All Forum Posts by: Steve P.

Brian,

I am assuming you are asking about my friend's rental. I would be purchasing with my SDIRA and probably no nonrecouse mortgage, just straight cash. So existing financing is not an issue.

The home has been for sale for $199,000 recently but I think he has a property manager looking for a tenant currently at $1300/mo. I think taxes plus insurance run about $183/mo. I think he is going to pay the property manager 15% for a top of the line job since he now lives 1500 mi. away. This used to be his personal residence and I believe he needs to walk away with a certain sale price or keep renting it out. Anyway I don't think he has a lot of room to lower the price.

I ran the numbers through analysis software with property management and other expenses. My cap rate would be 4.5%. I always look for a 10% cap rate but in my current situation buying this home to save my retirement home deal is worth it to me.

I hope the explanation helps.

Sorry I didn't explain better. I'm the one that first contacted my friend to help solve my problem. I have 25% down on a retirement home in Arizona. I can't get a large enough mortgage due to the fact that my newly built duplex and the rental home purchased as a package are in a brand new LLC. Mortgage lenders need two years of rental income before it counts so not only did I spend most of my available cash for the project but I can't get any income counted for the great rentals until two tax years go by.

So I knew my friend had a problem rental that he would like to get rid of. If you know anything about SDIRAs you know that I cannot borrow that money. I can distribute it making myself a huge tax issue. Instead I can buy his problem rental with my SDIRA but in turn I am asking him to lend his credit so I can get a full mortgage and prevent myself from losing the 25% down payment.

Is this a fair deal? What are the risks for my friend?

I want to put 25% down on a new home costing $320,000. I need a mortgage at 75% LTV. Problem is I just set up in a 3 person LLC in which we purchased a home that is rented out and purchased property on which we built a large duplex and just rented it out last month for $1960/mo. on both sides.

Both properties are great producers but I have to wait two tax years for the income to count and now my cash is also tied up beyond the 25% down payment. So I can't qualify for a full mortgage.

I have a friend that has a problem rental and he lives 1500 mi. away from it. I offered to buy it with my SDIRA relieving him of his problem if he will combine his credit with mine so I can get a mortgage on the new house. If I were to use the IRA to help me buy the house I want to buy I will create a huge taxation problem for myself.

What additional security does he need? What is the downside for him? I know I am creating a large problem for myself as the home I would buy from him is an 8.5 hour drive from the new home. But I can't manage a home in a SDIRA anyway.

Am I getting the short end of the deal, is it an even deal, or is he getting the short end of the deal? What's an even deal?

Rooster,

That is such a great response by you I will be quoting you in the attorney's office next week. Your response makes me very cautious. I fear I will go through a protracted legal case and it will delay me so long I lose out on my retirement home and down payment.

That makes a lot of sense. You have posted a great response and I find it very informative. I definitely need to see an attorney before I make any moves. Thanks much.

I did pay for title work. I pay a normal loan payment and I have made all of them for the last 5 or 6 months. But I will need to check for sure that the closing had charged me for title fees.

You bring up a great point and I will careful to make sure I am right about that. I just can't look at this time.

Thanks for the replies,

Steve

Has anyone ever refinanced and had the bank pay off the wrong mortgage?

I had two mortgages with Countryside which became Nationstar. One is a rental townhouse and the other is my personal residence. I wanted the bank to refinance the townhouse, not my home, and here is what happened. The bank paid off my house entirely, I owed almost the identical amount on both mortgages, but they placed their new loan on the townhouse. So in first position on the townhouse is the Nationstar mortgage and in second position is the new mortgage. There is no value there to cover the second position mortgage except possibly a small amount.

The refinancing took place in the middle of March 2013 and I received a call from Nationstar while I was out to dinner one night in May that I had two hours to pay the mortgage. Of course I argued that the mortgage was paid off. Well it wasn't. I paid the mortgage payment while on the phone and put off checking into it until the next day. That is how I discovered the mistake. I called the loan officer to tell him about the mistake and he said he must have written down the wrong loan number as both loans were almost identical amounts. He said he would correct it. As of Sept. 5 he has not corrected it. I informed him first around 60 days after the March closing and he has 90 days from the closing to get it to the title company. We are now 6 months along and he has not taken care of it. I went to the title co. about 3 weeks ago and they said there is no title work done on it yet. So I have been making regular payments for a mortgage that is supposed to have title work and it hasn't taken place yet.

He still has not corrected it. I have a retirement home being built out of state that will be ready for me to close on the first week of October and I can't get a mortgage because all the loan officers expect this mistake to be reversed or in some way changed and finalized. They can't even believe what I am telling them I don't think. Therefor I can't close on my new home.

I may have to seek legal help. But I was curious if I could just sell my house since I can cash out with no mortgage on it and just pay off the new house with that cash and a little extra that would be needed. The loan officer is obviously making my life very complicated by not taking action so what could I hurt by selling the home and pocketing the money.

The bank would be left in second position on the townhouse and wouldn't have any real security. I feel bad about that but could they sue me? Could I be taken to court? What rights do I have in this situation. It seems that I gave the bank every opportunity to correct the mistake and they didn't do it.

Does anyone have advice or an instructive story of such an event happening to you.

Thanks

Sounds exceptionally good but the expenses sound fishy.

$850-125-200 maintenance, etc. = $525 cash flow not considering lender. $525 times 120 mos.(10 yrs.) = $63,000.

If a property will pay all my initial outlay back in 10 yrs. I like it enough to do more due diligence. My expectation is this is a winner!

I can't give you much of an opinion on the metro area REIAs as I haven't been attending. I went to two CAREI meetings two years ago but decided it was not really what I wanted to do.

I am a rehab investor with two other investors and we have 4 rehabs currently in the works. We first started last February and have been able to gradually ramp up. The profits have been small really but the homes have also been small ones, a relatively quick turn around and sale.

I have 4 rentals as well and I am moving away from that to fix and flip.

Send me a personal message if you wish to talk.

Does the Kindle Fire have the same capability?

Can the landlord-owner deduct the cost of the ipad from his/her taxes?