All Forum Posts by: Vahe Ohannessian

@Dwight Jackson II

@Pratik P. is absolutely correct. I agree that this is not a good first project for a total noob. I'm an architect and contractor, and I can tell you there are WAY too many unknowns to make this worthwhile. You'll spend thousands in analyzing this deal, then find out the numbers just don't work, but as a new investor you'll have all your emotions tied into it, then your emotions will twist reality and tell you it's still a good deal and justify the bad numbers, and you'll be tempted to say "I've already spent this much, I can't back out now".  If you need reasons for running away here are some: other smart and experienced investors would have bought this long ago if they could make a deal out of it. If experienced investors who can analyze and do construction cheaper than you as a newbie, you'll be in real trouble quickly if you get into this not knowing what it will cost to rehab, how much rents you'll get and if those tenants will pay their rent, what kind of damage will be done to your brand new rehab after new tenants come into this building in a bad neighborhood, etc.  Just my thoughts.  I would look for a 2 or 3 family that you could live in and rehab. Good luck.

Linda, if you have never run a rehab project before, you want to hire a general contractor that will be on site and coordinate all the work among the trade subcontractors, materials etc. and handle inspections for the town/city inspector. Obviously this will cost more than if you hired each trade yourself, bought materials yourself, handled inspections but you should be ready to pay the extra cost and watch everything closely so you can learn.

Your question is very short so i can't tell if you have contractors you've talked to and can't decide who to hire, or if you don't know where to look. I'm sure you're participating in local RE Investment Clubs - ask other investors to refer you to someone they've used successfully. If you still need to find someone, use HomeAdvisor (www.HomeAdvisor) to find someone reliable, read reviews from other people who used them, etc. Besides reviews and licenses, listen to your gut feeling - how do they handle appointments with you, is there chemistry, etc. Paying a higher price for the right person will save you lots of time and money in the long run.

I hope this helps.

@Alex Price I have consulted a couple of attorneys, and they seem to think the last sentence about costs not to exceed $1,000 and the other paragraph about owing Points ($14,750) upon execution of the agreement are two separate things. I know what you mean because others have mentioned this point, and I was thinking the same thing when I signed (that i would owe $1,000 at the most), but it turns out legally they are separate things.

Honoring an agreement one makes shouldn't be considered "old fashioned" - it should always be fashionable!

In my case I didn't fully realize the agreement I was making.  Now that I do, I'm going to be looking to the other party to negotiate another agreement, and potentially borrow to "honor" my agreement.

 Jay, you're right on with both of your points above. While I wasn't "rate shopping", after signing the Commitment Letter my financial situation changed and I was suddenly without all the needed funds to close. So I scrambled and did a combination of seller financing and another private loan with VERY favorable terms, and no longer needed the hard money. Bottom line is that I do need to do a better job of carefully reading and understanding everything I sign myself.

Mike, the "execution" it's referring to is my execution of the Commitment Letter. They're providing me a Commitment Letter so I can meet the terms of my P&S, and in return I'm signing the commitment letter agreeing to their terms, which in this case the document says that they've earned their 3 points upon my signing of the commitment letter, period. I simply missed it! There was never any mention of it verbally, by email, or any other form, and since this was my first time using a hard money lender, I never imagined such a hook could be included in what I was signing.

@Edward B. Good advice, thank you. Turns out this particular lender is an attorney himself with money partners, so his own legal fees are going to come easier. I feel I do have enough on my side to negotiate something because nobody wants to go through this process for $15k. We'll see.

@Edward B. one attorney told me the trust probably won't hold up if there's a lawsuit.

@Account Closed that's very useful information which I'm hoping I can use in negotiating.

Thanks!

@Chris Mason I am seeking legal counsel...

@Ernesto Hernandez I would rather wait until this is over before I disclose.

@Russell Brazil and @Chris Mason

Thank you both for your input. Based on further research it looks like it is being treated more like a business transaction as Russell explained. We'll see how it pans out.