All Forum Posts by: Ryan K.

I recently tried a refi on my primary that includes rental property.  Great initial customer service, friendly sales guy, hired local appraiser, then I didn't hear anything for 2 weeks.  I followed up and found out that the underwriters said no because there is a commercial insurance policy on the rented detached house (AmFam agent said this is how it has to be).

So, good rates, good customer service, until you don't hear that the underwriters said no.

I made an offer to purchase a property.  The owner bought it in 1977 for $55,000.  It's been fully rented (house and mobile on property) for 5+ years.  Sale price is $525,000.  I'm having difficulty financing because of the mobile on the property, but I believe the rental income outweighs removing the mobile for financing simplicity.

The seller countered with provisions including:

"1031 Exchange.The Buyer shall cooperate in taking any and all actions, and executing any and all documents necessary to effect a tax deferred exchange for the benefit of Seller.
Should there be any cost or expense arising from or out of the Section 1031 exchange, the party seeking such 1031 treatment shall pay all such cost or expense."

"Seller may elect to have their attorney/accountant draw up a Structured Sale, in the event Seller determines that they want to use the Structured Sale strategy for capital gain deferral. Buyer agrees to sign such documents with no extra expense to Buyer."

So, it is obvious the seller is trying to avoid the huge capital gains hit. Would it be advantageous for me to suggest seller financing? At a competitive rate (80% LTV, 5/1 ARM, 30yr, 4%?), it would simplify my financing.

Would it be advantageous to him to seller finance?

I'm working toward a purchase on a 100+ year old home.  As the first reply said, it's near city center (that's where the real value is for this one).  Considerations I've found so far include: various layers of outdated insulation (mid-80's fiberglass stuff laid over old vermiculite), 1x2's nailed together to create 2x4's (but still relatively sound structure for the age), asbestos siding (needs a powerwashing and I've found it's totally OK, until it's time to rip it off or demoed), 1" galvanized metal water main is very old, electrical wiring that is visible is a hodge podge mess, there's an old gas pump on the site (not sure if tanks are still buried), real bad mold in bathroom, at least 3 layers to the foundation (that looks solid still), ugly old wallpaper, cigarette smoke smell, kitchen is a complete gut and remodel, nearly the whole home is.  All that said, I'd take a solidly built 1900's era home over a typical 1950's home all day long.

Do your homework.  When you go for the inspection, take a flashlight, clothes to get dirty, and hopefully someone with a lot of experience with old homes.  Good luck!

The house is 105 years old, 1.5 stories, maybe 2,000 sf plus unfinished basement. House is disgusting, nearly a complete gut and remodel.  It's in an expensive area, between Vail and Aspen.  Similar aged homes are selling for $350-450k depending on condition.  This home requires $150-250k, so value as is (my offer) is $300,000, no higher than $350.

It's listed for $650,000.  The seller believes he has a future development site for apartments, but the reason it hasn't sold yet and the reason I think it's presently worth 1/2 his asking, is that there are significant challenges to development that are unsolved, like zoning, utilities and access over a railroad crossing.

I think I'm going to write a reasoned and well-researched explanation to all the issues with the property and email the owner (we've emailed a few times and talked on the phone once but it was months ago when the property was first listed.

I presume Brent isn't talking about Chairman Mao? What is MAO?

I'm working on a deal now for a very challenging property.  There's an old house in very poor condition.  Highest and best use is 25-50 apartment units, and the seller thinks so and has it priced as such.  I have put in significant due diligence and, based on a myriad of reasons, high-density multi-family development on the site will be extremely difficult and very expensive based on the current zoning, the existing water and sewer and, most of all, an out-of-service Union Pacific railroad track.  Based on this research and the obstacles that need to be overcome, in my opinion, it's worth about half of what the guy's asking.

Seller is out of state, I believe he's about retirement age. House is rented out but hasn't seen maintenance of any kind for a few decades. Property has been on the MLS and in the local paper for over 6 months, which, in this red hot market, shows it is overpriced or too challenging.

What is the best strategy to convince a seller to take half of what he's asking?

The water rights are discussed in the MLS and I've been able to verify a number of public sources regarding the rights. Not sure if it is able to be concealed from the town or not, but not a bad suggestion. The previous town manager (held the post for 30 years, transitioned Eagle from a rural ranching area of less than 1,000 to a semi-resort area of 7,000, while maintaining an authentic community) was cutthroat on obtaining water rights from developments. There haven't been many subdivisions approved under the new town manager, it will be an interesting process, I am sure.

The first step is still to inspect tomorrow, then begin the offer process with the seller.  If we actually get it under contract, these other steps will ramp up quickly, including current financing and future development ideas.  If all goes as planned, I'll give updates.

City water, sewer, trash.  Gas and electric from the major utilities.

I'm going to look at the farm house again Friday for an in-depth inspection.  I believe at this point, we will get it under contract as a primary, remodel the house for ourselves, then start the development plans.  On first look, the plumbing looked modern and good (no idea on sewer).  Electric is the anticipated 100+ year old hodge podge and will be a big item to check Friday.  After the inspection, I'll have a much better idea on an offer price for an old farm home.  Really, it'd probably be worth more as a vacant site, but I think I can get price leverage by buying an old home that needs lots of work.

 Eagle is a small town (pop. 7000).  To my knowledge, there is not a single underground parking structure in town (maybe on a few homes, but really can't think of an example.  Vail, 30 minutes west, has multiple multi-story structures.

 My fiance and I combined.  This is another complicating fact but we both recognize it is a great opportunity.  What do you mean strip the water rights?

Thanks for the responses guys.  Since posting, I've continued researching.  This area is slated for a whole new River Corridor development plan, with flashy new parks from the town and great plans for private sector development.

This site has a MINIMUM recommended residential density of 17 dwelling units per acre x 1.4 = 24 units minimum.  Denver is booming with apartment development, so there is a close comparison, and most of the projects recently completed or under development are 100's+ of units, not 24.  Demand in this area is not an issue in the foreseeable future.  We're #1 on this list:

http://www.marketwatch.com/story/5-least-affordabl...

and we're in between #5 and #8 on this list:

http://www.realtor.com/news/trends/top-10-markets-with-million-dollar-homes/

With the small site, the question remains, what is the smallest feasible size for an apartment building?