All Forum Posts by: Jeff Copeland

An eviction is a lawsuit where the landlord sues the tenant for possession of the unit. You would/could only file an eviction lawsuit if the tenants were violating their lease (such as not paying the rent), not because their rent is too low. 

Your options will depend on a lot of factors, the main one being the lease. If the lease is for a specified term (and there is time left on the term of the leases, meaning the lease expires at some point in the future), then you generally have to either honor the remainder of the lease, or negotiate to buy the tenant out of their lease. You do not have any grounds for an eviction unless the tenant is in violation of their lease contract. You can give them a notice of non-renewal letting them know their lease will not be renewed after it expires. This is not an eviction, it's a non-renewal. 

If the tenants are month to month (either their lease specifically states they are on a month to month tenancy, or their original lease has expired and they remained in the unit on a month to month basis, or they had no written lease in the first place), then you can terminate their lease or raise their rent with proper notice (proper notice will be defined by state law, and/or the original lease). This is not an eviction. It's a termination of their month to month tenancy. 

In either of the cases above (non-renewal or termination), you would only have a need (and grounds) to evict the tenant if they refuse to leave after their lease expires or is terminated. This is referred to as a holdover eviction: http://www.evicttv.com/episode...

Eviction lawsuits can be costly and take a long time (especially in California), another option that is often faster and cheaper is Cash for Keys: http://www.evicttv.com/quick-t...

This is different for everyone. 

Some people prefer to be in a class where they can ask questions, feed off the energy of the group, and be kept on track by the instructor. 

Others prefer to read a book, so they can go back to re-read and review topics as needed at their own pace. 

Which are you? 

For what it's worth, there is a ton of educational material right here on BP - Be sure to check out the podcasts and the boosktore!

Out of curiosity, who is your lender? This should have been figured out before they issued you a preapproval letter!

Quicken/Rocket and other big national names are notorious for doing things like this, to the point many real estate agents won't work with them (or at least we advise clients not to work with them, but many insist and end up getting bitten like this much later in the process, when it matters). 

1. Is this legal? 

Yes, but it will likely violate the terms of your mortgage and could trigger the due on sale clause. You will also have to update your insurance to reflect the new ownership and maintain an insurable interest in the property (which can, in turn, can tip off your mortgage company since they are a named insured on your policies, and usually also increases your insurance costs).

2. Would we both gain 50% ownership once rolled into the LLC? 

The LLC would own the house. Your ownership percentage in the LLC and your LLC operating agreement would dictate how distributions and capital gains are handled. 

3. Can we refinance under the LLC or would we have to roll it back under the personel (sp) name?

You could refinance into a commercial loan. But not into a conventional mortgage (these are for individual persons, not corporate entities).

Here's the thing: You can always take out a 30 year fixed loan and pay it off in 15 years. You can't do the opposite. 

The 30-year term improves your cash flow if/when it's needed, and gives you more flexibility. 

First of all, the market today is nothing like the market from 1-2 years ago. Financed offers are more competitive now than they were back then, so don't give up on Plan A. 

One idea on the opportunity you presented is to bring in a cosigner (such as a parent) and finance it as a second home purchase with 10% down. It's at least worth exploring the logistics of such a loan product with a mortgage broker. 

Here is a good overview of financing in general and seller financing in particular. 

Make sure you understand what is feasible and appropriate for the situation, that way you aren't wasting time with offers and terms that are a non-starter.

Neither lender (the 80% conventional, nor the 20% HML) is likely to allow this.

Conventional lenders will have to know where your down payment is coming from and make sure it's seasoned as part of their underwriting process, and an HML is going to want to be in first position, so if you default, they own the property.

As already stated, you're better off bringing in a partner. 

The owners can't sell their house if they are dead. 

This will likely have to go through probate, and/or foreclosure (it's not uncommon to see both happening simultaneously), which can take months, or even years. 

These usually get listed on the MLS with a realtor once the estate, or the bank, has free and clear title.

There is a small chance that the owners had a will, and the heirs just need some help navigating a more simplified probate process. In which case, you'd need to figure out who the heirs are (one possible approach is to simply ask the neighbors, you could also search local court records online) and see what they know. 

It's not uncommon for their to be multiple heirs, none of whom agree on what to do with the property (or how much it's worth), so often the juice is not worth the squeeze. But you never know. 

One common approach is to form a company, such as an LLC.

You each contribute capital and own a percentage of the LLC, then the LLC buys the properties, and your LLC operating agreement dictates how to handle distributions, capital gains, etc. 

In other words, the two of you own the company, and the company owns the properties.