimble be more creative be more
24:42
flexible in how we approached it
24:43
and taking care of our residents and
24:45
working with them and ultimately keeping
24:47
collections up
24:48
you know that’s that’s where a lot of
24:49
people got jammed up during covid
24:51
where they just had a you know
24:52
one-size-fits-all approach
24:54
to collections and running property
24:56
management companies but over the last
24:57
six months eight months
24:58
folks it has been a different a
25:00
different business yep
25:01
you know and you have to be nimble so
25:03
yeah we’re happy that we were able to
25:05
make that change
25:06
then he asked for contact info i’m going
25:07
to just put my contact information in
25:09
the chat so you can grab it from there
25:11
but absolutely with that said
25:14
any other questions any more question
25:19
and yeah go ahead and send me an email
25:20
and i’m happy to kind of talk through it
25:22
so what else am i missing man i know
25:23
i went through i went through a little
25:25
bit of it i know this is not you can’t
25:26
do a hundred percent deep
25:28
dive yeah these things in 30 minutes
25:30
folks but you know
25:31
um we tried to give you the highlights
25:32
some of the challenges that we saw
25:34
you know um any other big things about
25:36
the refi process no i mean
25:39
it’s the same one you still have to
25:41
close that we can close the other so our
25:43
bridge lender did
25:44
something i was thinking telling the
25:44
team actually the bridge lender made us
25:46
use their bank
25:47
and their bank account but now we can
25:48
get rid of that and use ours and use our
25:50
process and our workforce yeah and i
25:52
talked i talked to jackie about that so
25:53
we’re getting that squared away but yeah
25:54
i mean
25:55
think of it like this folks it is an
25:56
acquisition minus the equity rate you
25:58
still need to have title company to
26:00
close the deal you still need to have
26:01
your lawyer
26:02
yeah you know there’s a lot not just
26:04
reviewing documents there’s a lot of
26:05
work that your lawyer has to do
26:07
you know it’s still good to have a
26:08
mortgage broker do these it’s all about
26:10
positioning with these right you want to
26:12
max out your loan proceeds or
26:13
if maybe you’re not a max leverage type
26:15
person you want to get the best interest
26:16
rate or maybe get some i o in there
26:18
you need to have an advocate there right
26:20
the lender is not your best friend
26:21
they’ll they’ll make it sound like it is
26:23
right but they’re really not
26:25
right they’re just trying to get the
26:26
best deal from their side right we like
26:28
lenders don’t get me wrong
26:29
but you need an advocate there that’s
26:30
why we use peak financing you know but
26:32
across the board right it’s the same
26:34
thing you know you’re just not raising
26:35
money
26:36
you know what’s up all right so with
26:38
that said it is coming up on four
26:40
o’clock so if anyone has any more
26:41
questions go ahead and leave them really
26:43
quickly
26:43
otherwise we’re about to call it a wrap
26:45
and again reminder for those of you
26:47
watching and we do this every monday 3
26:48
30 central
26:50
check out our facebook page linkedin or
26:51
whatever you want we’re there
26:53
what’s the topic for next week again ben
26:55
we’re underwriting a deal underwriting a
26:57
deal so no no so we’ll kind of go
26:58
soup to nuts as much as we can in a 30
27:00
minute slot yeah
27:01
i’ll push this guy off and i’ll bring
27:02
the other bell bald guy on here that has
27:04
a math degree and we can get this done
27:06
so hey hey what’s wrong man i’m not
27:09
allowed to be here
27:10
i’ll sit on the side all right no but
27:12
yeah we’ll kind of
27:13
we’ll have fun with it folks we’re
27:15
trying to educate everybody that’s the
27:16
point of this whole thing it’s not up
27:17
here for just
27:18
us to draw you know we’re trying to just
27:20
let people do the business right and
27:21
help people do that so
27:23
you know and we also encourage you if
27:24
you guys have topics that you want to
27:25
hear once again
27:26
let us know you know we’re just kind of
27:28
thinking through things that think
27:30
people might like yeah absolutely all
27:32
right all right with that said let’s
27:33
call it a wrap then
27:34
go ahead and sign it all very much and
27:37
we’ll see you guys again next week
27:39
later

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