All Forum Posts by: Chris Nowlin

Investment Info:

Large multi-family (5+ units) buy & hold investment in Galveston.

Purchase price: $1,100,000
Cash invested: $170,000

20-unit property in Galveston, TX. Currently in the rehab phase for another 4 weeks. 12, 3-bedroom units and 8, 4-bedroom units

What made you interested in investing in this type of deal?

Cash flow and long term wealth

How did you find this deal and how did you negotiate it?

Networking, networking, networking. All of the people involved in the project were met individually, yet connected with one another previously. Purchased from a wholeseller, there was no negotiation.

How did you finance this deal?

Traditional bank financing with 18 months of interest only payments. We added $69,000 in closing costs to the back end of the contract to bring less money to closing.

How did you add value to the deal?

Property was vacant and needed an extensive rehab process. Updated all 20 units.

What was the outcome?

Still in process. Expecting to generate $5,000 to $8,000/month in cash flow once stabilized and refinanced.

Lessons learned? Challenges?

Trust, but verify. Getting to the closing table was a learning experience in itself. I know have a much better understanding of the process and wont need to depend on others as much moving forward.

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

Yes. Wholeseller/Agent/Property Manager and Contractor

Start with the education and networking. There is so much base knowledge to learn and you will have plenty of time to meet key people during the process. Try to meet people that align with what you are currently learning. For example, if you are going through rehab education, reach out to contractors. Some will be open to chatting and some won't. 

Another part of the education is analyzing deals. If you are relying on a wholeseller's numbers, you probably aren't ready. Once you start to feel comfortable with the numbers and start to see the potentials in the deals, it's probably ok to jump in. 

This is where the other half of the two categories comes in to play. You will absolutely learn more from doing your first deal than you will ever read in a book. If you over estimate your rehab and underestimate your ARV, you will have some room for error.

Our first deal was a success. Our second was far from it. $30k over the wholesellers rehab estimate. Fortunately, we also sold the home $15k higher than their ARV. It was about 6 months of hard lessons learned, but it didn't break us.

Every deal will come with new lessons. You will never be 100% ready. You just have to pick the time you feel your knowledge and preparedness align and make the leap.  

@Brian Hout there is no actual foreclosure at this point. I am in contact with the lien holder who it trying to recoup some their money, but doesn’t want to foreclosure on the owner (his nephew) personally. I suggested the lien holder have his attorney begin the foreclosure to try and motivate the owner to sell (hopefully to us) .

@Brian Hout thanks, Brian. I would say note holders son (power of attorney), more so believes the loan to be in default. He didn’t realize the note was ever recorded until I pulled up the records. I have a copy of the deed of trust from the mortgage company.

I'm more so concerned with trail of gray areas that lead to the current position. Unsigned note, no attempt to notify in writing of default, dealing with POA instead of owner, etc.

The circumstances of the whole thing has me curious. Not sure it’s an avenue I will go down, but I am looming forward to hearing thoughts on the matter.

@Brian Hout yes, the deed of trust was recorded in 2012. There has been no record of payment produced by either side.

@Don Konipol from my understanding, Bigger Pockets is a community with a wide variety of knowledge and skill sets. Some of them possibly being lawyers, maybe even in the state of Texas. Obviously, I would never put money into an investment of such nature without the full backing and guidance of a real estate attorney. I was merely reaching out to BP with an interesting case I came across to see if anyone had a similar situation or story they could share.

It’s a real estate forum. It’s meant to generate discussion. Honestly, a “maybe”, would have been more a productive use of your time. Instead you condescendingly attacked my intelligence with a comment that can be summed up as, “only a lawyer can answer this.”

Thanks for the guidance!

@Greg H. Yes, the property is legally owned by the nephew.

I was contacted by a seller because of one of my mailers. He has power of attorney for his mother and is needing to sell her house. To make a long story short (can expand if necessary), the property is legally owned by his nephew through a seller finance arrangement in 2012.

Once I let him know the property was not in his mother's name he became confused. He did not realize the deed had been recorded since the note was never signed and a payment has yet (with an exception of recent months) to be made. There is a lien on the property for $150,000 held by the mother.

He agreed to sell us the note for $90,000 under the pretense that there has only been about $2,500 paid towards the property. As I am collecting documents to bring to a lawyer, the man tells me that there is note held by an attorney, but it was never signed by either party. Without the signed note, is everybody, except the property owner, out of luck?

I have provided the information on to a few people who plan on getting back to me when they know more, but I just wanted to put it out to the BP community and see your thoughts on the matter.

*The owner wants to try and sell the property for $200k, but we are afraid if he is successful, and the note is not legally binding, that he may not pay back any of the money owed. 

**Update** My partner spoke to a lawyer who told him that in Texas, we would not hold up very well if we purchased the note then file foreclosure because the property is Homesteaded. Any other legal professionals have an opinion on the matter?

I was contacted by a seller because of one of my mailers. He has power of attorney for his mother and is needing to sell her house. To make a long story short (can expand if necessary), the property is legally owned by his cousin through a seller finance arrangement in 2012. 

Once I let him know the property was not in his mother's name he became confused. He did not realize the deed had been recorded since the note was never signed and a payment has yet (with an exception of recent months) to be made. There is a lien on the property for $150,000 held by the mother. 

He agreed to sell us the note for $90,000 under the pretense that there has only been about $2,500 paid towards the property. As I am collecting documents to bring to a lawyer, the man tells me that there is note held by an attorney, but it was never signed by either party. Without the signed note, is everybody, except the property owner, out of luck?

I have provided the information on to a few people who plan on getting back to me when they know more, but I just wanted to put it out to the BP community and see your thoughts on the matter. 

*The owner wants to try and sell the property for $200k, but we are afraid if he is successful, and the note is not legally binding, that he may not pay back any of the money owed. 

 He has been on two that I know of and possibly a third. I highly recommend them from a wholeselling, as well as, an overall business perspective.