All Forum Posts by: Harriet Baldwin

Your call, @Martin S.

Whatever you choose to do, do document everything that you can.

My two cents, call a local-to-the-property landlord lawyer *now* and give a brief outline of the situation, there may be specific steps the local court wants/likes to see.

To me, sounds like these folks are troublesome.  I wouldn't assume they will cure anything, or that cleaning the carpet now will mean it is clean when they leave.  They may also use the water issue (or some other issue) to justify withholding the added rent you ask for.  With the info you've shared, I'm in the camp of giving them notice that you are ending their tenancy at the end of the lease.

If you are not going to hire a local PM, see if you can distance yourself a bit emotionally - sounds like they have gotten under your skin if they have damaged your property and what really bugs you is their asking for their check back.  If I were a betting person, I would bet they won't just move out at the end of their tenancy and that you may be headed for a holdover eviction...I hope I am wrong!

Can you put in a through-wall dryer vent (instead of through-roof)?  If not, consider adding a secondary lint filter.  Once upon a time we had a condo in a high rise that had a small (pretty fine) mesh filter in the dryer vent line, easily accessible for clean out.  

What is the dryer repair cost?  If under $100 (and you want to retain these tenants), pay the 50% - worth it for good will alone at that rate imo.  Higher than that and you could offer a flat dollar amount if you think it's appropriate.

@Account Closed, where we are 3x rent is a more common standard.  You may be losing good tenants who 'trade up' to a less rigorous landlord.  You may be unintentionally encouraging unrelated folks as tenants, so they can pool their income to meet your requirement.  That said, if you can get someone who has income of 4x rent, why not?  Figure out other ways to keep them loyal (pay for internet starting with year 2 of lease or...whatever appeals to your market or specific tenants).

Generally agree with @Joe Villeneuve.  

I think this is a niche product - for those with enough capital to flinch at HML rates, but not enough capital to completely self fund. If you are targeting buy-and-hold folks, I assume that a conventional refinance is the most likely mechanism to fund their exercise of the option - if their credit is that good, they may be less likely to use you in the first place. If they're going to sell the property, then your target client is more a slow flipper than a buy-and-holder. However, even if the market is just 1% of REI, that may a big enough niche to operate in...

@Brian Sinclair, this may be a nit-picking question (but details are where the devil is, right?):  Your first post has a 10% option fee and a 5% increase in option price from original purchase price.  Your spreadsheet has a 5% option fee and a 10% increase in option price from original note principal amount.

Also, not sure how others on BP would opine, but a $50k property where $10k will make it a $100k property, that would be especially sweet (and unusual!).  You might want to use more typical figures.

One last thought, are prepayments allowed and if so is there a penalty (I assume yes prepayments allowed, and no, no penalty - but never hurts to double check).

As with any product, if you can get folks who are interested, why not (not legal advice).  

If I understand it correctly, in this structure you are basically financing the purchase, but not the rehab.  In our market, the fix up costs are often higher than the purchase price for the home, so this product would not be super exciting.  I realize that in most markets, that is not the case!

I may be missing a few details, but looks like your client would need over 50% of purchase price up front? Or, since the proof of funds list doesn't include down payment, are you getting that on the back end? Perhaps the 65% LTV is based on ARV, not purchase price?

My math: 35% down, (65% LTV), 5% for 6 mos rent (at 10% cap rate), 10% option fee, 1-2/3% for 2 mos' security (again, 10% cap rate-although not listed in proof of funds, so maybe not required over and above the 6 mos' rent required there?), so almost 52% cash upfront plus any fix up monies and 35% of $4k closing costs (yes, included in loan but still have the 65% LTV ceiling).

As a potential buyer, I would want to compare this to a hard money lender - this seems like a similar structure, but the (effective) lender holds the deed and isn't financing fix-up costs, which would make it less interesting to me.

Some regulations differ by state. In NY, at least in our county, you can file a "DBA" (doing business as) with the County Clerk and request an EIN number from the IRS - with those documents, you can open a business checking account at the local bank. Well, you will also need some money to deposit ;)

Ask at your local REIA, they will know the local procedures.

Many hard money lenders don't like to loan money to anyone's first deal.  If you find one that does lend to folks who don't have experience, you will pretty much be partnering with them, and that will cost you $.

In any initial written communication with anyone, I would tell them right up front that you have dyslexia.  Even with spell check, things still slip through the cracks.  Also enable grammar check (or use an online one), and for important communication have someone double check your text ("witch made it hard to really" should be "which made it hard to really").

Most folks on BP, however blunt, give pretty decent advice.  Your choice whether to take the advice or not.  Best of luck!

FYI our local Realtor board did a "lunch and learn" last month on MH. Financing discussion included FHA, VA, some local lenders, and Wells Fargo who has a program.

However 1/1 MH screams single wide, which some lenders won't do...or if the structure is half a double wide plus some stick-built, hm that could be interesting to get permitted much less financed.

Creative solutions might not be acceptable to an estate, but worst case you might encourage them to think of this as land - unless they can verify for you that the current structure as built is acceptable by zone and code (even if pre-existing noncomforming).

There is a REIA in Binghamton that some folks from Corning and Elmira attend - see posts by @Christopher Stanis for meeting updates.  Or pm me for info, we are most active in Elmira and have done a few deals in Corning.

Another issue, who enforces the deed restriction? Even if something is legal to create, who is going to enforce it - especially if the initial party that thought the restriction was important is no longer around (death or dissolution)...pretty clear with an HOA, less so with a one-off property. Not a lawyer, but theoretically for a one-off deed restriction, seems like someone would have to litigate to enforce, unless there was some other mechanism for enforcement created up front.

The mixed-use project that we developed in CT has deed restrictions due to a community group's concerns about 'sure, that's today's approved use, but what if in the future you could do X with the property, that wouldn't be okay'.