All Forum Posts by: John Mitchell

My business partner and I bought our first investment property (4-Plex) last year. We used the same agent that helped us purchase the property to find tenants. For each tenant we paid him a fee. Total payments amounted to $900 for last year. Do we need to file a 1099?

Thank-you for the help!!

Hi All,

Thanks for all the advice. As of now we have been in communication with the builder who actually reached out to us (the same day of me writing the original post) to grant an extension on the deal, which we accepted. We extended the deal 45 days. We also put in the deal an amendment that if we cannot secure financing terms by a certain date then we walk away with our escrow money. This was a blessing in disguise for us as our original lender's rates were pegged to WSJ Prime, which we initially overlooked.  

Currently, we are working with 2 lenders and we will be putting 25% down for the 4-plex and if the deal does not work then we will walk away and look for another deal.

Again, thanks for all the advice on this one.
 

Hi All,

My business partner and I have signed a contract with a construction company for the purchase of a brand new quadplex in Texas. The closing date is Aug. 30th and our lender just told us the loan did not pass due to the Debt Service Ratio being below their minimum threshold. This was for a conventional loan, and they looked at both our financials and the properties, and since the properties' financials did not meet the minimum threshold the loan failed. Is there anything I can do to salvage this deal or is it dead in the water for me?

Thanks,

@Alex Ramirez @Rosa RegierThanks for the responses. So, the only contract we signed was a reservation contract that entitled us to reserve the right to purchase the 4plex. According to the reservation contract we only agreed on total cost ($415k), the reservation deposit ($5k), and related items with the construction process.

The contract sent over to me yesterday is the longer 13-page TREC contract.  

Hi All,

My partner and I are closing on a 4Plex property that is a being built now. The total cost of the property is $415,000. 

- We have already paid $5,000 in earnest money and now the seller wants us to deliver 10% of total cost which is $41,500 of additional earnest money to the Escrow Agent.

- The seller also wants us to deliver $62,250 of cash at closing and the financing total would be $352,750.

1. For a new build is 10% total cost of earnest money standard or high for a 4plex and can I get that number down to say 5% or less?

2. I do not want to deliver any cash at closing, I want it to be all rolled up into the loan and pay the full $415,000, so I only have to pay the down payment. Is it normal for the seller to ask for cash at closing to reduce the loan amount? 

What levers can I pull to reduce the cash at closing to zero, so I only have to pay the downpayment at close.

Thanks for help,

John

Hi All,

My partner and I have reserved a 4plex property that is currently being built. We negotiated price directly with the builder and we have all of our lot information and how the property will look when finished.  The builder sometime in the next month or 2 will require an additional payment of 10% of the purchase price, which will be deducted from the original price. 

Question: Is it possible to hold that 10% in an escrow account and when the project is completed, pay the full original price of the loan, not the deducted price, and get the 10% in escrow back. Essentially, I am trying not to pay the loan downpayment and the 10% payment to builder. I only want to pay the loan downpayment of the original price.

If this is possible, what are ways for me to complete this.

Thank-you for the help!!

I am new to Bigger Pockets, and excited to connect with the people on here. My wife and I currently have a house and are looking to purchase a rental property to start building our rental portfolio. We live in Dallas and want to focus on the Dallas/Ft. Worth area and we are looking at small multi-family units as well as single family houses.

I have a couple of new investor questions:

1. We live in Texas and for the time being would like to purchase most of real estate in Texas. Would it be better to create an LLC in Wyoming and then register it in Texas or should I just create it in Texas?
2. Within the Dallas/Ft. Worth Metroplex, what areas do you guys find attractive?