All Forum Posts by: Cara Lonsdale

This is absolutely spot on. I would add that the "note" should come from a local mental health care provider. Not some internet "dr" that they paid money to be sent a note. The HUD direction provides that Landlords can request to receive RELIABLE disability related information. I would contend that most of the Internet sites that provide ESA notes are not deemed reliable support documentation for such request.

The other thing to note is that there ARE limitations IF the Landlord is worried about the safety of other Tenants. or themselves, or significant damage to the unit.  This COULD exclude aggressive breeds based on risk or threat of safety, and puppies, who tend to do significant damage to properties while they are potty training and teething.

My guess would be a commercial lease since you are renting to a business.  But I would DEFINITELY get an attorney to draft.  You will want to cover things like liability insurance, licensing, and so forth.

Also, make sure your homeowner's insurance will accept this type of Tenant, and still cover you.  You may be surprised to learn that your insurance will skyrocket several thousand dollars for the added liability, and many of them will have all kinds of exclusions.

Lastly, make sure your CCR's don't exclude you from having a business run out of your property that is intended for single family residential use.

How bad is the credit? Could they do FHA with a first time home buyer grant/assistance for down payment assistance? Then structure the deal to have Seller pay closing costs. Otherwise, they might be out of luck. Even a hard money lender would require some type of down payment. A Seller carry-back would most likely also require a down payment of some sort.

Building credit is easy.  The key is to not go crazy with opening up a bunch of credit cards, but rather be smart about what accounts you open.  Have a plan for your charges, making on time payments, and paying the balance off within a quick amount of time to avoid costly finance charges.  Consider purchases that you would already be making, but instead of paying in cash, put them on your new card, and put your cash on the card to pay it off.  You might even consider choosing a card that has a promotional starting interest rate of 0% or some small percentage.  This way, you can let your balance ride for a few months while you make timely payments and establish good payment history before paying off the balance before the promotional interest rate drops off.

Don't wrack up your card with unintended purchases, or impulse purchases.  The line of credit is a business tool for you to use on your investing journey.

Also, make sure you diversify your types of credit.  Don't open a bunch of credit cards.  A credit profile that has a credit card, a car payment and a personal loan (and of course Real Estate) would make a good mix for creditors to consider, and the credit bureaus to evaluate for a score.  Again, make sure you have a plan for paying it off.  Don't extend yourself beyond what you can pay back if required.

There are types of alternate credit that can be used.  Payment history on your utility bills, cell phone, and other types of bills can be used to establish credit.  Go to the credit bureau sites and investigate what they will consider to give you a credit score.

FHA will be your go-to lender for starting out (beside Hard Money Lenders with higher interest rates). Your first deal might need to be a house hack in order to use the FHA loan, but you will be surprised how quickly a year goes by, which is the FHA requirement for occupying the home.

Lastly, if you find yourself having trouble getting anyone to give you a credit card or loan, consider a pre-paid credit card.  These allow you to place a deposit on the card, and have a credit limit equal to that deposit.  These still report to the credit bureaus for payments made, time they are open, and usage history.

So, basically you want to do half of the job of a loan officer or financial consultant?

I'm not sure how you would "break" into that.  My guess is that you would still need some type of license, either in mortgage lending or securities.  

I am not in your market, but this seems like a sticky situation.  I can't answer to all of it, but there are a few things I can answer to.

First, it really depends on what type of title they/you have.  My assumption based on your comments is that it is personal property, and not real property.  So, foreclosure is out (unless owners converted it to Real property.  This can be done in a few states, under a few circumstances, but I don't think this is applicable based on your comments.)

So, you have to repossess.  Now, it's just a matter of how.  My guess is that it will be required to go through the courts since you can't repossess without disrupting the peace (people living in it) and without taking their other belongings.  I would suggest looking into the process for Replevin.  This is a process where you as a creditor, file a lawsuit in court, and ask the courts for permission to repossess through an order of repossession.  This seems to me to be the only viable option outside of paying them to leave on the own accord.

The appraisal is "locked" already. It will follow your FHA #. Additionally, it is now a material fact. So, you will have to disclose it to the Seller, which I don't think is your issue here, except to point out that you have contractual obligations to alert the Seller if you are backing out due to appraisal shortfall. In AZ (where I am), that is 5 days. I don't know what it is in your market. If you go beyond that, you have released the appraisal contingency.

Is going back to the Seller to ask for a "meeting in the middle" price point not an option?

I have had good experience challenging appraisals, but maybe it is different in different markets.  I don't think it has to do with the appraiser's pride.  I think they just need justification for the higher price.  If you can provide them comps, how could they ignore those?  In my experience, appraisers give lower values when they don't have anything else to comp to.

What about my other idea of ordering a second appraisal (different appraiser), and offering them comps upfront?  By the way, challenging your first appraisal doesn't exclude you from ordering a second appraisal.  It's just about the time.

So, if I understand you correctly, you are the Buyer?  There is some confusion when you mention that you could "relist and grab a conventional offer for tens of thousands more".  That sounds like a Seller position.

Anyway, going with you being the Buyer, there really are only two options to move forward on the current path if you are not willing to pay the $52K difference.  You must challenge the appraisal, or you must order another appraisal.  

If everyone around you says that the appraisal was surprisingly low, it must mean there are comps that could justify the higher amount. Don't be discouraged by this process. Appraisal challenges can yield different results. I have seen it happen in my market (AZ). What happens is that you and/or the Seller submit comps that you feel the property should be judged by, and any explanation that justifies your added value, and the underwriter reviews them with the appraiser. Adjustments are made based on what the underwriter and appraiser can justify as being accurate comps for the subject property. Keep in mind, FHA has a layer of criteria that conventional appraisals do not have. FHA appraisals have to make sure that the property is habitable by FHA standards. So, many times, the appraisal comes back with repair conditions.

As mentioned above, you can also ask for a second appraisal to be completed.  You run the risk of the second appraiser coming back with the same result, and it will cost you to have the other one done, but it could also give you the result you are looking for.  Make sure that you have the comps that justify the value ready to show the appraiser when they complete the appraisal.  That may help.

Again, you are double dipping in that scenario. One of you is committing fraud. In the scenario I gave you about you living there, and he rents a room, you are meeting your obligation to FHA, but he is defrauding the Section 8 system.

I smell fraud.

Your idea is creative enough.  If you were talking about a duplex instead of a single unit, this would be a doable scenario.  However, if your roommate is obtaining section 8, they are most likely required to occupy the entire unit.  Their section 8 voucher (funds) are based on the bedroom count and person count.  My understanding is the Section 8 doesn't allow for benefits of renting just a room out of a property.  

So, if you are "double dipping" by also using the property as YOUR residence to fulfill FHA requirements, you are creating a fraudulent situation for your roommate. Your FHA obligation would be met if you are living there as your primary residence, but his/her obligation to Section 8 would not be on the up and up.