All Forum Posts by: Jared Emerick

@Chris Bounds So with the POA and Auth to Release- as I have prepared already- it's not like the Bank can't read between the lines on whats going on. Do you set up your sub2s through your own trust or have the seller set up a trust? Why or Why not?

Would you mind tagging those friends, if they're on BP, to share their experiences?

And as always my goal on any purchase of a deal (only 2 so far), having equity in the deal on the purchase price allows for me to get a solid plan B & C in place. 

@Chris Bounds Thanks for sharing your experiences. Did you ever notify the bank of the change on any of the deals? ( I don't expect to do this or find many who have, just interested to see what the bank's reaction is to sub2 when they are notified).

Hi,

Just interested to hear experiences of buying sub2 when either 1.) the bank called the note due and what was your exit, did you get out of the note being called? Or 2.) when you were buying sub2 you actually did notify the bank of the change (as the DOS clause usually asks for the notification of change) and what was the result doing that?

Thank you in advance for the sharing your experiences.

Jared

 Thank you so much for sharing this link. About to close on first sub2 deal and really needed to clear this issue up. :) Thanks again.

@Bill Gulley 

Thank you for your professional opinion. Sub2 seems to be a 50/50 split here at BP so I wanted to hear from at least one of the sides to help me in the decision. I appreciate it coming from someone as experienced as you. I will read your threads on the topic. Thank you for mentioning that.

Hello,

Went to a home today with a very motivated seller. It seems the priorities at closing are that they would like some cash at closing (<$2,000), and if to make deal sweeter, will carry a note until final sale of home by me. 

I can't seem to get down to detail how I want to do this deal so I am reaching out to BP. 

Conservative Home Value: $48,000-$55,000 (could be more, the home is in a small town where comps are nearly impossible to find, This estimate is based on trulia, realtor, and zillow). 

Rehab needed: about $5,000. 

Mortage: $36,000 balance (terms: 30 years @ 4.5%; 28 years remaining, $377/mo is principal, interest, taxes, and insurance)

Other notes: the seller is ready to move because of a broken relationship and moving away for a job. Wants to close ASAP. The seller is ok with a "subject to existing financing" purchase (with some money at closing), or a straight buy (where I would have to use a HML.) The home will rent from $750-850/mo.

I guess it's tough to figure out how to buy this home because I am unclear about how I want to exit. Other area investors say 2/1s in the area are difficult to sell quickly, are are better as long term rentals here. But i would like to be able to cash out of the property in about 24 months ideally.

My thoughts: Assume the mortage, owner finance the property or lease option the property as an exit. This will cost me <$2,000 upfront to close the deal. And I would have the home around $43,000 (36,000 loan+2,000 at closing+/- $5,000 for light rehab)

Can anyone experienced with seller financing offer advice or would you offer suggestions on buying the home outright through hard money at 5 points/15%, interest only loan. 

Any thoughts and opinions are appreciated. Thank you very much.

@Brandon Turner Again these are worst case numbers (where they're at now). We're meeting at the property next week.

In reply. Exactly my thoughts right now. Cash flow as a rental is thin with the hard money rates for sure. Plan there was to refinance the property to lower rates and lower monthly payments (at 80%, or$72,000, refinance would just be under money owed to Hard money lender). It would work better with that scenario (over time nicely) through the calculators (. I guess it just concerns me to count on refinancing as a necessity to cash flow properly and maintain equity in case of unexpected drop.

With the flip, The numbers are too thin for me where they're at. The money is expensive, and to get it done with <80%LTV (the numbers are right at 80% now)... i have to assume it 1. sells for 110,000 2. It sells fast. Two things I don't want to have to count on when flipping.

It seems at these numbers, although possible, the deal is making money at the sale. Not the buy. And I just don't like that. If the purchase number can be around $30-35,000 (my ideal entry point). Then the deal makes sense. 

Thanks for your thoughts @Brandon Turner  @Jeff Rabinowitz @Larry Turowski 

UPDATE TO ORIGINAL: I also wanted to add that a JV option has opened up with a friend/mentor who runs a blind pool fund and the investor selling said "If needed" he could carry back a small 2nd lien position for the HML to agree to 100% finance for me.

@Larry Turowski Thanks for the thoughts. The numbers we're correct. I was just stating that the land was worth $33,000 alone. Therefore, leaving the house valued at $26,900. The purchase price is $59,900. Since the home is right behind me, I know the values a little better. With a clean up the house could probably get the $60,000 as a retail rehab (203k loan or a similar loan for owner occupied). I was thinking though from the investor-to-investor purchase that number ($59,000) was too high to make this work, but wanted to see the thoughts of others if they could make it work creatively. Thank you again for the response Larry.

Jared

 Hello everyone,

I have a property ready to get under contract. We're still negotiating, so this is a "worst case scenario (at the price now)" situation. Asking for thoughts and opinions. This will be my first home which requires actual rehab work. Currently I have 1 rental which we have on an O.O loan, lived there, carpet and paint rehabbed, and now rent out.

Situation:

Purchase Price: Home: $59,900 (land is worth $33,000 and is next to mine)

Plan A: Rental. This home is located directly behind my house, actually touching property lines. (I would love to keep this to add equity to my current home.)

Quote for Rental Rehab: $15,000

ARV: $90,000

Rent: $900-950/mo.

Plan B: Flip. I could use the quick cash to advance my investment career. 

Quote for Flip Rehab: $30,000

ARV: $110,000

I've run through several calculations on the returns and profits. This is why I am posting this now. The reason why is because of financing. Creative financing would be the purchasing angle of this home. My hard money lender can do 3 options for me: 

For all 3 options: Will finance 100% if below market value. (more or less 80% LTV) Will finance rehab costs for me. Possible to delay payments during rehab.

option 1: 15%, 5 points, Amortize after 5 years

options 2: Same 15/5. Interest only or amortize. Ballon due in two years. After 2 years, can extend additional 2 years by paying 5 points out of pocket. This can be done for up to 10 years.

option 3: 10 year term at 17%. Amortized or interest only. Ballon due in 10 years.

Other options include: Getting a HELOC to help with costs. (@80%- $10,000 available. @90%- $26,000 available; we would be able to qualify for 90% at our local bank at a 4.0x rate if by the end of the year)

Loans? What loan types are offered that non-owner occupied investment properties qualify for?

Thank you for any advice, wisdom, knowledge. It will be much appreciated.

Jared