All Forum Posts by: Dean Weltman

I did some research into this, including using a lawyer to look over what I was doing, and I came to the conclusion that wrapping an FHA loan is a bad idea.

I'm my case, the loan didn't say they 'may' call the note due, it said they 'WILL' call it due upon transfer of ownership interest... 

The experts on here I don't think we're focused on that aspect, but they are very knowledgeable and detailed in the many other reasons why they tell you not to do sub 2 and wraps on FHA loans.

Personally, I'm still open to doing a sub 2, as long as it's just temporary to get the home under contract. But I would definitely have a plan A and B on how to quickly get rid of the property's original financing... 

I'd say LOC. I don't like paying interest on money I don't need. Everything else is close enough that it's a wash...

You're going to need some type of LOC or personal loan (really the same thing). Maybe a private lender that knows you or someone to partner with that can bring the cash. I would think most hard money lenders would be a no go on this as they like to get their name on the deed, and they research it beforehand to ensure the value is there...

Try a HELOC, or look for private money/hard money on this site or through your local REI groups. Credit cards. Loan from your 401k. Family/friend loan. Get a Home Depot card where you get no payments and no interest for about a year to pay for materials and then do most of the work yourself or sub out the labor.

 It's my understanding that all such properties must go to auction first. If they don't get sold then I'm not sure what happens, but I imagine some counties might be more willing to deal directly with an investor at that time... Gotta do something. Most of these types of auctions are run at the county level - on the courthouse steps, as it were. 

The good thing about occasionally chiming in with something incredibly wrong is that it brings the experts out to set things straight. Thanks guys! Duly noted. 

 If that's correct, and it probably is, I imagine they're referring to paying yourself in any manner to manage the property. I would think that as long as you only pay for materials (like lightbulbs) and only bill the sdira for those materials you should be fine. But there may be extra scrutiny on your transactions. 

That's all a guess. FYI

 Justin,

What about paying yourself a reasonable fee for managing the property? I'm guessing that a no-no?

There are some very good posts in this thread. Personally, I would want to hold back some of that HELOC for emergencies. Assuming it's a LOC, you have the security of an emergency fund but you're not paying for it - although there is some opportunity lost... If it's a cash disbursement up front I'll be wanting to get a return on my money, ASAP.

And all that needs to be weighed against the cost of the money with the subsequent return, and then factor in the risk... 

Although the OP referred to them as a hard money lender, which I believe they are, the have a new product which is a long term loan for rental properties, probably similar terms to others in this niche. It's not a hard money loan he's looking at, but a loan with a 30 year amortization... FYI