All Forum Posts by: Gregory Flores, Jr.

It sounds good, and hopefully those rents appreciate a bit to generate at least $100/door, or your financing expense comes down when you refinance to acheive the same thing. What did you end up deciding @Dustin Pavlik?

Just some ideas. I call on experienced NYC investor @Llewelyn A. to give this any validity with local laws.

Take over the house subject-to his first mortgage. Create the seller financed piece as a $50k second lien mortgage at an agreed upon rate, and explain that you’ll pay down the $50k note to them (which they’ll be earning interest on) and after a year or two (when you can shore up your credit/income requirements) you’ll get everything refinanced into one loan so that the seller and the original lender are paid out.

He’ll collect interest on his $50k before being cashed out in the future, and you won’t have to go through a bank. I believe there’d also be some benefits to the seller by collecting $50k over time instead of being taxed on it all at once. It’s all about selling the benefits of this structure, and it works best if they don’t need all the cash today. If they need some cash, give them a down payment on the $50k seller financed second mortgage.

You’ll have to take on payments of their first mortgage. If that first mortgage is current, and you continue to pay it down, the original lender should have no reason to trigger the due-on-sale clause, but this is something that can happen. Basically the trigger is that the lender could say “this house is being sold via this “subject-to” transaction so we want our $550k today.”

Typically I’ve read that you’ll want a seller to hold at least 30% equity in the home for a seller financed deal. The fact that they’ve paid down less than 10% would make me concerned that there’s something wrong with the house or property. Your options are limited with that much first mortgage debt on the house. Is the seller expecting that your payments will cover their mortgage with a little left over? Or are they expecting to still pay out of pocket every month to cover their mortgage expense that you don’t cover? Tough to say how this will be a win-win. What was their original mortgage on the house? Have you thought of taking the house over subject-to the first mortgage instead of creating this new seller financed loan?

How reliable are the monthly rental income numbers? Is the $1,400/month figure the current rent, or market rent? Stress testing your expenses in a worst case scenario where you need to replace a large ticket item down the line is a safer way to ensure that the property will always cash flow. Also the only thing catching my eye is the ARV stays at the purchase price even after putting in $5,000 for rehab. Is there no value added rehab work that you’re doing?

You’re looking for opportunities that don’t exist. Metro areas can have rent and property value appreciation in the future, but you’re not getting those benefits right away and the cash flow will be negative to start. Check out this thread about the metro NYC market and pay attention to comments made by Llewelyn A. They may be most appropriate for your questions. https://www.biggerpockets.com/forums/12/topics/509736-new-york-nightmare-market?page=1#p3121712

@Bill S. I was able to pull an O&E. Just have a HOA lien from February 2017 to look into. I know there are some laws around HOA lien treatment, so that's the next thing to nail down.

All this is helping to build up my system for foreclosure buying, and possibly look into REOs. I am leaning this way given my experience in distressed debt investing, so I appreciate everyone's continued feedback.

A recent property in my backyard sold out of REO for $220k in May, and sold on the market this month for $385k.

Where is the house located? I know of property in Brooklyn NY that was selling for mid $100ks an are now worth over $1M. Rents in the area also appreciated from $500 to $1500+ from purchase until now. Given that it's been a 10 years, and the person in question bought the properties when big capital projects were beginning in their neighborhoods, knowing where this place is would go a long way in helping us evaluate it. 

It’s terrible. I️ just finished watching a commercial where people are hyped off of a free seminar and talking about retiring in one year after wholesaling and doing deal after deal like its cake. First time seeing a “guru” commercial. Seems crazy these people can go out and sell nonsense like this.

@Bill S. since I’ve gone back and got the most recent laws, I’m leaning more toward the auctions. I’ll be attending the Arapahoe County auction on 11/29 to see how it goes down. 

@Bill S. thanks for pointing that out. Found that the site where that info came from contained info on pre-2008 laws without differentiating pre and post! I’ve got the latest ones now, and realize the info I'd written previously commingled new laws with old. 

The 15 day pre-auction cure filing with the trustee remains valid, while the 75 redemption period has been wiped out since the time to cure was expanded! 

THANK YOU. Helps the strategy I’m working on.