All Forum Posts by: Carley M.

@James Caruso - I'm happy to share with you what I learn. One parent told me that the trust can't give money to him directly (or it gets counted as income) but that the trust could make payments on his behalf.  I'm going to ask about providing him with a pre-paid credit card (or similar) and if that would allow him freedom to spend where/when he wants without depending on a trustee to cut checks. I'm also meeting with a local accounting firm to discuss having a partner listed as the trustee so that I know someone professional is handling the money but also personable and available to help my son financially when I'm not around any more (as opposed to just having a disinterested bank trustee be in charge of his money - I've seen that cause problems for other people).

I have an adult special needs son. I bought a 4-unit property for him to live in (I occupy one unit as well) and so that when I die, he will have an income stream above and beyond his Disability payments. In order to protect him from losing his benefits, I need to put the house (and life insurance) to pay into a special needs trust for his benefit. I'm hiring a local trust attorney to navigate the legal stuff.

Have you moved your properties into a trust (even if not special needs)? What pointers can you give me? What do I need to make sure is covered? What is the one thing you wish you had known when you set up your trust?

Thank you in advance for your advice!

I've done a sale with a rent-back before.

You should handle the roof situation completely separately. Make sure it is fixed and inspected prior to close.

When you set up the rent-back (if it doesn't inconvenience your family situation), make sure that the sellers obtain renters insurance, require that they list you as an additional insured, and put in a time limit for the rent back.  If they've been waiting to find a place, they can start looking as soon as you sign the contract and they can make their purchase offer without a contingency since the property will be sold to you before they close. Give them 30 days post closing and then charge them a significant per-day rate for each day past the 30 that they stay in the property.  Otherwise, you could be waiting to move in for 6 months or a year. I started looking in January, found a place in April, signed a contract in May, but didn't close until November. While that is certainly not a typical timeline (this is my 8th home purchase experience), you need to protect yourself from the worse case scenario.  Also, price the rent-back to cover all the costs of them in the home, not just the mortgage payment. I also asked for a security deposit to be held in escrow to make sure that when they moved out, there wasn't damage to the property. That might help the sellers decide that it would be a cheaper option for them to move into temporary housing while they search for a new place.

A rent-back is not ideal and if you can avoid it, you should. That said, I jumped through a lot of hoops to get my most recent property because I knew it was the right financial decision and would be worth it in the long run.

Good luck to you! 

Welcome @Bart Grady! I'm new too. :-) Great to see so much activity in Buffalo!

@Brandon Reed It's a national program and the only requirement is that you can't own more than one property, it has to be your principal residence, and you can't have delinquent payments on your credit report for a year before you can buy. They base the amount of loan that you qualify for on how much you pay or can afford to pay for rent/housing.  In my case, I was renting below what I could afford, so I had to demonstrate that I could save an additional $1,000 a month to qualify for the property value I wanted to buy.  It didn't matter anyway since the 4-unit pays for itself and my required owner contribution is negative.

The NACA office here was not used to doing 4-units and I had to learn some of the financing nuances on my own. For example, no one brought up the fact that I would need a Certificate of Occupancy or were concerned that the current owners didn't have one. I pushed the sellers to contact the City to square up and wound up having to negotiate directly with the City on what repairs would be required for them to issue me a COO after the sale. The City inspector really looked out for me and proactively requested a Conditional COO be issued so that I could close. I found out just before closing that I wouldn't have been able to close without the Conditional COO. No one at NACA knew to tell me about the requirement because it's a City ordinance. The real estate attorney for the bank didn't even know because she lives somewhere else in New York and isn't from Buffalo. If I had gone with a traditional or local lender, I may have gotten more of a heads up instead of the mad scramble. I just keep reminding myself of how much money the NACA program saved me and how much I love my new money maker. :-)

You have to attend a class to learn about the program and you have to attend a class to learn about the buying process/working with realtors, etc. You're required to do 6 acts of volunteering during the year for the life of your loan, but acts of volunteering includes telling other people about the program, not just going to activist events or volunteering in the administrative offices. There's absolutely no way for them to track it.

NACA is not-for-profit and the funding is all provided by banks (Citibank and Bank of America right now) as part of their required participation in the Community Reinvestment Act.

@Ryan Hurd - I just completed going through the NACA process to buy a 4-unit. No downpayment, bank paid closing costs and even seller's title/survey costs, and I closed at 3% interest. The program also doesn't require PMI, which further reduces my borrowing costs. The NACA program also doesn't have income or credit limits. That said, the actual process of going through the program was time consuming and frustrating at times (poor staff management), but my closing costs were over $30k and my down payment would have been almost $8k. For that kind of money, it was worth the extra time (3 additional months due to also getting the rehab costs included in the financing) and worth the occasional frustration which I minimized by personally staying on top of my file. The loan does stipulate that it has to remain owner occupied or be refinanced.

For me, this was the best financial decision. I have 4 units that rent for $700 each, I occupy one of them, and my PITI payment is $1289. The surplus goes to a repair escrow for now (eventual replumb/rewire) but I'm hoping to go solar within the next 5 years and increase the rents to include solar electric.

@Michael Noto @JD Martin The tenant pool for the property is good. The applicant is a student and asked me to consider including utilities so that the stipend she receives would cover those bills as well. Jd you bring up a good point about her losing her stipend. I hadn't thought about that, but it certainly would impact my decision if it's not guaranteed for the term of the lease. That would make me less likely to be willing to make the accommodation.

@David Zheng in your experience have you had the bills exceed 2x?