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I've just watched a fractional deal hit the skids for a $1 mil condo on Hilton Head Island after 20 years of fairly trouble-free operation. 25% owner wants to be liquid, but the partnership doesn't guarantee liquidity. Current market is in a slide and nobody will take it off his hands. He cries until one of the other partners buys him on the cheap to shut him up. SC permits fractional titles but there's stipulations (which I don't know about specifically).

Strong fences make good neighbors. Have good contracts.

James, the only quote of mine that you need is the one you apparently missed.

We all know a few bikers and ran around when we were younger. :wink:

Actually, many years ago, I booked spandex rock cover bands into biker and mob owned rock bars in the 80s. Somedays you were the bat. Other days, you were the ball.

You didn't come down on ME hard. I simply understand and recognize a certain "street" mentality with regard to a way of "doing business". White collar types who live in the suburbs and have never had any interaction with "goombahs" think in the terms of "laws" and "might sue me". You just encountered a guy who doesn't give a crap, and will have a guy beat down for $50. It's far more prevalent than you care to know. It's a free market economy, and David is simply serving a segment of the market -- as seedy as it is -- and dealing with the constituency as it is.

These people (he and his tenants) simply don't care because they live in a completely different realm far beneath the surface of what soccer mom's & dad's know as "normal". It's like the biker who decides to walk onto the golf course and relieve himself in front of a bunch of beret & pink green knit cardigan-wearing country clubbers who stomp around and hollar about how "tough" they are, he's going to be arrested, this is an outrage, some people.... That biker could care less about the law, the country club regulations about taking a pee on the fairway, your new tartan weave, and can probably kick the entire foursome's *** with his right hand tied behind his back AND wouldn't think twice about doing it just for kicks. You have to understand the fundamentally antisocial acclimation of the demographic.

It's kind of funny reading the cyber-parallel here. I am in no way defending David or his business - just amused at the dichotomy.

Or whatever is left of you 231 years following the "Great Experiment".

There's a guy in my town that runs a couple of sleeping room "hotels".

Similar mentality, $30-40 a day. You also have to understand the mentality of the "tenant". We're talking about people who are incapable of renting an apartment and staying put for a month, let alone a year lease on an apartment. Complete transients. Mostly indigent, a step above homelessness. They virtually own nothing.

These are people that you have to be hardline with or you might get your throat cut. These are not people who are going to sue you for constructive eviction or adverse possession of their property. These are people who will blow into a town, run a couple of scams, and either be gone or in jail in a couple days time. They're also popular for prostitutes.

You simply cannot apply the same "legalities" that we live and breathe to this "business". It's not even in the same realm. Making their life bad for them generally involves flipping a case of beer to his meathead muscle guy "bouncer" who shakes down the "tenant". It's constructive eviction Tony Soprano style.

Incidently, the guy who owns the sleeping rooms in my town, also owns the worst, most hardcore hilljack, redneck, biker bar.

It's not something we encounter in our day-to-day existence as REIs, but it is a segment of the business that does exist.

Personal networking for a mixed-use commercial/residential. Distressed property with a bad landlord tenant situation for the commercial frontage.

Watching a listing for residential. It expired twice. Made a lowball offer. Owner accepted.

Ft. Wayne is a very troubled market. Check your census numbers on that particular MSA.

The dynamics between NC, your NY markets and Ft. Wayne Indiana couldn't possibly be any more different.

I love it when coastal guys come to our region and think they're stealing property from us. In the Cincinnati area recently, there was a new home development right next to a city park with a nice public golf course. Very nice, quiet street. Brick 3500 sf 4/2.5 homes with 2 car garages on .25 acre. Starting at $650,000. CA execs are jumping all over themselves to get in the door.

The houses are MAYBE $300K max in any comparable area. Just good marketing with local representation in CA. Laughing all the way to the bank.

I recently bought a 3/2 in Hamilton Ohio for $15K.

It's a poop log, but it rents for $500 a month.

That makes more sense.

Years ago, my wife and I lived in downtown Cincy in a rehab loft. As part of a block grant for community development, the developer worked a deal with the city to contribute $15K per unit towards the downpayment towards the conversion when a tenant chose to exercise. They had a deal worked with then Star Bank (now US Bank) to do the financing as a package deal at 7.75%. The rents were $750 for a minimum of a 2000sf loft space. We figured that even at 7 3/4%, the equity gain of $15K was worth it because there were no restrictions on transfer, length of time in unit, sublet, etc...

So we were in the financing process when the owners stated that they would exercise upon 80% of the tenants committing to the deal and forming the HOA. I always thought that was part of the deal with the city, and may have been.

While we were waiting on the rest of the tenants to get their acts together, the Cincy PD shot and killed a minority kid that touched off a week of violent riots and mayhem. We were done.

So you're describing lender contingencies such as my 80% OO example.

No, I've not personally done such a deal, but I've got experience in mixed-use commercial. I'm interested because our area has been virtually untouched by the condo-conversion wave of the past couple years. I'm a reasonably intelligent business person, and I understand the importance of developing a niche for myself. Nobody seems to be doing it except for maybe the big players. I only know of a couple new condo development deals right now and that is in downtown Cincinnati at The Banks. Very high end. There's also a new tower going in near downtown that is supposed to be some architectural spectacular. Again, very high end, many, many units. All near downtown.

I'm looking at something more along the lines of a vehicle back to home ownership in other areas. Without question, I agree that you have to temper the credit risk with the loan portfolio. However, given the owner-financed credit profile, it is inherently riskier regardless of what you do. Risk abatement is a question that I have for seasoned guys. Is the risk profile similar to an owner-financed SFH? Higher? Lower?

Is the deal better off being structured to hold the paper and offer a syndication to other investors? What are some things I should be considering in paper re-sale covenants? What have you seen on the coasts?

I'm trying to benchmark other areas right now, hence my call for someone with experience in this area.

Short sale with the mortgage holder?

There's another $30K worth of legal fees, holding costs, etc... that can probably be bargained.

With the market still on the slide in FL, how long till that extra $30K evaporates?