All Forum Posts by: Greg Kimura

Hi Kris,

Thanks for your response.  Here are the answers to your questions.  She's going to use the money to live off of and also for some overdue repairs on the house.  The house is one of her rental properties.  The house does have positive cash flow, but since she's not working, she uses the income for her living expenses.  She has one more rental plus we're 50/50 on another, so she has 2 1/2 houses of income.

In 10 years, she can start taking money from her retirement account.  She told me that she should be able to pay off the loan in 5 years, but worst case is that she may need 10.  Our agreement on the loan is for one 5 year option at 5% interest, again due in a balloon payment.

The other reason why I need to have a lien position is that my better half wants it.  She and my sister get along very well and are good friends - it's just something that she wants.  I get it and we're all okay with it.

Thanks again for your help.

Greg

Sorry, this is a repost - I had a bad title on the last one.  Here goes:

Hi Everyone,

I'm new to this site and I was looking for help to do a hard money loan. I have lent money to friends and family in the past and after the last debacle, I was told that I should have a lien position behind the first mortgage. I have no idea how to do this.

Here is the information on the loan: My sister has a house that she would like to get a second mortgage on. The banks won't lend money to her, due to her debt to income. I have some extra funds and I want to help her. I know it sounds crazy, but I've agreed to a 2% loan (under 10%) with everything due in a balloon payment in 5 years (interest and principle). I have the loan documents written up and I have the money ready to lend. I want to make sure I have a lien position under her first mortgage, just in case. Her first mortgage is for $75K, the house is worth $165K and I'm going to lend her 100K. I know it's more than the property is worth, but she's my sister and she needs the help.

And advice on what to do and how to do it. I'm trying to keep the expenses down.

Thank you.

Greg

When doing a rehab/flip, make sure you don't overspend.  You should have made a budget before buying, which would've given you an estimated profit.  Try to stick as close as you can to the budget, because unknowns are bound to happen and if you do come in below budget, it just increases your profit.

Remember that your goal is to make a nice profit.  If the cost of the soft close drawers isn't much (it shouldn't be) and it fits in your budget, then go for it - but only if you believe it will help sell the house.  If not, then pass on it - I doubt you'll lose the sale if your house doesn't have it.

One more thing.  If the other houses for sale have soft close drawers, then yours should too.  Again, I don't think they do, but take a peek at houses for sale in the area.

My advice is to consider what your goal is.  If the money is to be used for a RE investment, then don't worry about getting returns between investments.  Just park the money in a safe place.  You want the money to be there when the opportunity knocks.  Remember that that's what your goal is, right?

Also, a a former employee at a credit union, I can tell you how important it is to keep your account balance below $250K. FDIC and NCUA only insure up to that point and you never know if your financial institution is going under - I've seen some drop without warning! Also, if there is a financial crisis, you want the cash ready to go, because that's when some of the best buys are found.

Good luck and always remember what your goal is.

No dog has ever lived at the house?  It sure looks like a dog did the damage.

Here in So Cal, it's hard to get a B neighborhood SFH to cashflow. The prices are too high and the rent isn't high enough. I agree with James Mabe - the people who live in better neighborhoods typically are owner occupied or if they do rent, they'll stay a long time. And even though you can't get a positive cashflow, you will enjoy a higher than average appreciation in value.

Back in 1989, we bought our new home and we turned the old one into a rental property.  The market here in So Cal was very hot and was about at the peak.  Our real estate agent told us to keep the old house and he would help us turn it into a rental.  His reasoning was that property values were going up so fast that we would be foolish to sell the house.

Well, we listened to him and he not only had us hold the house through the peak of the market, but he also put in the worst tenant possible.  It took four months to evict this person.  I couldn't believe that he let her in - she only had one week rent when he let her in.  I had heard all kinds of stories about landlords changing the locks on tenants, so I did it.  The next day, a police officer came to our store and told me that I had to change the locks back or give her a new key.  If I didn't, she could get $100/day until I did so.  I told him that she hadn't paid rent and he told me since I didn't know the law, I had better get an attorney.

From the fateful day back in September 1989, to the time we finally got her out in December 1989, I thought I'll never do this again!  Well, when it's in your blood, it's in your blood.  I have been engulfed in the business of investing in property and being a landlord.  I've learned a lot of lessons, some were very expensive indeed!  I still make mistakes and even though we turned the corner years ago, at times I still feel like a rookie!

Hi Everyone,

I'm new to this site and I was looking for help to do a hard money loan.  I have lent money to friends and family in the past and after the last debacle, I was told that I should have a lien position behind the first mortgage.  I have no idea how to do this.  

Here is the information on the loan:  My sister has a house that she would like to get a second mortgage on.  The banks won't lend money to her, due to her debt to income.  I have some extra funds and I want to help her.  I know it sounds crazy, but I've agreed to a 2% loan (under 10%) with everything due in a balloon payment in 5 years (interest and principle).  I have the loan documents written up and I have the money ready to lend.  I want to make sure I have a lien position under her first mortgage, just in case.  Her first mortgage is for $75K, the house is worth $165K and I'm going to lend her 100K.  I know it's more than the property is worth, but she's my sister and she needs the help.

And advice on what to do and how to do it.  I'm trying to keep the expenses down.

Thank you.

Greg

I have been in the rental property owner/management business since 1989 and I am always looking for a good investment.  My first investment had a very slight positive cash flow, which soon became a big loser when I let the wrong person manage the property.  After cleaning up his mess, I've done well and I always have a good positive cash flow set up, or I don't buy the property.

I have had some successful investments and I want to give back to the ones closest to me, so I am working on lending money to a family members and friends.  I was warned about this, so I'd like to make sure I'm protected, just in case something doesn't go as planned.