All Forum Posts by: Christopher Freeman

I do not know of any real estate companies with major corporate operations in this area, but my company, C&S Wholesale Grocer has many corporate finance opportunities, both within and outside of LDP programs. We're a $27B/year supply chain company with over a thousand employees in Keene, several hundred of which are accountants and financial analysts. It's an extremely complex business model, and there's endless opportunity to develop your financial modeling skills.

I found this and it helped me understand the legal lay of the land a little better:

https://www.nmhc.org/uploadedFiles/Articles/External_Resources/Fair%20Housing%20White%20Paper%202016-03%20FINAL.pdf

Essentially, the law does not adequately address shared housing. However, there is some federal case law supporting prohibitions on children in Single Room Occupancy (SRO) rentals.

Thus, while the right to discriminate against children in shared housing is not specifically enshrined in the law, such a policy may be defensible on the basis that there is a compelling child welfare reason behind the prohibition.

Still, this doesn't leave for much comfort in communicating rejections, ignoring leads, or declining viewing requests. Lack of awareness of case law could lead a rejected party to believe they have been unfairly discriminated against. If they bring a suit, the landlord will still need have cost to defend themselves.

Howdy,

I have a small portfolio of rental properties that I rent out on a "per bedroom" basis. I'm not clear on how the FHA applies to this type of rental. Because my business model means that I'm choosing roommates for other people, do I have the same right to discriminate that my tenants would if they were choosing their own roommates?

As a hypothetical: If I have one vacant bedroom in a house full of students or young professionals, can I lawfully turn away a single mother who has an infant? It is obvious that foisting a child onto a group of young, childless tenants is not reasonable, but reasonableness is not the basis of law, and I need to understand what the legal boundaries are. (Note: we sometimes accept couples, so single occupancy restriction is not an option).

Does the financial/administrative burden exemption of the FHA apply here? Obviously we do not have an issue with any particular demographic, but our administrative reality is that we need to create harmonious roommates situations in order to manage turnover and reduce requests for mediation in roommate disputes.

If the financial/administrative burden exemption does apply, where is the line?

What about the octogenarian whose home nurse visits three times a day applying to live with the group of PhD candidates who you know have a no guests policy so they can focus on their dissertations? Or the applicant with three emotional support cats when you know one of the existing tenants is allergic? Or devotees from the Church of Bacon applying to live in a house where all the other tenants are orthodox jews?

Before anyone speculates that these scenarios are unlikely, it's true that many inquiries will fizzle out when the person learns that they are demographically dissimilar to the other occupants. However, I still have to communicate with them in a compliant manner. Additionally, we've found that many older adults and/or single parents who are looking for house shares are doing so because they don't have other options. They may be willing to settle for demographically incongruous housemates in a way that might be less acceptable to said housemates.

Thanks in advance for your thoughts!

--Chris

Howdy all,

I'm currently working on a lead generation project to identify homeowners who may be interested in selling their homes using seller financing. The general idea is to pitch seller financing as an opportunity to turn an unwanted house into an investment (ie in a mortgage note secured by the sold property). There will be some digital marketing involved to bring traffic to a website designed to capture the leads.

I know there are regulations governing marketing for investment opportunities, but this seems like a little bit of a grey area. On the one hand, you could make the argument that you are marketing a financial product, which I think might bring it under the purview of the SEC (not 100% sure here). On the other hand, I don't see how this would be any different than posting a bandit sign and then pitching seller financing to all your call-in leads. I'm not looking to sell a reverse mortgage or home equity loan, so I'm not a lender. I'm just looking to buy real estate for rental or flip purposes.

Dodd-Frank creates certain restrictions on the ability to sell real estate using seller financing (which don't apply because in this scenario because non-consumer purchases are exempt), but how does it impact someone's ability to market themselves as a real estate buyer who makes their purchases using custom tailored seller financed offers?

I intend to hire a lawyer before actually executing on this marketing plan, but want to get some thoughts and feedback from this group to help me work expediently when it does come time to start shelling out lawyerly sums.

Best,

Chris Freeman

Co-Owner | Parabola, LLC

You could give the required notice now to raise rents to market. You'll have to revert later, but you may turn some apartments in the process and be able to move forward at market rate.

Sucks for the tenant. Hopefully the ones adversely affected are the ones that voted for it.

Count me in! If looking for a venue in Keene, may I recommend Machina Kitchen and ArtBar? They have a fantastic beverage selection and inspired small and medium plate dining, all served up in a chic lounge-like atmosphere. It's a popular spot for local movers and shakers. The landlord for that building is local and might also be interested in attending.

@Ryan Saulle, looks awesome! Would you be willing to share a little information about how you financed the project and whether you did the work yourself or hired it out?

5 percent maintenance seems low. Granted, you'll be maintaining a freshly remodeled property, but you still need capex reserves on top of day-to-day maintenance.

Were you upfront during the negotiations process about the possibility that you would cash them out early? I definitely intend to market based on a combination of cumulative returns and/or NPV, but I have mixed feelings about lubricating the deal with an offer of solid fixed income and then cashing them out at the earliest opportunity.

I do, however, think that an early pay-off is an opportunity for further negotiation in the form of offering to buy the note from the seller at a discount.

 Your comment: "My commercial lender will provide up to 75% LTV and will allow the seller to carry back the difference, thus eliminating the need for a down payment."

Your lender will require an appraisal and will lend the LESSER of the Appraisal or the Contract Agreement. 

So, for instance, your agreement with the seller is for $250,000 and your 25% carry back is $62,500 and your lender will lend you 75% or $187,500 based on the preliminary paperwork. This is what is agreed to but the appraisal hasn't been done yet.

Next, your lender will have an appraisal done but say the value comes in at $200,000 not the $250,000 you've agreed to. Remember, the appraisal is the basis of the loan to a commercial lender, not your contract price. The lender will drop the amount they will lend to 75% of the appraised value of $200,000 or to $150,000 and you have to make up the difference of the sales prices of $250,000. So, $100,000. But that now becomes a 40% carry back, with the lender now providing 60% of the funding of the original $250,000 if in fact the lender will allow you to over encumber the property which most won't.

Also, Balloons and Adjustable Rates destroy the value of owner financing in most cases.

Great point on appraisal. In our particular scenario, there is fortunately no balloon or adjustable rate.