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Getbig Main Boards => General Topics => Topic started by: IroNat on July 17, 2020, 04:10:32 PM
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https://www.marketwatch.com/story/the-open-secret-in-commercial-real-estate-is-that-owners-regularly-take-cash-out-of-properties-heres-a-look-at-how-much-2020-07-17?mod=home-page
"There is nothing to ‘stop the hammer from coming down,’ says one lender"
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I recently had my real estate agent try and talk me into doing this with one of my properties. I was looking at building a new facility closer to my house, and asked him to start looking. I had planned on renting out where I am now to make a little bit of money monthly. He told me he had someone willing to rent for $8,000 month for my building in January 2021. He asked how much I owed on that property. It was about $493,000 then and what he said was, I should get the five year lease at $8k monthly, then refinance it. He said it would be worth between 1.1-1.2 million at that rate. So he said do that, you’ll have the equity in it to meet the 20% and then take the rest as a tax free distribution which would be over $300k after paying off the original loan. I could be mixing it up a bit there, but that was the gist of it. Anyway, I told him my monthly payment would almost triple, putting it close to the $8k I was getting. What would I do if the person defaulted? He told me a bankruptcy would kill me unless I had the funds to cover. It seemed cool in theory, but for me not worth the risk. A lot of these folks pulling money out to buy shit they don’t need is why we have problems. What my plan was, was to take the money I pulled out and use it as part of the down payment to build my new facility. Then covid hit and I’m glad I stayed liquid.
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I recently had my real estate agent try and talk me into doing this with one of my properties. I was looking at building a new facility closer to my house, and asked him to start looking. I had planned on renting out where I am now to make a little bit of money monthly. He told me he had someone willing to rent for $8,000 month for my building in January 2021. He asked how much I owed on that property. It was about $493,000 then and what he said was, I should get the five year lease at $8k monthly, then refinance it. He said it would be worth between 1.1-1.2 million at that rate. So he said do that, you’ll have the equity in it to meet the 20% and then take the rest as a tax free distribution which would be over $300k after paying off the original loan. I could be mixing it up a bit there, but that was the gist of it. Anyway, I told him my monthly payment would almost triple, putting it close to the $8k I was getting. What would I do if the person defaulted? He told me a bankruptcy would kill me unless I had the funds to cover. It seemed cool in theory, but for me not worth the risk. A lot of these folks pulling money out to buy shit they don’t need is why we have problems. What my plan was, was to take the money I pulled out and use it as part of the down payment to build my new facility. Then covid hit and I’m glad I stayed liquid.
Getting over-leveraged can kill you quick.
Glad you made a smart decision (or maybe just a lucky one).
Cash flow is king.
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Cash flow is king.
...ha and there won't be any of that in a large percentage of commercial property soon.
Testing the waters right now changing some commercial to multi family. In the age of Amazon there is going to be A LOT of empty retail space, has to be a niche in there somewhere.
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I personally think that high dollar/high rise residential is being over built in the Houston area.
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I personally think that high dollar/high rise residential is being over built in the Houston area.
Yeah, anything the mob can start a fire under and burn hundreds of units is probably facing a headwind. ;)
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I was referring to the possibility that in the future far fewer people will be able to afford to live in them....
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Real Estate Investment Trusts (REITS) shares down by half...
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I was referring to the possibility that in the future far fewer people will be able to afford to live in them....
It's like the 80s all over again. The wealth gap is widening.
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I was referring to the possibility that in the future far fewer people will be able to afford to live in them....
That's true, I lived in Houston most of my life and worked in commercial/residential development and construction. The cost of the "inside the loop" living is going insane, just compared to 10 years ago. My house in the Heights almost doubled in value in 8 years, wish I still had it.
My ex lived downtown in one of those fancy lofts that used to be office space. $2600 a month for 500 SF and crap parking. It was like living in a shoe box.
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That's true, I lived in Houston most of my life and worked in commercial/residential development and construction. The cost of the "inside the loop" living is going insane, just compared to 10 years ago. My house in the Heights almost doubled in value in 8 years, wish I still had it.
My ex lived downtown in one of those fancy lofts that used to be office space. $2600 a month for 500 SF and crap parking. It was like living in a shoe box.
I'm a native and I know that they are ruining the Houston Heights with McMansions...the parts of the neighborhood with the original housings stocks are incredibly comfortable to live in....
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I'm a native and I know that they are ruining the Houston Heights with McMansions...the parts of the neighborhood with the original housings stocks are incredibly comfortable to live in....
For sure, I lived in an older home that had be renovated heavily, only 2 bedrooms. Then the 4k+ square foot homes started going in around me; ruined the feel of the place. The street i was on changed from a nice quiet street to a flashy street with rich oil and gas people in a matter of 2-3 years. I sold the home when i moved to New Mexico, don't miss Houston at all.
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For sure, I lived in an older home that had be renovated heavily, only 2 bedrooms. Then the 4k+ square foot homes started going in around me; ruined the feel of the place. The street i was on changed from a nice quiet street to a flashy street with rich oil and gas people in a matter of 2-3 years. I sold the home when i moved to New Mexico, don't miss Houston at all.
Where in New Mexico?
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Where in New Mexico?
Santa Fe.
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Santa Fe.
Beautiful place. Expensive but beautiful.
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Beautiful place. Expensive but beautiful.
Yeah it's like being on vacation every day. ;D
I moved here a while back to be closer to my parents since they are getting older and live kind of remote. It is truly gorgeous here and the people are generally very nice. Nobody gives a shit who you are and what you do for a living. Certain things are expensive but overall it didn't impact me too much. I spend 5 years in Albuquerque after college and always came here to go hiking. Living in Houston almost my entire life i sometimes forgot there are places like this. It's really hard to find a job here, but i got lucky after looking for about a year.
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Yeah it's like being on vacation every day. ;D
I moved here a while back to be closer to my parents since they are getting older and live kind of remote. It is truly gorgeous here and the people are generally very nice. Nobody gives a shit who you are and what you do for a living. Certain things are expensive but overall it didn't impact me too much. I spend 5 years in Albuquerque after college and always came here to go hiking. Living in Houston almost my entire life i sometimes forgot there are places like this. It's really hard to find a job here, but i got lucky after looking for about a year.
One of my best friends is from Albuquerque. I've been there several times but wouldn't want to live there. Santa Fe and Rio Rancho would be my choices in New Mexico.
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One of my best friends is from Albuquerque. I've been there several times but wouldn't want to live there. Santa Fe and Rio Rancho would be my choices in New Mexico.
Yeah it's not a great place to live. Rio Rancho is really nice. I also spend a lot of time in Angel Fire during the winter; small place that has plenty of things to do outside. I've heard Las Cruces can be a good place to live but it gets really hot down there.