All Forum Posts by: Albert Hoffman

Hello Everyone,

I’m scheduled to close on the sale of my single family rental the first week in May, and will have ~$250k in equity to roll-over into one or more replacement properties.

I’d really like to hear other member’s perspectives on the pros and cons of purchasing small multifamily (2-4 units) with 30 year fixed financing vs larger multifamily (5-20 units) or a mixed use property with a commercial loan, which would likely be a 15 year loan term with monthly payments based on a 25 year amortization of the debt.

This is my first 1031 Exchange, and I greatly appreciate your ideas, perspectives, or shared experiences.  Thank you!

I have searched the forums and couldn't find this specific questions asked before . . .

A little background info:

I am living in one unit of a fourplex, renting another unit in the same building to a friend, and now he wants to move a mutual friend in as a roommate.  I'd like to avoid this situation, because I know it will lead to nothing but problems.

So, what justification do I have to deny a tenant's request for a roommate, other than "because I said so"?

Thanks in advance

@Joshua Dorkin happy birthday, old man!  :-P

Thank you all for your responses so far.

Joel, thanks for the good advice. I just sent a note to a RE attorney friend of mine, and will post back what I discover -- just in case any other forum members find themselves in a similar situation.

Originally posted by @Chris S.:

I don't know if or how laws in MN differ from in TX, but here it's assumed that MF investors are sophisticated, and should rely on their own due diligence for uncovering defects. Your legislative climate may vary, however. Good luck!

Chris, thanks for the heads up on TX law!  I notice that Texas has several cities on the "Top Bed Bugs Cities", but here in MN they are relatively uncommon (IME).  From what I have read, to discover bed bugs you need to bring in a bed bug sniffing dog.  I have never heard of anyone doing this as part of an inspection.  Perhaps it is more common in states where bed bugs are more typical.  Sure wish I would have done that now, though!

Again, thank you guys for your responses.  I will post back here as I continue to learn more, in hopes of helping someone else avoid or deal with this problem.  If anyone else has any advice, please feel free to chime in!

Hello BP,

I've never dealt with a situation like this before, so I could really use the expertise of the BP community.  This is a lot of information and questions for one thread, so I'll try to break it up using bullet points.

• Past:
  • Had an inspection of a six unit building by an inspector that I have used several times in the past.
  • During inspection, seller’s agent asked us not to talk to the tenants or mention the sale of the building (Red Flag!  Looking back, I was a fool to go along with this) .
  • Renegotiated post inspection and closed on the building last month.
• Present:
  • Tenant vacates after Section 8 refuses to pay rent due to previous owner’s failure to comply with orders to treat . . . bed bug infestation.
  • Another tenant informs me that the city has ordered the previous owner to have the entire building treated, but he never complied.
  • Same tenant informs me that at least three units are infested.
• Future:
  • I plan to renovate the entire building and get all new tenants.It’s in a great location but there is some major deferred maintenance to deal with, and the units need updating (new floors, paint, etc.).  Would very much like to avoid dealing with the infestation as a recurring problem.
• Questions:
  • Do I have any recourse as far as going after the seller for not disclosing the infestation, complaints from the tenants, and orders from the city to me?
  • What about the inspector?
  • What is the best way to deal with the bed bugs?  Since I need all of the tenants out eventually to complete renovations, I was considering getting them all out and then treating the building before starting work.
  • What is the best way to get the tenants out?  They are on month to month leases and the rents are below market (probably due to the infestation).  I'd like to avoid them getting angry and suing me for the bed bugs.

If you have questions, comments, or advice on any part of this situation, I would really appreciate hearing from you.  Many thanks in advance!

I second the Crooked Pint. It's centrally located, close to the highway, and has plenty of off-street parking.

I think it's a great idea.  Have you considered a more central location for people with day jobs? 

@Ron Scribner: You are correct that there is no longer any note on this property. 

Today I learned that there was a first and second mortgage on this property; however, after the sheriff's sale there is no longer a note, only a sheriff's certificate of sale. 

It is my understanding that if there are others out there who may have a lien on the property, they can file to redeem and then would be in first position to get the certificate. 

That risk alone was enough to make me back out of this deal, not to mention that the appraisal was not guaranteed to be completed before the end of the redemption period, even with the $200 rush fee.

So, what do you guys think will happen next?  The bank will not give out any information as far as what their plans for the property are until after the redemption period is officially over.  There are currently 3/4 units rented.  I believe that the bank would have to give the tenants 90 days notice if they planned to evict them.

Thanks everyone for your expertise!  I am only beginning to know how much I don't know about foreclosures :)

Wayne, 

Sorry if that didn't make sense, let me try to clarify.  The sheriff sale was back in July.  The property is now owned by a third party bank who has nothing to do with the lending or sale of the property.  The end of the redemption period is at the end of this month.  

Does that clear it up at all?

Thanks again!

Hello BP,

I do not have a lot of experience in foreclosures, so I was hoping to gain some perspective from some of you who do.

I currently have a four unit building under contract in Minnesota. The redemption period is up at the end of this month, and closing is scheduled for January 28th.

Because of delays on the part of the seller, there has not yet been an inspection or appraisal. This will make it difficult to close as scheduled.

Now for my question . . . In this situation, would it be a smart move for the buyer (me) to let this property foreclose and try to pick it up at a discount at the Sheriff's sale? In the past, local properties have usually been sold in foreclosure for below market rates. But since banks no longer have as many houses on their balance sheets as they did back then, perhaps they do not have the need to liquidate at such a discount, and would rather hold out for top dollar in the Summer months.

If it makes any difference, this property is under contract for 90.4% of list, and 95% of pretty accurate comps.

Many thanks in advance!