All Forum Posts by: Cara Lonsdale

I charge $25 per day.  However, we had a similar situation when we got one of these ridiculous judges as one of our eviction cases not too long ago.  He wasn't so much concerned with the $25 per day, but when it was beyond 20% of the rental rate, he said it was excessive, and limited it to the 20%.  Better than nothing, but still ridiculous.

It sounds like you got a bad judge.  

One suggestion is to spread out fees instead of lumping them in as a late fee (another tip our judge gave us) including an administrative fee for processing the eviction notice or late notice, postage and handling fee for typing up and mailing the late notice (this is obviously small potatoes, but a few dollars here and there add up).  Mileage fee or service fee for driving over there to serve the tenant.  You get the idea...

 The most obvious problem he creates by filing BK is that he eliminates many lenders from being able to loan to him.  By narrowing that field of options, he may be buying time, but to what avail?  If he isn't able to refi, then what does he have?  Most lenders have a 2 year minimum seasoning on BKs.

Honestly, IMO, his best bet is to contact the lender (NOT the servicer, but the LENDER), and throw himself at their mercy for a loan modification.  If he has the kind of equity he states, they shouldn't have an issue with doing this, and placing the amount owed onto the principal, and perhaps spread the loan term out to reset at 30 years, or even going to 40, which would lower his monthly payment, and lessen his burden, which is what I am guessing got him in the trouble he is in now.

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!