All Forum Posts by: Ian MacLeod

I am in negotiation to purchase a package of 5 single family residences from an individual owner. She owners the properties clear title. She is asking 299k for them and frankly I think she wants out. Being a landlord is not her thing. I believe the properties will appraise for 350K in total. We have 30K cash we can put into the deal and she will carry 40K as a second (7% interest amortized over 9yrs but a 5 year balloon payment). So, we need a first of 229K. As we are from out of country we are only able to get a first for 65% LTV ($195K). Obviously when you add up our down payment of 30K, first mortgage of 195K and seller 2nd mortgage of 30K you can see that we are 34K short of the 299K total price. Can anyone think of a creative (and legal) way to structure this deal so that we don't need to come up with additional funds. (Will the lender use 299K (purchase price) or 350K (Appraised value) as the lending value?). If they will lend on the appraised value and not the purchase price then our problem is solved. 65% of 350K would be 227,500. This would put us short by only $1500 which we could put together. Also, as a point of interest we will be buying under the name of our LLC. We do own two other rentals but they are already leveraged at approximately 65% LTV so there is not really any equity we can get out of them to use for this purchase. Any thoughts/ideas on a structure for this.

Thanks

Ian

HI Bill....thanks so much for taking the time to answer my question....As far as the second mortgage goes I understand what you are saying.

With regards to the transfer of title from personal name to LLC after closing it was the lender who actually told me I could do this...I think in a round about way they were not saying it was allowed to do it but rather if I do it after the fact and keep the insurance in my personal name, they will never know and it would be a non issue....Where it gets a little muddy for me is if I do transfer the title from personal name to LLC, if the insurance stays in my name it seems to me that really the insurance is invalid...I would have policy in my name covering a building that technically I no longer personally own....Maybe I could add my LLC as an insured to the policy that is in my name?

Any further thoughts?

Thanks
Ian

Hello all BP’ers,

I need some assistance with structuring a deal. I live and work in Canada and my issue relates to financing. It is quite difficult for Canadians to get financing on investment properties in the US, or at least I have found it to be.

I have a 4plex under contract. I have arranged for a first mortgage from a private investor. They will lend 50% LTV at 8% and the seller will offer a second mortgage of 40% LTV for 8% as well….I need to put in 10% from my own cash….What I like about this arrangement is that I only have to put in 10% from my own funds….However, I don't love the interest rate.

Anyhow, after some digging I found a different source that would do a foreign national mortgage at 70% LTV and rates around 4.5%. The drawback is that they will not allow a second mortgage at the time of closing. They said they would allow a second mortgage after closing though. So I am thinking is there a way that I could put 30% down from my own funds and get the first mortgage for the remaining 70%....Then, within the next few days, have the seller do a second mortgage for 20% LTV….This would still leave me with only 10% down as well it would be better for the seller as they only have to carry 20%....My concern would be that after the sale closes and the seller has his funds that he would back out of the deal and not honor the 20% second mortgage. Is there some way that this could be controlled by a lawyer or some other legal option to ensure that a few days after the purchase the second mortgage gets done?

Lastly, I had planned to buy under my LLC….However, the foreign national program insists that the property must be bought in my personal name….However, it was pointed out to me that after the deal closes the title could be transferred to my LLC with no problems…Can anyhow comment on this? It seems to me that if I can transfer the title to my LLC after the closing date that this would likely be in breach of the mortgage or lender regulations…However, I have a few lenders actually tell me that this is possible and "isn't a problem". Looking for comments on how to do this and whether or not it is acceptable to do.

Thanks in advance for any feedback or comments.

Thanks for your responses...great information....Particulary that pricing has little do with the actual value. I was sort of under the impression that when selling a property you would ask close to what it is worth....Now that I understand that asking price and true value have little to do with each other some of the price discrepancies make sense to me....It's sure great to be able to bounce an idea off people with more experience than me.....Your insight is appreciated.

I am a relatively new investor and must admit I am really struggling with determining what a property is worth...I realize ultimately if the deal goes far enough we will need to do an appraisal and this will tell us the lending value.....However, when I am analyzing properties sometimes the pricing just does not make sense....for example two duplexes on the same street within a few blocks of each other....they appear to be in similar condition....One is a foreclosure listed for 97,000....another is a regular sale (not foreclosure or short sale) for 59,000....the foreclose is vacant and needs work...the regular sale is in good condition, has performing tenants in place for 650/side...I just don't understand why can be so different....When looking at properties I see examples like this all the time. Obviously, to me the regular sale with the performing tenants seems to be the better deal - particularly for someone like me who looking to buy and hold....However, these huge discrepancies cause me to second guess myself a bit....I think, what am I mssing here? Why is the property that is a regular sale so much cheaper....Its as though they put the price tags on the wrong houses....I would appreciate tips that anyone can offer on doing a quick analysis of value when I am considering properties. Thanks in advance for any insight.

I need some help here folks....I am looking at buying a property to rehab and resell...Property is listed for 74K....Wholesaler I would be buying from claims ARV to be 180K....When I look at sold figures in a very close proximatey prices range from 50K - 250K for houses of similar size....I am wondering if there is a good website or tool that I can use to determine which comps are retail sales vs. sales of distress properties that are not really comps for my property once it has been rehabbed...It seems that calculating an accurate ARV is absolutely critical to succsess and, in order to do this properly you need good comps....I know that I can call my realtor and get this info from her but when evaluating properites it's nice to do some of the preliminary due diligence on my own to weed out deals that are not viable....Thanks in advance of any advice.

Hi,
Looking for some advise or direction regarding mortgage financing...Myself and my partner want to buy a duplex in Florida. Expected purchase price of 50,000. Expected value after rehab is $75,000. We are Canadian Citizens and live in Canada. We have set up a corporation in Florida which will hold any property we buy. We can offer personal guarantees. We have good credit (In Canada), good employment income and good net worth. Our idea is to pay cash, rehab the property, rent the property out and then refinace it to get as much money out as we can and then repeat the process. Does anyone have any idea if any bank can help us out with this being that we are from Canada? If so, any contact info would be great. If we are not able to get financing from a bank any contact info for a hard money lender that would look at this would be great. Lastly, can anyone think of a better way to do this? Is there an advantage to getting financing at the time of purchase before we rehab the property...I can't think of a reason why I would want to do this but maybe I am missing something. Thanks in advance for any help.

Myself and a partner are looking at buying an investment property. My job is finding the deal, dealing with the realtor or seller and conducting all the due dilgence. If we proceed with the purchase of the property then my partner will be supplying the down payment funds...After closing the property will be managed by a property manager and I will be responsible for dealing with the property manager. At this point due to some credit blemishes the mortgage on the property will be in my partners name only....So to sum it up, I do all the work but he supplies all the money and takes the risk by being the only party named on the mortgage. We have agreed to split monthly rental income 50/50 and proceeds upon sale at 50/50 when that time comes....My question is, is this fair to my partner.....Any insight or opinions on this matter would be appreciated.