All Forum Posts by: Jeff MacIntosh

Please forgive me for my ignorance, this whole venture is new to me and I am exploring not just this short term deal, but other long term deals as well to eventually develop income properties.

Again, I would like to thank everyone who has taken the time to reply and offer advice. Since I started this thread, this is what I have found out...

He owns both properties outright, no liens
Back taxes total $12,000
Loan to Value ratio is about 30%
Both properties compared to others on the street are valued around 180k each
The main cost is Plumbing, sheetrock and insulation
A recent divorce was the cause for the depletion of cash. taxes assessed have been amended since the first property in the midst of a flip. He is doing a thorough rehab on the property. 
The offer was and still is that I buy the properties from him for a total of 60k. properties are signed over to me, finished, and then sold. I get my 60k back with another 25% extra for helping out after costs.

 I figured this way, if anything happens to him, the properties are mine to do with as I wish, and I should be able to recover 60k plus costs from them.

@Mike McCarthy Thanks for the insight. The points you make are valid ones, and it is the reason I want to know what can be done through either a bond or policy that could protect me to some extent from the potential pitfalls. In response to your questions, here's what I know...

What if the reno still takes longer and costs more? - This is an x factor. what is needed is insulation, sheet rock , and a roof. All wiring and plumbing are intact and in good order, up to code. 

What if the house doesn’t sell? - This house is in a good area that once done should be well on par with other houses in the area, and market is strong near Austin, TX.

What if the house sells for 70% of what he thinks it will? - I can't speculate other than to research other houses in the area to get a feel for what the market will bear. If it takes a while to sell, I am fine with that.

What if he runs into an unexpected issue with the foundation/roof/etc? - Foundation is solid, roof is to be replaced, needs insulation and sheetrock.

Was everything permitted? What if the city decides it needs to be? - Everything is above board and permitted with the city.

I suppose it is about risk assessment, which is why I would like to learn more about how I can hedge my bet, to ensure against as many obstacles.

Hi Bjorn,

thanks for taking time to reply. As my original post implies, I am taking a non-sentimental approach to the point of researching what I can do to ensure against unfavorable situations many people find themselves in. If it cuts into the overall return, so be it. I appreciate your insight, thanks for your time.

I am in NY, my friend in Texas owns a house outright that he is rehabbing, due to some unfortunate circumstances he has run out of cash, and wants to finish the rehab and eventually sell the house. He has some overdue taxes but is not yet in any danger with the assessor's office. He asked if I would take out a mortgage and buy his house, which would afford him the cash to pay the back taxes and finish the rehab, upon which he would then have me sell the house at fair market value, approximately triple the amount he is selling it to me for. He would be making the payments, and I would receive my loan amount back plus a little extra for helping him out. My mortgage would be paid off after the proceeds from the sale are complete.

We've known each other for 30+ years, however I want to make sure I cover all the angles up to and including taking out an insurance policy on him should something happen to him, or a surety bond to make sure work is completed. What other things can I do make sure I don't end up on the losing end?