All Forum Posts by: David Lee Hall, III

Current meetups I recommend:

Bigger Pockets Pittsburgh / WPREIA: 
https://www.facebook.com/WpreiaPittsburghReia/
SWIG (SouthWest PA Investors Group): 
http://www.swpainvestorsgroup.com/
ACRE (American Congress of Real Estate):
http://www.acrepgh.org/ClubPortal/ClubStatic.cfm?clubID=1346&pubmenuoptID=18385

REIA & ACRE are free the 1st time and require memberships or per meeting fees afterwards.
SWIG is always free but as it is held at a restaurant it is asked you buy dinner/drinks to keep it free. 

There are other groups as well and sub-groups of these for specific interests (commercial, landlording, etc.). I recommend you attend each regularly to keep in the look on strategies, laws, properties for sale, etc.

Are you terminating a lease or simply not renewing it? Sounds like you are not renewing it after the first year. In that case usually it would roll to a month-to-month unless a new one is signed. I believe 30 days is required, but I am not a lawyer or professional property manager so don't quote me on that. :-) 

It only applies to owner-occupants in PA. So assuming SFH you would be out of luck on getting it applied (I have tried - best bet is to buy in January as it is only evaluated yearly, so you could get a year of reduced taxes).

Additionally, there are bills on the floor in Harrisburg that will be voted on this year to drastically change the school tax setup and expand the homestead availability. Unfortunately it looks like the current proposals are looking to shift the tax burden for education to investors with this. Brad Dornish (local PGH lawyer) has a couple articles written over the years about this. He presents monthly at the Pittsburgh area American Congress of Real Estate meeting. If you are in the area I would recommend you stop by and introduce yourself. 

These changes all stem from a lawsuit sitting at the PA Supreme Court about how funding tied to the school district properties is not fair for depressed areas and violates the PA Constitution's edict on education availability.

Articles:
https://dornish.net/is-pennsylvania-ready-in-2018-to-end-most-property-tax-for-funding-public-schools/
https://dornish.net/is-pennsylvania-ready-to-end-most-property-tax-for-funding-public-schools/

I have a contract I am selling to a friend that would like to do a double or simultaneous close versus an assignment (could be dry closing, but not required). This is off-market, and he is aware while the home is under contract to me I do not own it. Does anyone have a standard contingency they would be willing to share I could add to my contract given the sale of B (me)->C (him) is dependent on successful closing of A (seller) ->B (me) for legal protection purposes? 

Yes I trust him and yes I would still prefer to include said contingency even though these types of transactions are sometimes viewed as shady. Everything is above the table here, I have just only ever done wholetail with a few weeks between or assignment scenarios. 

I have a deal that I am selling to a trusted person. Often (actually always) I would do an assignment. However, he would like to roll the fee into his acquisition loan. This requires a double-closing or simultaneous closing (dry or not doesn't matter). Does anyone have a contingency they would share for the B->C contract since A->B has not occured yet? 

Sounds good - the only thought I have is potentially on the new short sale. If it is possible to take out a loan on it (FHA, low interest, 30yr) since you will be living there, you may be able to save your cash and use it to finance a 3rd purchase without even touching the original house. It could be more cost effective to do that as a primary residence and only paying closing costs once on it, versus having to pay closing costs on it, and then closing costs on a cash out refi at most likely a higher interest rate on the original house since now it will be viewed as an investment. Nothing wrong with your current approach, but you could save several thousand depending on rates and closing costs by using the power of owner-occupancy on that 2nd property.

Unfortunately burns are out of my league. I think you definitely need a specialist to get appropriate value. I did look at a burned duplex one time and one contractor I had used previously that had experience in the area blew my thoughts on rehab costs out of the water - was almost 2.5x what I thought it might be. As @Jeremy Lee said, if you can put together the appropriate ARV and comps and provide what it was rented for, it may turn out to still be worth rebuilding for someone. You might try contacting ServPro or Panhandle Cleaning & Restoration* to see if those companies know any investors that may be interested. Could be a more efficient use of time than Craigslist and dozens of inquiries.

*I do not personally recommend these companies, they are just the only two I know off of the top of my head. Google looks like it can provide many more. 

Just an update for anyone following this thread.

Plan of action thus far, as decided after talking with a couple lenders and the 3 posts I had on this topic.

1. 1. No reason to panic since my original HML acquisition loan isn't due until June
2. 2. Look into business LOC which could be used for HML relief and may acquire other small $ rentals for bundling
3. 3. I spoke with a previous HML lender that I was below their minimum, they said they might make a one-time exception since I am a previous customer, but I may have to pay extra points.
4. 4. If I can acquire other properties in a similar value range, then I could potentially bundle them all for take-out. Looks like they would need to be at least $50-60k in value individually and total $200-$300k. While I have enough leads to do that, not sure I have enough time or holding capital to try to get 5 or 6 done in 5 months. Usually I am more of a 1 per 2 months guy as I am still building processes. 
5. 5. Put a tenant in, sell it turn key. May take a loss. (It would easily beat 1% rule at fully appraised value, but if someone was buying at 70% I would take a loss. 
6. 6. Refi into another short term loan. Likely will take a larger loss here since as-is appraisal will be lower and I wouldn't be able to take out as much, plus you know, points. This is just kicking the bucket down the road, but allows for #4 to be more viable, or maybe hitting that 2 year mark on self employment and being able to go back to my local bank. 
7. 7. Look at personal HELOC or similar to take out the HML acquisition loan. (This is least likely as it is owned in my C-Corp and those types of transactions have not been recommended by my lawyer, plus my wife might kill me.)

@Odie Ayaga

I have not looked into that at this time, but will definitely inquire with some companies on that front. I was in a presentation last week from Merrill Chandler and he was discussing this promoting his company. Unfortunately his strategy was not really viable for me Given business structure. I think perhaps I should look into it more just for cases like this. A $250,000 LOC could easily buy and rehab 3-4 Cash-flowing properties and then have the money recouped by packaging them for a long term note. Not a huge fan on the package idea as usually you can't sell one without full repayment, but so long as it is done in small blocks that shouldn't be too detrimental.

@Dan Gamache

Oooooh, I am excited to see you here. I want to pick you brain for no comment. :-)

So I am in Western PA, home of the 60-90k ARV. I own a few of these that I have bought either with cash or a small bank (before giving up my W2).

Without the W2 I have obviously lost an avenue for but or HML refi.

This thread is a perfect example of risks when things go sideways. 

I have every intention of buying more in this range. They usually are good houses, can get a decent tenant, and rent $900-$1000 a month. I have one under contract right now for $26.7k that needs $10-15k for $900/mo. ARV is mid 80s. Obviously in the appraisal risk zone.

What would be your recommendation on how to handle these from a finance perspective to meet my goals of having a long term note with PITI under $600/mo?