Cap rate of 17%, Debt Service of 1.46 why won't they lend me the money.. owners willing to carry 20%

Asking 699,900 for 32 units, rent is under market, 100% full and has been for 14 months.. with waiting list..
In Buying Property - Asked by Wally M. - Feb 16, 2010
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abid r.
Lender/Mortgage Broker
Bridgeport, CT

Possibly your credit or personal net worth/liquidity. If that's not it, then it has to do with the overall CRE environment in your particular area.

Feb 16, 2010
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John L.
Glendale Heights, IL

Where is the property? Maybe I can help.

Feb 17, 2010
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John T.
Oldsmar, FL

I was told a minimum of 1.5 debt ratio on any new loans from commercial institutions. Put more expenses under your business, such as your vehicle.

Feb 17, 2010
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greg b.
Wichita, KS

Give me a call. I can provide additional collateral to the investor to help guarantee the investment.
Greg Buss 316-371-3371 cell or 316-264-5200 office

Feb 17, 2010
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George P.
Long Beach, CA

I think something here is miscalculated. With a cap of 17, the dscr would automatically be higher than 1.46, unless you were extremely leveraged at a very high interest rate. For example, even a 75% LTV at 10% interest only, with a one million dollar property @ a 17 cap has a NOI of 170,000. A loan of $750,000 at 10% i.o. is $75,000/yr. 170,000/75,000 is a dscr of 2.26. A dscr of 1.46 for the 170,000 noi, means the payment is 116,438. That could service a loan of $1,164,000 at 10% i.o. Or a loan of 800,000 at 14.5%.

Feb 17, 2010
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Paul E. W.
Livingston, NJ

The issue may be how the cap rate was determined. In calculating the 17% cap, did you factor in a vacancy rate? At some point, all building incur vacants for a period of time. Also, is your NOI based on ACTUAL or PRO FORMA figures?

Feb 17, 2010
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Gregory G.
San Francisco, CA

Is this a section 8? Is there deferred maintenance? How much are you putting down?
Gregory Garver - Commercial Real Estate Broker
Broker License# 01716531

Feb 26, 2010
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T.J. L.
Los Gatos, CA

Without seeing the summary sheet of the deal the question is hard to answer. Hopefully you have about $70K of down payment or it'll look to the lenders that you have taken on little risk in the deal. 100% occupied is great, esp with a waiting list. 1.46 debt service sounds like a lot of deals my group has done for the last 18 months. Again, I'd need to fill out the summary sheet with you and submit it to my funding people. No up front fees to do this. They give funding results in about 3 days after submission. It's no risk to try. If my lenders do not lend, they tell you why, for free. Then you'll know what to do to get funding.

Mar 10, 2010
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