All Forum Posts by: Damian Baynes

Wow! That's crazy. It's an unfortunate situation for the tenant but could work out to be a great deal for you. Good luck!

Sounds like a really good deal. Have you been inside the house already to confirm that there is no damage or issues inside? I've heard that people will totally wreck the inside of house they're losing to foreclosure because at that point they could care less what the new owner has to deal with. They just lost their house.

@Ellis San Jose I'm not dismissing the idea of approaching the seller about working something out, I'm just trying to have as many options available as possible in case they aren't interested in financing.

@Jonathan Flink The house and the lot are independent. The lot is not automatically included in the price. The owner just happens to also own the lot. They purchased the lot earlier this year. I'm guessing they figured it would make it more attractive to someone by owning the house and the vacant lot as well.

Hi Amy,

I'm in the NYC area as well and can totally relate. If you want to remain relatively close to NYC I would recommend the Philly area. You can find some very attractive prices and rental rates down there. I would drive the area and look around a bit to get a feel for it. Also, I heard there are parts upstate NY in the Buffalo area that have strong rental markets.

One mistake I made was not looking into how my purchase price would affect the taxes on the property. My taxes went up way more than I anticipated because I didn't look to see how the property taxes were calculated. That was a buy and hold property.

Thanks everyone for all the useful input!

@Aaron Junck I'm honestly not sure if the appraisal can support both the house and lot price but I am interested in this method. @Bill Gulley As far as using the proceeds for improvements, the company I am using for the exchange sent a ton of information regarding uses of the funds and I actually can use it for that purpose but I can't take title to the property myself until the work is done. Please see below:

"Construction/improvement exchanges occur when you wish to make improvements to the replacement property utilizing the sale proceeds of the relinquished property. This usually transpires when the fair market value of the replacement property is less than that of the relinquished property. If you were to

acquire the replacement property and construct the improvements, the improvements would not qualify as like-kind property. Therefore, you cannot take title to the replacement property until the improvements are completed. Typically, an intermediary will take title, sign the contract with the builder and have the

improvements completed. Once the improvements are completed, the intermediary conveys title to you. The improvements must be identified within the 45-day exchange period and title of the improved property must be passed to you within the 180-day exchange period."

@Tom Goans I totally understand its a process regarding getting approval from government agencies and such. The lot is already zoned where I could build up to a triplex by right and I would put in contingencies in the contract regarding the environmental tests done to make sure the land is suitable to build on, utility hook-ups,etc. The area, specifically the block in question is full of multi-unit rentals so though I understand it's not a guarantee and I definitely want to continue educating myself on the process, so far I'm comfortable enough with the risk involved due to the zoning being in my favor and the fact that the type of property I would like to build is not out of line with what's already in the area. My property management company I use for a property I recently bought in the area has a construction company as well and they do very good work.

I think at this point my fear is getting the lot free and clear if that's what will likely be required before I can build. I reached out to my real estate agent earlier and he said he's going to reach out to a few people he knows who know more about land deals and also recommended going to a local bank as they seem to be more comfortable taking on financing for lots and construction loan as well.

@Ellis San Jose Can you explain a little further. The way I intrepret your statement is for the seller to finance the house but how will I get the lot free and clear if they do that?

@Bill Gulley Ohhh.. Never knew it had to be free and clear before you can begin construction. Yikes! 50% is higher than I expected but I had a feeling it would be higher than a typical purchase transaction for a house.

@Aaron Junck Interesting idea as far as paying full price for the house and getting the land for cheap. Actually what they did at first was try to force people to buy the two as a package at one price but I guess that didn't work so now they are offering them separately priced with the option to buy both. With that being said I would have to offer them higher than their asking price for the house to get the discount price on the lot. The house definitely needs some work to get it to where I think it needs to be to get great rental income but I still think it's a great deal.

They are asking $160k for the house and $45k for the lot. So if I do what you're suggesting I would maybe offer $205k for the house and Get the lot for $100 or some small sum that I can pay off cash. Do you think this will this trigger any type of red flags though? One last thing I didn't mention is this is going to be apart of a 1031 exchange deal I'm selling one house I had the idea to buy the house and lot and then use the remaining proceeds left over to make to renovations I want in the house.

Thanks for your replies so far.

Hey everyone,

I've come across an opportunity where the seller owns a large house and also owns a vacant lot adjacent to the house and is trying to sell them as a package deal. This deal is pretty enticing to me because down the line I would like to get into development, though I'm not quite ready yet. Need more time to understand the process. My question is how would I go about getting a loan to purchase the lot? Even though I would buy them as a package they are technically two separate properties and I'm guessing I would need two separate loans for the two is that correct? Are lot loans difficult to get? I do not plan to build on the lot for about maybe another 6-8 months. Any advice in this area would be greatly appreciated.