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All Forum Posts by: Ben Reiss

Ben Reiss has started 7 posts and replied 47 times.

Post: Buying two Duplexs next door to each other mortgage ?'s

Ben ReissPosted
  • Wholesaler
  • Newark, DE
  • Posts 50
  • Votes 4

Hello everyone,

I currently have 3 units in Philadelphia, a duplex and a SFH. all are rented to students, SFH recently purchased but after rent increase and a few fixes it should be worth closer to 220K with mortgage around 135K the duplex is closer to 70% ltv worth about 450K. I am in the process of selling a lot in philly and my last property in northern delaware.

I am looking at two properties in the area that are owned by the same person. two 5 year old duplexes with gross rents around $4,500/ month each. he doesn't want to deal with them since he has another income stream from his own company. I have used his company and he is swamped. He recently has asked someone I know about property management, had mentioned selling them earlier this year to me. He just doesn't want to deal with them. But he is making money so he's not in a rush to dump them.

I was wondering if anyone had ever had any luck doing a blanket mortgage on two properties next to each other from the same seller, combined would sell for about 680-700K. The reason I was looking into this as he would give me a better price if I buy both of his units at once. I will have enough to do 1 unit and go through all the hoops of a normal financing that I have dealt with. 25% down on multi, 6 month reserves, ect.

I was looking into the option of commercial financing and if that would allow me to have him carry a few % maybe let me do 20% on both or less. I will have enough to do 20% down on both but not much else. I have a partner/friend that I have worked with before that will lend me the 50K more I would need to do the closing costs, reserves, misc fees.

From my short dealings with commercial lenders they are less concerned with how the money makes it to the table, ie the 50K would be less of an issue with commercial loans then conventional. Has anyone recently had any luck with doing some creative financing with commercial and owner held second? I would love to do both. as they are rented and I know the area in depth. I have done very well with the units I have and the area is all college rentals.

There is a few months before I would be needing to move on these. I know I will be contacting tons and tons of mortgage companies, brokers and banks. just wanted to know if this was feasible or this was completely out of possibility.

Thanks for any ideas,

Ben

Post: Asking Seller to pay for closing cost and escrow fees?

Ben ReissPosted
  • Wholesaler
  • Newark, DE
  • Posts 50
  • Votes 4

just get a set number paid back from seller. Is this an investment loan?
if so you are limited to 2% back from seller.

if it's conventional OO then you can get up to 6%

every private sale I have gotten concession from sellers. I had the last seller pay the transfer tax (2%) so that maxed out the concessions.
Another one was a OO so I was able to bump it up and get a lot more back.

FROM MY UNDERSTANDING: realize that the seller cannot have money go back to you, meaning seller concessions can only go towards closing fees. So your mortgage company will not let seller pay for anything going into escrow.

They can put that 2% towards any FEES. so towards title insurance, transfer tax, any other fees from the bank/state.

Post: Buy Raw Land and Build House using a 203k Loan?

Ben ReissPosted
  • Wholesaler
  • Newark, DE
  • Posts 50
  • Votes 4

It would not be a 203K from what I've read you would do FHA construciton to Perm.
they will roll all costs into the loan and it is still only 3.5% down I think.
problem I have run into is they are only doing it on manufactured or prefab. you can't get the loan to do a stick built home on it.
I was looking at doing this on a lot I have in Philly, do a 4 plex and move in. but there are not a lot of people who do the laons. Google it and start looking for "FHA construction to perm"

Post: $2,750,000 40 Property Package Sale???

Ben ReissPosted
  • Wholesaler
  • Newark, DE
  • Posts 50
  • Votes 4

Do these properties happen to be mostly in the Point breeze area?

There was a guy looking to liquidate his stuff (about that many) in that area but I think he was selling off a few at a time also if he could. This was about 2-3 months ago when I was buying a lot in Temple area

Post: The Story of a Loan ‘Shopper’

Ben ReissPosted
  • Wholesaler
  • Newark, DE
  • Posts 50
  • Votes 4

I agree though that going that far is ridiculous, wouldn't she have known the terms of the loan in full a few weeks in advance. I can't fathom why she would need to keep stringing anyone along and lying.

Post: The Story of a Loan ‘Shopper’

Ben ReissPosted
  • Wholesaler
  • Newark, DE
  • Posts 50
  • Votes 4

Corey,
There is also the problem of calling to get a quote and a GFE then the lender all of a sudden jumps terms. I have seen lenders try to slip extra points in, or along those lines. There are bad eggs on both sides. I think getting all the information into a few loan officers and getting a true GFE, which of course they make no garauntees on until they have every possible document(which I don't blame them on), is due dilligence. Correct me if I am wrong.

"In the lending industry, there is a commonly used term called a "shopper" to describe a person who is calling every lender in town to find the best deal on a loan." makes it seem as if you are saying anyone who shops their loan is doing something wrong.

I don't thinik you should use the car dealer metaphor, I have seen more shady *&^% done at car dealerships and motorcycle dealers than anywhere else. Until I have a full contract and all fee's spelled out at a dealership or on anything I am buying or signing up for I have no way to compare.

How would one go about doing due dilligence on loans if they shouldn't call multiple brokers/mortgage companies? I am not being snarky or anything else I am looking to understand from your side of the table. how can one go about finding the best deal on a loan without offending the loan officer.

Post: Rehab SFH on College Campus

Ben ReissPosted
  • Wholesaler
  • Newark, DE
  • Posts 50
  • Votes 4

The abatement is for new construction and total rehabs in the city. It was used to build up rehabilitation in Philly. I also think I could bump up that rent some on the next go round.

glad you think the numbers are realistic, i am pretty cautious about how much I need to have in reserve and I do much of the work when necessary and I don't need a permit. I have done two full rehabs (not gut but 5 gutted baths, and two gutted kitchens and a lot of other misc). I am pretty confident in my knowledge of the area and I have a very good friend who has a bunch up there. He is a bit more cavalier though and he now has a very large nest egg to be working with, so doesn't understand my feeling all that much.

I should be able to build reserves back up pretty quickly. i honestly have very low cost of living. my day job teaching pays all my bills and a bit and I also have a night job bar tending a few nights a week to add a grand or two a month. I am currently living in my parents old house while I rehab it and clear it out. They moved to florida and it was empty when I sold my house so it worked out well. I am just going to let all the cash flow build up for a year and pay down all my debt. Summer is a good time bar tending since I work more and pretty much double the cash flow for about ~2.5 months.

I am also cautious in investments but I feel like this is a good deal and there are not a lot of them in the area I like unless you can afford to buy a lot and build. Which i do not have the capital for and won't for a year or two.

I also have the lot that I could dump pretty quick if necessary. I guess I am just getting slightly anxious of the idea of not having a years worth of expenses in the bank. I've run closer to the bone but this will be the first time in a couple years.
Thanks for the reassurance.

On the DTI issue, since I don't have a primary right now my DTI is pretty good. i also have leases on everything and the duplex has two years on taxes and the other SFH I have has been on for one. I have leases till June '14 on the SFH and the duplex is leased till July '14. if you have a lender who won't take leases even if you have 2 years of landlord exp keep looking.

I found the lender lets me use 75% of the rent on lease as long as I have had exp and there are valid leases in place. so only one that mattered was the SFH home I already own.

How long have you been a landlord? have you been a landlord for 2 years? or have you just bought the first 2 right in a row?

Post: Rehab SFH on College Campus

Ben ReissPosted
  • Wholesaler
  • Newark, DE
  • Posts 50
  • Votes 4

Kelly,
Thanks for the response.

Going conventional financing, The expenses are low on a few things because of the brand new rahab from the studs out.
I actually know the contractor that did the work. He built 3 duplexs for a friend of mine. He does very good work and the whole thing is only 3 years old now. I manage my own stuff so that is 10% back off the 50% rule.

The taxes have a 10 year abatement, that's why taxes are so low. There's is 7 years left on that. so that backs out off the 50% rule also. I am not going against the rule of thumb, there are just extenuating circumstances. Does that make sense why the return may not be up there at $715 but I am even backing out $200 for Cap Ex. I am going off the fact that it is a nearly new house. so figure even if I keep back 20% for cap ex and turnover it would still cashflow a few hundred. It is in a rare position of being pretty much new and also having the Tax abatement.

Does that clear it up and make more sense or do you think I am being overly opptimistic?

Thanks,
Ben

Post: Rehab SFH on College Campus

Ben ReissPosted
  • Wholesaler
  • Newark, DE
  • Posts 50
  • Votes 4

Good Morning Everyone,
I have asked a few questions on BP and gotten some good advice. I have done some marketing and found a few things. I bought a lot with some title issues I cleaned up for 18K all in that is now getting low ball offers around 65K after owning it about a month. I want to hold this and build on it in a year or two and have a nice cashflowing triplex.
I currently have a new construction duplex up the block that is doing well. I am looking at another building that is a SFH two blocks from my Duplex. It is currecntly rented at $1,800/month to 4 college students. I think this is actually a bit low and could be raised to at elast $2,000 for the upcoming school year. If it was earlier in the rental season I think it could push $2100-2200. It is a well done rehab (done in '10). The guy originally asked for $180k, we have coem down to $170k and I am mentaly debating the deal. mostly because it stretches me a bit. I owe a chunk in taxes since I sold some stock and a house I had the first time home buyer loan on.

So I guess I am just a bit gun shy of taking on more debt right now. This house will be throwing off about $800 after PITI and a couple hundred in capital reserves.

Rent = $1,800
PI after 20% down = $730 (roughly depending on rate but likely slightly less)
taxes = $340 / year so $28.33/month (10 year abatement)
insurance = $1520/year so $126.66/month
(this is from the same company who does the duplex which is high but it's in the city and it's a commercial policy since it is student housing)
I self manage
Everything looks like it is in good shape and the gut rehab was done only about 3 years ago so all new systems.
I am putting aside $200 month for capital costs and figure I will run about $800-$1,000 at turnover.

So net = 1800-730-28.33-126.66-200 = $715.01

Anything I am missing?
Does this look like a good deal to anyone else?
The Duplex throws off about $2,000/ month after putting 10% aside for capital expenses and all misc costs.

I am going to spend the next year paying down debt, paying off this tax payment and basically getting back to having a nice 1 year cash cushion. Then plan on saving to build the triplex on the lot.
Thoughts on this plan or anything to point out as to why this is not a good idea.

Thanks,
Ben

Post: Lender imposed limit on credits from seller??

Ben ReissPosted
  • Wholesaler
  • Newark, DE
  • Posts 50
  • Votes 4

Yeah, I ran into that before, Non-OO is always capped at 2% from what I've read(and run into). FHA can go up to I think 6% and some OO can still go around 4%. depends on the bank. I think it is usually between 1% and max of 6%. I don't think you are ever allowed to get more than that even on an OO loan.

Can you have a seller carry back? maybe you could get the seller to hold a "note" for the 2K off purchase price and then hand you something clearing it at closing? I have no idea if this would work. but it's about the only way I can think of other than Wayne's idea of escrow-ing the money for repairs. then it is technically not going to you but to hold for agreed repairs.

Other option is to get a note from seller for cost of repairs and collect from his $2,000 proceeds of the sale (if there will be any).