Check out the Flyer for my latest funding Opportunity: Cleveland Apartment

What is the exit strategy?
— I am looking to finance the property with the funds for 12months so that I can do a 80% Loan-To-Value refinance with traditional lenders.  They are asking for 70% Loan to Purchase Price. It’s a 3-5 year value-add proposition so selling in a year is another exit strategy.

Are you under contract, if so when is the closing date?
— We are not under contract.  The Sellers will not accept a contract with-out proof of funds, or a bank Pre-Approval.  We have put our financials together for the bank pre-approval, and it is supposed to take up to 20 days to receive that notice.

How much are you planning to put down, are you able to put any other property as collateral?
— My goal with this property is to be in to it with no money down.  We have two properties in Las Vegas that have over 100k in equity.  We are capable of purchasing the property with cash but are looking to do this no money down.

What is hold back on conventional loan?
— It will be our first Commercial Loan. We have multiple Assets with the bank we are using, already, and were hoping that we could get better pricing and terms since we are a known quantity with them.  However according to members of my mastermind group, it’s fairly common that first time commercial loans take longer to get approved, as there is more financial vetting to be done.

What is causing the high CAP rate?
— According to the property manager I have used to scout out the Ohio Market, Cap Rates are 20-15% right now.  Ohio as part of the rust belt has been hard hit.  However Cleveland is quickly becoming an emerging market and cap rates will begin to fall.
— Also the current owner is currently in arrears of taxes for $24,000 on this property alone.  They own 5 other properties in the area, and over $150k is arrears in taxes.

What is the area and building rate at C? D?
The area is a C, and the Property is a C+ it is the only apartment for 6 city blocks.  By adding some landscaping to the property it can easily be pushed to a desirable B property.

Other News items about Cleveland Market:

An email I received from the property manager:

Hey Troy,
Nice talking to you yesterday. Most of the properties offered in the zip code are being offered at 10 to 22% cap rate. That particular area, although not a war zone is a less nice area of Cleveland and a higher risk. I wouldn’t want to own any building there that had a cap rate that was less than 20%.
Tax valuation is 242,200.
It sold in 2011 for 412,000.
If units are priced right and building / units are taken care of they should not have a problem quickly renting however

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