All Forum Posts by: Cara Lonsdale

If he files bankruptcy, he can buy some time, but that comes with other obvious problems.

Equally, if he files homestead, that will buy him a little time.

If the property forecloses and is sold over the existing loan amount, he will receive the difference.  So, not ALL of his equity is lost.  The bank doesn't keep all of the foreclosure money, just what they are owed plus fees, accrued interest, attorney fees, and any cost associated with foreclosing.

At the very least, he should contact the lender and discuss options.  They may be willing to work with him, and perhaps do a loan modification.  My guess is that doing that may be his only option for actually staying in the home.  Everything else is just buying time....limited time.

Just an FYI, to syndicate a deal, I would stick to a $1.3MM price point and higher so that you can obtain a non-recourse loan.  I don't know of a lender out there that will do a non-recourse loan under $1 Million (loan amount, not purchase price).  So, to get to that, it will be roughly $1.3MM purchase price.

Your investors won't want to touch a deal that has recourse to come back on them.  This is why non-recourse loans are good for syndication deals as they are exclusively linked to the project, and not the people.

Also, you will want to use a 50% rule when figuring expenses (50% of income).  This is a nice conservative figure that looks good when presenting to a lender.

Lastly, make sure that you have at least a 1.25% Debt service ratio.  This is a good rule of thumb for maximizing opportunities for loan.

Just a few thoughts to consider right off the top in glancing at your deal.

Hope that helps!

@Ian Ray  Do you have funds to purchase?  Or are you looking to be a syndicator, or fractional partner?  What is your goal for this good deal you found?

I would agree with @Greg Scharlemann, you need to start with underwriting the deal to see JUST what kind of good deal it is.  You may surprised after running numbers that the expenses make it a loser, or the deferred maintenance presents a problem, etc.  Get the financials from the owner and put together a spreadsheet to analyze the deal.  

If you want help analyzing it, there are many here that can help.  I would be willing to look at it if you'd like.  Just PM me the materials (you can black out the address if that makes you feel more comfortable).

I know how exciting it is to feel like you have a good deal in hand.  So, if there is anything I can do to help you evaluate it, just let me know.  I am happy to help.

I think you got the right answers from people, but just to reiterate....

Lenders consider each contract individually, and most likely they have a 'no assignment' in their addendum somewhere.  They would consider a Buyer swap as a new contract.

You are correct...it is TOTALLY ASININE!!!!  Lenders can be REALLY illogical when it comes to deals, and get caught up in the smallest piece of minutia, but they do it all the time.  This is why they end up foreclosing on a house and taking less than the short sale offer that was in front of them.  They don't care.  Their mortgage insurance will cover their loss, so what do they care?

It should be about the bottom line...the net to Seller (Lender).  Period.  But it isn't.  

Here's a thought....why doesn't current Buyer complete the sale and flip it to new Buyer?

Kilz is a flipper's best friend!  :)  It hides odors and stains.

Get the oil based Kilz, and be sure to follow-up with your regular paint VERY shortly after so that it adheres properly.  If you wait to long to paint the regular coat, it may roll down the walls and have trouble adhering to the oil based Kilz.

Hope that helps.  Best of luck to you!

Wow.  This sounds crazy.  Alot of issues to deal with here.  Let me try and break them down as they relate to a solution.

For starters, you will need to refer to your lease.  These are your instructions for how to handle EVERYTHING!  I can't, and won't speak to a Texas lease because I am in AZ, but I can speak to things that you need to look into as it should be the same.

First, are both tenants on the lease, and responsible for the lease?  If so, then even if 1 roommate moves out and relinquishes, they are still liable for the lease.  It's all about possession.  IF they have told you they are out, but clearly haven't relinquished ALL keys, and haven't vacated, then they are still in possession, and you can collect rent for each day that they are in possession.  IF they have given you all keys, and are out, but just left a bunch of stuff there, it is considered garbage/abandoned, and you can charge them for removing it.  Again, full disclosure, I am speaking to AZ leases.  So, you will want to refer to your lease for specifics on what it calls for.  There is a section on possession.  If you have to evict, and they leave stuff, you have to store it for 30 days before throwing it away, but you can charge them for the storage.

Regarding a Tenant at Sufferage (this is the Tenant that hasn't moved out yet), you have to go through the eviction process for this.  Send your 5 day pay or quit ASAP to get this started.  They will owe you for rent each day that they continue to stay beyond their lease expiration.  Your agent may be correct in advising you that you can charge the whole month, but a judge may be more sympathetic and allow for a prorate of the rental rate.  Therefore, you may want to look at a prorate when you file court docs to appear sympathetic yourself so that you have the judge on your side (they are supposed to be impartial, but they always seem to side with the "poor tenant who is being kicked out" instead of the "big bad mean landlord").

Now, regarding the funds you received from the auto-pay of their monthly rent.  These are intended as rents, not deposits.  If you refer to your lease, it will probably tell you that pre-paid rents (in this case they would be post-paid rents) cannot be used for damages or considered as security deposits.  So, in my opinion (again, unless your lease in Texas states differently), you cannot keep these funds to cover damages unless you have written agreement from the Tenant to do so.

I know this isn't what you want to hear, but you will most likely have to return the post-paid rent, and then pursue an eviction to get the 2nd tenant out, and collect for damages.  Most likely, when the Tenant figures out their auto pay went through, they will contact the bank and have it reversed anyway, so my guess is that money won't stay in your account long.

I hope this helps.  Best of luck to you.

Congrats on your first transaction.  Let me offer you some thoughts.

FHA loans that offer the standard 3.5% down payment option are for owner occupants only. Owner occupants are required to live in the property for at least 12 months, and certify under penalty that they will do just that. What you do after the 12 months is up to you. However, these initial 12 months are required in order to be compliant with the terms of the loan. This is not a technicality, this is an absolution. You can go to jail for loan fraud if FHA discovers that you are not living in the property for the initial 12 months.

The same is true for most, if not all of the first time home buyer programs.  In fact, some of those that offer down payment assistance will often times require more than a 1 year commitment....many of them 3 years.

It will not be possible for him to utilize FHA or even a conventional loan product intended for fist time home buyers to purchase an investment property. They all have occupancy requirements for the owner.

Best just to save up for the down payment. Look into HomePath in your area.  They offer a 10% down investment program for the first 4 properties.  The purchase has to be one of the HomePath homes, if any are available in your area.  The program is slim now that short sales aren't so rampant, but there are a few still out there.

Also, regarding the cloud on title (which is what the egress issue is considered), this is a big issue REGARDLESS of your financing.  Things seem friendly now because the infringed property is related to the Seller, but what happens when he sells his property and the new owner says "no way".  Then you have a big problem.  Get that resolved BEFORE pursuing it.  The Seller needs to have a clear resolution.  If she is related to the neighbor then it may be a simple CC&R or deed restriction added that they both agree to that grants an easement for the property you are looking for.  Either way, I would get that resolved before even considering a property.

Best of luck to you!

 Okay, so as we peel back the layers on the onion of this transaction, it is becoming more of a stinker!  So sorry to hear that.  

All Realtors are real estate agents, but NOT all real estate agents are Realtors.  Realtors subscribe to a higher ethical standard of practice, and agree to not only abide by that higher standard, but be measured and disciplined by it as well.  Realtors are required to take continued ethics training, and be a responsible agent within their community.

Real Estate agents who are NOT Realtors do not do any of the above.  Now, that's NOT to say that all real estate agents are unethical.  Just that Realtors agree to, and are held to, a higher standard.

I guess, before doing business with any real estate agent, I would ask them if they are a Realtor.  If they aren't, I would want to know why.  Why wouldn't they want to abide and be held to that higher standard for their real estate business?  

Let us know how it goes when you contact the broker.  

WOW!  There is alot to know before going to auction.  There are also different types of auctions.  So I will just speak to trustee sales (foreclosures sold at the steps of the courthouse or trustee's office).

For starters, you need to know that you are actually bidding on the 1st lien holder, so that you are awarded the property, and not a jr lien holder's debt against the property.

Of course Comps to know what to bid.

Do a drive-by.  You can't go in or disturb the occupants (unless the property is actually listed for sale).  Make sure the structure is actually there, and observe as much as you can from the street.

Put together a budget for rehab.  I usually do 2; a light remodel and a full gut.  Build in a contingency budget for unexpected items.

Confirm money.  Confirm money.  Confirm money.  There is a bidding deposit due the day of the auction, which is usually $10K in certified funds.  Then the balance is due within 24 hours of winning bid.  So, as an agent assisting a client, I would make sure they understand that this is not a normal sale where they get 30 days to close and can obtain a mortgage.  There ARE hard money lenders that can provide loans within that quick turnaround, but if you are using one of them, you need to have that lined up ahead of time.

You have to know how to take title.  

You have to know what the process is in your state for evicting anyone living in the property if they don't vacate after the sale is complete.

Just to name a few things...... :)