All Forum Posts by: Duane Gunkler

Yes, the loan is in our name and we own the land.  The lender has been helping us as much as they can, but there is only so much they can do.  What I've started doing is buying the materials myself (like cabinets, tile, flooring, pool, etc.) and then the bank was giving ME the draw instead of the builder.  That way, I know the money went to the supplier and the materials/work.  I have now paid for pretty much everything I'm able to ahead of time.  Everything else that needs done will be billed after the fact, like plumbing finishes, driveway and sidewalk pour, retaining wall, etc.  So, my guess is that they're going to ask me for the money to do those things, and I'm going to be in a tough spot at that point.  I don't yet know what I'm going to do.

Thank you so much for your input!

 You are correct.  It is a custom home and our contract is with a builder.  The bank has been having inspections done prior to the draws, but there was plenty of things that have been done.  We are past drywall.  Most of the bathroom tile has been installed (we are still waiting on our Main Bath tile - coming next week).  The dragging of his feet has mostly been to him running out of money and having to wait for other draws/projects to complete so that he can then move forward on ours.  I have strongly considered firing him and finishing with someone else, but I don't know the legal ramifications of that.  There is still roughly $139K left to be drawn from the bank.  I think we are going to have to contact an attorney because this just doesn't look like it's going to end well.

Thank you for your input on the matter!

 This was a custom home and we have a construction loan, so we own the land they are building on, so I'm not concerned with them trying to put us in that position, but I know there were a lot of people in those shoes with the cookie cutter homes.

I appreciate the context and input.  Thank you!

Hello BP Community,

Have a question about my personal home.  We are building a new home and did a construction to perm loan.  We signed the contract last April and were originally supposed to be in by last fall.  Here we are a year later, and we're still waiting for them to finish.  We have a fixed-price contract, but the builder is saying that they are nearly $250,000 over budget (Contract price is $781,000).  Additionally, we have gone past the 1-year mark for our construction loan.  The mortgage company gave us a 3-month extension, but we are concerned that we still won't be able to get the CO in time for that deadline.  If we don't make the deadline, they will give us another extension, but the rate lock will not be honored (we have 3.5% now).  So, that means we will jump up at least 2% on the rate.  If anyone here could give me some advice, I would be most appreciative!  The major reasons for the delay are money related.  The builder is doing several homes and we are confident he used the money from the draws to pay for other projects, so then, when the money was gone, he had to wait for other funds before resuming work again.  They are suggesting that they're going to be asking me to come up with the additional $250k at some point in the near future.  I'm happy to share more details if need be.  Thank you in advance!

Looking at purchasing a vacation rental on the Gulf Coast somewhere.  Would most likely be in March of next year before I purchase, but wanted to start looking at all the numbers to see what to expect and decide if I should go for a condo or a house.  I would use the unit mostly as a short-term rental with a property management company running it, and would stay there a couple times throughout the year (in the slower seasons).  Wanted to know if anyone here has a property and would be willing to share some of the numbers so that I know exactly what to expect?  Thank you in advance!

Curious to hear opinions on the BP Community's experience with rentals.  I am under contract on a 2/2.5 Townhouse that I will be renting out.  It has a great roommate floorplan with all living space downstairs and two master suites upstairs.  Current tenant has paying $1200/mo because she has been there a couple years, but market rent is now between $1300-$1400.  I will be closing at the end of this month, so I have not started marketing the property for rent yet, but I was also considering renting it out as a roommate scenario for $800-$850/person.  My guess is that renting it as a single unit would carry less potential stress/hassle and possibly less vacancy.  Would love to hear your thoughts?

@Larita O'Bannon -- Welcome, and congratulations on starting the journey!  I am doing the same thing right now with conventional financing and a loan against my 401k.  I think you might get mixed responses on taking that approach, but for me it made sense.  Obviously, like everything, there are risks.  The biggest risks with taking the loan against the 401k is that if you leave your job (voluntarily or otherwise), you typically have 90 days to pay off that loan or it will be treated as a withdrawal and subject to the 10% penalty and taxed accordingly.  I'm guessing that you are not going to be house-hacking and living in the multi-family, but rather maintaining your current home with your family.  If that assumption is correct, you will need 20-25% down on the MFH.  Typically you can borrow up to $50,000 against your 401k (or half the balance if less).  Also, if you use the 401k loan toward a primary residence, you can spread the payments out over 30 years, but on an investment property, you will have to pay it back over a max of 5 years.  I only mention that to be sure you factor that in as part of your cash flow.  Even though you're paying yourself back the interest, it will be a new monthly amount coming out of your paycheck, and could be a significant amount depending on the size of your loan.  Best of luck with it and keep us posted!

@April Paytes --  The biggest difference in your scenario vs. Larita's is that you will need to go with Commercial financing if it's a 6-unit.  Anything over 4 units is treated as Commercial.  Keep in mind the financing terms aren't typically as attractive when doing your cash flow.  I haven't done commercial, but from everything I have read on here, it typically carries a little higher rate, and shorter term.

Just my newbie two cents, but look forward to hearing all about both of your journeys!!!

Awesome.  Thank you @Kyle J.

@Bjorik Mutize -- Thanks for the ideas. The market on multi-family has just gone up so much in the past year in my area (and I would imagine all over the place). The quads that are available on the MLS now, in the same neighborhood that I was looking a year ago at $250K are now $385K-$400K!

@Ehsan Rishat -- I have been looking at neighborhoods that have multi-family, but there just aren't many in the places I want to live, and what's out there is just way too expensive for me to make the numbers work.  I'm also scared playing those inflated prices in case the market does settle a bit.

@Shaheen Pirouz -- I have been in contact with a couple wholesalers, and some of the issues I mentioned above.  Also, I am looking to do Conventional Financing, so not looking to go the Hard Money line or cash equivalent that a lot of them need.  

Bottom line, I decided to take a lower variance approach and went to contract on a Townhouse today. I'll dip my toe in first and get some exposure to REI and then build from there. Thank you again to everyone for all the help and advice, not just on this message, but in my time at BP. Such an amazing resource and network of really nice and helpful peers!

@Kyle J.  Thanks for the recommendation.  Looks like they are very polarizing.  Some people love them, and a fair amount are not happy.  I always take negative reviews with a grain of salt.  Things like people being mad they were charged a late fee when they didn't pay their mortgage on time, etc.  Easy fix - pay on time!  LOL