All Forum Posts by: Eric Gross

Recommendations for an attorney in Georgia anyone?

Thanks @Jeff Rappaport that confused the ever living... just kidding it actually makes a ton of sense. I'll have to check on the Land Contract vs Contract for Deed the property is located in Georgia. Good thoughts on the ease of eviction in case things go south.

Georgia is good at protecting the owner/landlord with evictions not taking long at all. I'll see about the land contract vs eviction process.

So I'm piecing this together. 

• Lease Purchase or Option
• $5k a non-refundable deposit / option consideration
• roof to be repaired in 2-3 months upon which time switches to land contract

Okay fill me in on the reason for the Contract for Deed. It's usually used when the buyer doesn't have credit to qualify for a loan correct? Would I be creating a mortgage note? Without the legal title, will the buyer be able refinance the loan?

Thank you so much.

Okay so I used to be pretty smart. Or so I thought. But it's been a while since I've done anything remotely "active" in the property investment world. I have been renting out a few places as a sole proprietor that just about squeak by, loving the tax writeoffs. Until now. 

Turns out that the roof on my SFR rental is done. Estimated costs about $10-15k. And I just don't have that kind of scratch laying about (and oh yes, a baby on the way).

So whilst I've always loved the house, but I'm thinking it is time to sell. I owe about $125k, and in it's condition (dated features, need for repairs) that's just about what it's worth, add in any closing fees and it's a wash. ARV according to the comps my property manager pulled it might go for $150-155k.

The new tenant which my prop manager just put in, wants to buy the place. He's a renovator from Cali, likes the place for his own residence. But has got some interesting terms, which are throwing me for a loop. So I'm looking for a little Bigger Pockets community insight:
(I'm using "quotes" where I'm pulling directly from his email so to all you helpful readers out there that means that's his wording, I've got no more details than that. But I would love your insight.)

• "As Is, Where Is" a sale price of $130k with owner financing. "As mortgagee, I expect that the owner, as mortgagor, will hold the property title and will issue a deed of trust."
• Down Payment of $5,000. Due before signing on Friday, April 8th (yeah that's not happening.)
• "Will pay for all repairs/maintenance, owner/mortgagor is released from all liability w/o warranty. No home inspection appraisal required."
• Wants to do a "7 year @ 7% Fixed APR interest, until refinancing." No prepayment penalty.
• According to his math, with annual property tax that payment comes to "$2236.59/mo." (my math put's the figure about 30 bucks less, but I'm only so good with a spreadsheet.) Which is about a grand more than I usually get for rent, which makes me think yippie, yippie, but also makes me skeptical.
• "Mortgagee will get property insurance and a home warranty."
• "24 months or less is target for refi" however added, "We would like to request a caveat, 'in the unlikely event' that as mortgagees we are unable to refinance within 24 months or less, then the mortgagor agrees to annual extensions even upwards to the full seven years term."
• Seller takes care of closing costs and fees.

Okay so that's what I'm looking at. To me it seems overly complex, and frankly, I think issuing a deed of trust would trigger a due-on-sale clause. Am I right? Or is this a wrap-around mortgage (if thats the term). It also seems pretty quickly forced, which leaves a bad taste in my mouth, you know rushing into something you don't quite understand—I hear that's not always a good strategy. He and I have been going back and forth for a bit through my property manager/agent, so if I were him, I know I'd opt to pay as few rent payments as possible.

I like the idea of coming up with a win-win solution here. But by all means if any of you guys smells a giant rat, let me know! I mean let me know why too that'd be great.

For those playing at home, try running your numbers. My powers of spreadsheet skill say, at 2 years he'd owe me $95k remaining principle, and will have paid me more than $29k, which minus my loan nets about $13k. Makes it seem like I'm coming up roses, and even more so triggers the spidey sense.

I've had a few people ask me to keep them informed of my homevestors project. Its caused a few moments of unease, and its still a work in progress. Check it out at [LINK REMOVED]

To answer back to some posts. Yes I realize that there is a very low equity spread on this deal. But I wanted one with minor repairs, so I accept that the return would be low. I'd rather do one locally, but I live in California, and I think it would be very easy to lose a lot of money quickly in a rehab deal, especially here in California where everything seems to need a new foundation. This is my first rehab, I'm bound to make a few mistakes. The appeal of a HomeVestors deal in Georgia to me is my familiarity of the area, and for what its worth, I get the experience and mangement of HomeVestors. Sadly I realize that I won't get the hands on control, but I won't be getting calls about every little rehab issue and they are marketing to and qualifying the buyers.

When all is said and done, if my $500 investment nets me anywhere from $200 to the possible $20,000, I'll be stoked. To me its more a learning experience, hopefully I'll find it a good and profitable experience. If anyone else can offer me a similar turn key operation, I'd be willing to check it out.

A while back, I was set to purchase 6632 Slatewood in Charlotte NC. I'd post the link, but the site won't allow it, I see they've raised the price almost $10k. The LLC under the HomeVestors franchise the whole time were up front telling me that they never inspected or lived in the home. I signed the contract and got an inspector in the next day. The repair work was estimated at over $10k, including foundation work, so I used the escape clause that their contract had in it.
The LLC tried to persuade me to keep in the deal, as it was still a good deal, and it was already setup with a lease purchase tenant in place. The LLC also guaranteed a number of months rents and was going to hand me the substaintial non-refundable deposits from the tenant.
Ultimately I decided not to pursue the property. Feeling that there were just too many things I didn't quite understand and that unexpected $10k repair bill.

Someone should contact them and casually see if they mention the foundation repair estimates. Just you keep my name out this okay? Thanks Post the response here, no need to get ugly. Personally I'll bet they don't disclose, but I hope I'm wrong.

Currently I am persuing another HomeVestors deal in Atlanta, GA. I just closed this week, $13k worth of repair work I'm told has already been started and should take 3 weeks to finish (a list of necessary repairs was provided). I'm also told there are already a few buyers interested. For $500 out of pocket, I have purchased the property for $99k, there were $3k worth of fees on the hud 1, and a repair escrow of $13k was setup. All was included into a wrap around mortgage with a baloon due in 3 months. It should retail for $140k. But for a limited time, because I'm so nice, I'll give one Bigger Pockets member the opportunity to buy it now for just $139,900. Act quick supplies are limited. :)

My take on HV is that they are people. Some people have more strict ethics than others. As with any deal trust, but verify.

I don't usually check here, but I will try post updates for those interested.
4/5/08

Also let me know if you've worked with other operations or wholesalers.