All Forum Posts by: Dean Baluch

Thanks! And you reminded me to report back :)

Last year turned out better than I would have thought with the pandemic. Savannah remained very popular with tourists and short term rentals in general did better than hotels. I filled the vacancy upstairs with sophomores. I didn’t convert it to short term because it was too early in the pandemic. The numbers are very close but hard to compare honestly just yet. I refinanced everything and improved the cash flow the last few months. So far, everything has been positive. 

I worked with a broker who specializes in short term rentals to buy the properties. I can have her contact you if she’s taking on new clients. Let me know. 
i have not done a rehab so I can’t comment or recommend on that. 

Multi families in the Victorian district seem to be a good investment with good cash flow potential. Savannah is a very popular short term rental market but permits are required  and the city has stopped approving new ones. Properties with transferable permits sell at a premium. 

I have 2 condos with permits and comparing long term with short term economics between them. Of course Covid has affected business but it has rebounded pretty sharply. It’s early so I don’t have a comparison yet. 

I will be looking for another long term multi family later this year. 

I have 5 doors in Savannah and it feels undiscovered. Though, I’ve heard this has been the talk for sometime.  Lately though, there is a lot of development along the entire Route 16 corridor from downtown all the way to I-95 and the airport. I could see it completely filled in over the next 20 years. The entire area is screaming for a midtown gentrification ... something to bolster the mall and maybe some taller buildings or business parks that wouldn’t fit in downtown historic/Victorian districts. I could also see the north side of the river developing nicely ... there’s nothing there other than a Westin resort. 

I purchased two similar properties and one is long term rented, the other is short term.  You need permits to short term in Savannah and they are hard to get, so the properties happened to have them already.  Long term is easy ... tenants pay bills, management takes a fee.  Short term is difficult to forecast, but the property management companies have models.  I just added a margin of safety on their monthly cash flow estimates for my initial cash flow analysis.  I learned that I underestimated the cost of the bills I would but the predicted cash flow was healthy (3x the monthly cash flow on average).  All was going very well until this virus hit.  Hopefully, the warm weather and some good news out of the scientific community will get things back on track.  I will keep monitoring and report back here.  If all goes very well, I'll convert the other property to short term as well once the tenants decide to move out.  They are SCAD seniors so they won't be there much longer though I'm happy to have them.  

I have 2 long term and 1 short term rental in Savannah, GA.  Great town, undercover. Let me know if you want to share notes, but I'm still a novice.

Brooks - I am looking to do something similar with 2 partners.  But I'm curious if there were any lessons learned you could provide here and hopefully answer my shotgun questions...

I'm assuming it makes sense to use the same lender?  

Do you both have similar credit scores and thus would receive the same rate?  

Was your lender able to combine any redundant fees or provide a discount on the underwriting?  

Have there been any issues at closing?  

Did one of you have to be a primary on the loan? After you close, did you transfer to a LLC/LLP?

I'm happy to report that this issue was resolved.  

I determined that they had no cause for accelerating the loan and that in such event, I would have 60 days to refinance.  I let them know that those costs would be pursued in court and that I was hopeful another solution existed.

They first came back with a "compromise" that involved a refund of the appraisal and another fee that essentially split the difference.  I politely refused and asked to speak with someone who was able to fix this without having to file a formal complaint with CFPB.  

Within 24 hours of that, I received an updated HUD to sign that offset the balance with reduced lenders fees. I reviewed it three times and confirmed that I did not owe anything additional and the loan was sold a few days later.

The culprit was GoodMortgage.com.  

They were able to give me a really good rate and the loan officer was friendly.  I really did not appreciate the heavy handed threats to squeeze me for a relatively small amount of money that was entirely their fault.  

I hope this information is useful to the community.  Thanks everyone for your help in understanding the issue and recommending some solutions that helped me win one for the little guy.

Hi Jon - thank you for the response.

The stack of paperwork does include an Assignment of Leases.

The Uniform Residential Loan Application has a checkmark in the box next to "Investment"

The Affidavit of Occupancy states that the property is "Investment Property:  Not owner occupied.  Purchased as an investment to be held or rented."

The only language they seem to be using is in the Addendum to HUD-1 Settlement Statement that states:

"Agreement to Correct Clerical Errors.  In the event of a mistake or clerical error in any of the documents or in any amounts paid or received at closing resulting therefrom, Seller and Borrower/Purchaser agree to promptly execute such documents as requested by closing attorney and to pay any amounts due to owing as a result of said errors ..."

And in the Compliance Agreement, "... if requested by the Lender ... to fully cooperate in adjusting for clerical errors, any and all loan closing documentation deemed necessary or desirable in the reasonable discretion of Lender to enable Lender to sell ...  said loan to any entity"

I don't really see how this is a clerical error since it is consistent with the contract.

If the loan isn't acceptable to Fannie Mae by their own mistake, then they should pursue another investor that doesn't have that guideline, right?

Hi Mary - thank you for the link. They are up there but have > 4 stars though not too many reviews. I won't out them here until the matter is resolved. But everywhere I looked had them very highly rated and they offered me by far the best rate, though I'm earning it now I suppose. 

I'll let everyone know how this develops. 

Thanks, Wayne.

I reviewed the document I signed and it seems to me only applicable to "clerical" errors.  That's some reach.