All Forum Posts by: Butch Greene

Quote from @Greg Scott:

I would never want a condo as a rental.  There are a lot of reasons that is a bad idea.

On the other hand, if you could buy the entire condo and turn it into a small apartment, there may be an opportunity.  Not enough data to tell.

Got more detail. The party own the entire building and all units. He doesn't even know why his attorney structured it in that manner. He's is the only member of the HOA.

Two units are being rented out as regular annual rentals.
Rest are medium term rentals (90 day) for a local hospital.

Sp would that mean you can turn it into an apartment building?  
Layout reminds me of small time share condos but the other condo complex next door does not resemble this one at all.

Rented a condo on a trip. Aged, cobwebs throughout. Outdated units. All their AirBNB reviews are similar.  Asked the owner if he'd sell & he immediately said he'd consider owner financing.  I have a friend who buys townhomes, not condos who is my only potential buyer. He's not interested in condos.
All units in the building are owned by the same party. I pull up all units tax links on GIS, but no data attached.
 
What are the hurdles to locating a buyer?
Don't know enough to price/comp it out. Don't want to say too much with getting it under some contract or protecting my right to a finder's fee.   Still haven't "done my first deal".

Quote from @David Krulac:

@Butch Greene We have had similar situations, one involving an FHA buyer of a two unit, where both units were under lease. FHA requires the borrower/buyer to be owner occupying the building, but state law requires that all lease transfer to the new owner and cannot be terminated solely due to ownership change. In that case and others we have had FHA allowed an exception until the lease expired, then the buyer must occupy. In some jurisdcitions they are talking about life time leases that can't be terminated unless there is a lease violation and are automatically renewed, don't know how FHA would look st those situtions.

 That would make the most sense to me. Oldest daughter is in a lease that ends July 2025 & could move in then & youngest daughter has to live on campus 1st year & wouldn't be able to move in until July 2025 as well.  Any idea who got the exception?  By the time I figure this out all offers on table will have been long since received probably, but since it's popped up twice in a row now, it's bound to pop up again.

Still trying to find a house in Chapel Hill for our 2 UNC student daughters. Zero luck. 
Twice now, small homes that would be perfect have LEASES locked in through July 2025. Lender (One Brokerage from here on BiggerPockets) says we can't buy it as a primary residence if it's leased.
These leased properties would be perfect because July 2025 is when they would move in.
We DO NOT have 15-20% down for a commercial loan. 

Am I asking the wrong questions? Is there a way? Friend advised I could check to see if the leases have a cancellation clause upon sale that can be triggered, but no luck

Quote from @Chris Martin:

Sounds like they don't qualify for a Section 121 exemption/exclusion. Since you are in NC, historically I would think a simple broker's option contract would work. Alas, NC Realtors removed their form years ago. An attorney can draft a NC legal option contract for you. 

What the contract does is lock in your rights as a buyer but delays closing until some future time, possibly years or even decades. 

Can money be exchanged to bind for a set price on that contract?
Or is it strictly a "First Right of Refusal" form?  We tried First Right of Refusal with our other neighbor's home, but it gives you zero leverage because we are in Asheville/Buncombe County. Bidding wars for homes and First Right of Refusal simply means you've got to be the highest bidder every time.

Thank you Kevin.

Any possibility of structuring it so that we can get a build going for the 2 bed house for my dad?

Any time a contractor goes in a property, you can have their insurance agent send you a certificate of insurance w/ you as Certificate Holder.  Just because a policy date is on the original, doesn't mean the contractor's policy is active.

We do it all day every day for property owners.  

Also, Adam is partially correct, but that can be messy for you and the tenant.  If they file a renters insurance claim, the carrier may seek recompensation from your contractor and/or you if it's the contractors responsibility to cover the damages.  If the contractor is uninsured, it falls to you.  

I'll assume you don't know this, but you should require every renter to have you as an Additional Named Insured on their renters insurance policy for the same reason you want to get a Certificate from a contractor doing new work.  If tenant doesn't pay their policy, you get a notice & can take action to enforce it.

Looked at buying an AirBNB that we know about. House is rented out regularly but also has a 2nd homesite that has a septic installed & perked for 2 Bed. They've got a travel trailer sitting on the septic for the time being.

When we reached out, owner simply said they needed to hold off on selling it until next year b/c they sold their primary residence this year.
Don't know much about tax implications of selling primary residence in the same year as a rental.  

BUT...it's right next door. We could use the RV/septic to build my dad a little house to get him closer to us & rent the other house out to pay for as AirBNB or leased.  

What options do we have for locking in purchase of the property NOW & him avoiding the tax hit of an immediate sale before it goes back on market next year. Don't think a 1st right of refusal would be beneficial.  There are buying frenzies in this area b/c of low inventory.  

Quote from @AJ Wong:

Hi Butch. Great investment getting ahead of the college housing expenses and putting the equivalent rent money to work..If the property is generating income it can be classified as a 'second home.' And correctly..you cannot co sign as a primary if it's occupied..2+ units can sometimes require larger down payment (as you've found) another option could be to access equity against another property..check in with @Joseph Chiofalo for potential lower down payment options..might be able to get to 15% down..Good luck! 

Appreciate it. We've looked into DSCR. It won't work for our situation. Limited on what we can take out of our primary residence. We've got the equity in our home for 40% down, but we don't qualify for the payment to tap into that much more monthly debt on our home.
Love listening to all the gurus tell you to just tap into your house's equity to use it to create wealth, but you can't tap into money you can't afford to pay back.  

And purchasing in a high end college town eliminates any "deals". You either pay the asking price in this college town or you don't get the property.  Nothing has been on market for more than 45 days within a mile of campus.  I check what they sold for so I can learn. And they get what they ask for.

We've been eyeballing a place to put our junior in college but we don't have the income and down payment to buy a 2nd home outright or the 20% to do it as commercial.  A property just popped up FINALLY close to campus, would be perfect for our junior (and OUR FRESHMAN who can live off campus May 2025).
BOTH sides of the duplex are leased until May 2025.  We could do it as a primary residence for her if the 1 bedroom side were open. 
Is there an alternative finance method to buy the property? We'd have a duplex an easy walk from campus. A daughter (if not BOTH) to put in it come May 2025.
20% of $550k for a family with 2 college kids is a ton.
But looming college loan debt from their housing is worse!