All Forum Posts by: Jeremy Johnson

Harry Marsh https://www.harrymarshlaw.com/

 24 Hour Title.  https://www.24hourclose.com/

Merrit Law, Smanra Chak, https://www.merrittlawnc.com/

Such amazing go-givers!  Cool to see your goals for the year, I know you guys will crush them! I may have a lead on a small hotel in West Texas. It's about time I reach back out to my buddy that told me in the fall he was wanting to sell one this coming spring. I'll let you know what I find out.

Also, I'm traveling out to the DFW with my family in April (6-9th) staying in Tawakoni for the solar eclipse. It would be awesome to meet you guys if you're around.  Sub✌

Yep, totally doable. Your basically cross-collateralizing the purchase of the land with your home, and then using the "free and clear" land as your equity down for the construction loan. However, why not just use the HELOC funds as the down payment on the construction loan? Unless your going to buy the land at deeply discounted value off-market and then have it appraised. Am I missing something?

Garrett,

I wish I had a grandmother like yours! Sounds like a dream come true.

I'm surprised you don't have any comments on this post... Maybe you got your answer somewhere else, but in case not I'll offer my opinion.  First and foremost, I AM NOT A LAYWER, so take this as my opinion and for "entertainment" purposes, or something like that...

A couple of things to consider. First and foremost, if she is going to owner-finance it to you, no, you don't need credit pulls, unless she asks for them as the lender. Most likely not though.

It probably makes the most sense to have her setup a Trust, if she doesn't have one yet, and then hold the note for the loan in the Trust. If she passes before its paid off, the note stays in the Trust, and can be managed by the Trustee(s) and payments disbursed according to the paperwork defining the trust. This could be a way she can give to other family, a non-profit, etc. once she passes away.

The nice thing about owner-financing, is there is no set structure, so if she wants to take the 80K down, and give it to the estranged son, then that is up to her.  You should look at any limitations on gift taxes though, and she may actually want to structure it around any of this. An example is the money goes into a trust and then is paid out over a period of X-number of years at the gift tax limit each year.

She can charge you whatever interest rate she wants. Even 0%. I see this all the time in the creative world. It can even be whatever terms you want for repayment, like 40 or 50 years. Truly the structure is whatever you negotiate with her.  Get creative if you need to.

Finally, use a title company/closing attorney for all the paperwork, make sure they do a title search, (I would recommend paying the money for a Warranty Deed to ensure your protected as the buyer from any unknown liens) and then make sure the Promissory Note is secured, i.e. recorded against the property with the county recorders. The Title company can do this for you.  If you skip this step, the Note is only worth the paper it is written on. Also, if you setup a servicing company to manage the payments (usually like $25-35 a month), they can setup an escrow account for taxes and insurance as well and cut a check to her Trust bank account each month. Plus, this give you proof to the rest of the family that comes knocking that you actually have been making the payments and not taking advantage of her.

Good luck

There are as many strategies to find buyers as there is to find deals, so it is going to be more of what your available time and skills are. I will list a few options below, but the TLDR version is I may be able to help you with the Dispo side depending on the deal structure and comps. Send me a message and I'll shoot you my number and we can get on a call and discuss the deal you have locked up and see if it works for my network of buyers. I got a relationship with a very active flipper in the Atlanta GA area, and a partner that does full time dispo for wholesale contracts.

Online sources like Craig's list, Facebook Marketplace, or local Facebook Investor groups can work, but its like a shotgun blast. You have to post a TON to find a suitable buyer. This works pretty well though as long as you actually have a good deal locked up. Many times I see wholesalers trying to sell deals at 80 cents on the dollar, and right now, this doesn't usually work. They need to be around 60 cents on the dollar ARV.

Go to local investor/BP meetups and network with buyers of W.S. properties, these are typically Fix N Flipper's, Local Contractors, or just a buy and hold investor looking for a great deal that they can reno and keep.

If you don't want to deal with the dispo portion of it at all, you can network with other investors that focus specifically on the Dispo. Again, networking is going to be key to this.  

Alternatively, you can sometimes sell the contract to a company like New Western, KeyGlee, Homevstors, Happyinvestor, etc. You won't likely get large assignment fee with these groups, but they can work for specific properties. You will need to network with them and get their information for each company.

You can sign up for Investor Lift and gain access to their network of buyers, and then start marketing to them directly. HOWEVER, this service costs around $500/month for the basic package, or $1K or $3K a month if you want access to their buyers list. 

Joseph, I can help with EMD or Double Close funding. I can also help with dispo.

What market are you working in?

 As a first venture, this could be a lot of work and energy, and if you haven't ever managed something like this, or have a partner that has, it could become overwhelming quickly. You sound very entrepreneurial in your vision, so something big like this may be in your wheelhouse.

Most businesses close within 3 years of start, so as long as you feel you have the confidence and fortitude to make this successful, then it sounds like a unique venture. I have a sister that is starting an RV park, and have been in processes for nearly a year getting permitting, county approvals, business plans developed, and layouts drafted.  They have yet to break ground. They are very seasoned business owners, and have all of the capital to put it together, yet even for them it has been taxing on them.  We talked on Sunday, and they are staying positive, but I can hear the frustration in their conversations some times.  We even talked about looking at them buying an established RV park to help them build out systems and gain some training in the business while they work to build out their new park. 

These are just things to think about in your process, and I don't want to discourage you. As an entrepreneur myself, may times I have to bring myself back down out of the visionary planning and put my integrator hat on and make sure I have people in place to help me through it.  

For the partnership, you defiantly will want to have several conversations with your partner on expectations and who is doing what.  It can go sideways really quickly if you don't have strong conversations early on.

Good luck! I hope you all the best!

Finding a partner in the area may be your best bet, unless you can develop a business plan and get a SBA loan for the startup costs. You will still have to come up with part of the funds yourself/partner even on a SBA loan.

Stefan,

I would classify this as a hybrid because the owner is also carrying back their equity in the property, not a straight subto; regardless, there are a few things you need to protect yourself in the deal. 

First and foremost I would suggest putting this property into your LLC, or even a new trust named after the previous owner, but listing you or your holding company as the controlling member.

Included would also be a Limited Power of Attorney to give you rights to update/modify/change/payoff, and discuss all things pertaining to the mortgage and the existing insurance polity.  You will need this to modify the insurance to list yourself as the sole beneficiary to the insurance in the event of a claim, but the previous owner will be listed as an additional insured to satisfy the mortgage requirements.  Otherwise the insurance will pay to the previous owner in the event of a claim.

You will need a change of address request signed by the seller to the mortgage company to send billing information to your address.

You will need authorization to release information pertaining to the insurance or mortgage to you/your LLC.

You will also need to transfer all Utilities to your name (using the same above documentation).

You will also need to get access to the login info for the mortgage. Its best to just use the current mortgage holders login information, and not change anything.  Move the payments to your bank account and setup auto-bill-pay or setup a mortgage servicing company to do this for you.

Obviously you must transfer the title into your name. This can be a challenge in itself as you need to find a title company/closing attorney that has experience in subject-to transactions.  Most are not experienced and can put you in a really bad spot if you try and use one that hasn't done this type of transaction before.

DM me if you want to jump on a call and discuss this in further detail. I can connect you with a great company that I use to help with all the paperwork, contracts, and finding a good title company/attorney. 

As far as the deal goes, I'm not sure what insurance, management fees, repairs and vacancy pencil out at, but these could kill the cash flow.  A quick run of the number with standard assumptions shows that it could cashflow just over $1000 in year one. If you self manage, it could be another $3K in your own pocket. Depending on Taxes it could be a lot more. 

Alternatively if you have 200K sitting around, you could possibly get better returns in another property, or possibly doing PML/PMP.

Matthew, 

as others have said, it may be difficult with many HMLs because of how extensive the project is and your stated experience level. 

However, if the numbers make sense, you have a good plan, a good contractor to help and your also willing to put some of your own funds into the project, it speaks volumes to some HML groups. I'd suggest reaching out to https://actcapital.alphagatorfunding.com/ and see if their team can help you. They are an institutional HML group and fund in most states. I recently did a pre-qualification with them for a flip I was looking to do in Utah and they called me the next day to discuss the deal, options they offer, and rates. It might be a good place to start.