All Forum Posts by: Kevin Danikowski

@Chris Mason Correct, 2% "interested party contributions.". 

The methods above work (i.e. tax proration, 2% seller contribution, and increasing rent security deposits), however I am looking for other additional methods to use, would you have any to offer by chance?

I'm looking for a way to increase the amount of seller credit at closing. I have a deal for an agreed upon price i.e. 300k, but it's worth more, i.e. 350k. So i'm "purchasing" at this price while trying to maximize the amount of seller credit to get to the agreed upon price of 300k.

Conventional loan guidelines only allow 2%, but some other methods to increase closing credit is:

1. Have seller put more into security deposits

2. Increase the percentage of prorated tax credit to 140%

3. ???

I'm looking for other methods. Does anyone know any?

I've thought about:

1. A separate escrow account for after closing (this is mortgage fraud so wouldn't work)

2. A repair escrow for repairs needed on the property (I don't know if this is allowed thought). 

Any other methods are appreciated. 

Hey All,

I have an owner that is very willing to do owner financing as long as I hit his purchase price (PP). He owns 150k equity in a 350k 3 unit property. I'm trying to figure out my best course of action to do 100% LTV because I'll need to put up 20k toward a new roof after the sale. Everything else in good condition.

Strategy 1:

Wrap around mortgage. He refinanced with a 4.75% 30 year loan 3 years ago and owes 200k on it. I would then have a mortgage where I pay him and he pays his loan. 

Strategy 2:

Find a bank that will take first position for 60% of PP, and seller takes second position for 40% of PP. 

Both of these have a due on sales clause risk, I'm not sure of the severity of that risk, but since there may be a market recession soon, is that risk magnified? I would believe it is the opposite since the bank doesn't want an upside down property? That's another thing in itself. 

Hello, I know i'm revisiting an old thread, but I have a related question. 

I'm about to purchase a 6 unit from a seller who wants to retire. They are going to pay capital gains tax on over 

$400,000. They aren't too interested in seller financing unless it sweetens the deal for them. 

I was thinking, maybe if they agree to seller finance at a better rate than my current lender, and then sell the note for say 10% off the principal, do they pay taxes on that note since it's at a loss? Or do they pay capital gains since the note is considered all profit? 

My gut feeling is this won't work, but it's worth asking about. Any thoughts?

I just wanted to say thank you to everyone that weighed in here, they have all made me adjust my approach to this deal.

@Eric Veronica I laughed pretty hard at your "ABC7 special report" haha. You are correct, it would need to be properly executed. However, after visiting the property and understanding the story it turns out there is some motivation from every owner to sell, at least from what I would be able to offer them for their situation. I actually plan to buy every unit outright. Once I have the deal under contract which will hopefully happen this week I can provide a more in depth insight on this deal. 

The benefits for a de-conversion would be lower taxes and no need for separate association and condo accounts, it is also more attractive from a selling standpoint. Do you believe there are benefits to keeping them all as condos with the assumption i'll own every unit 3-4 years from now? (that's the rough plan timeline). Thank you Eric for the question!

@Luke Miller Yes that was what I was hoping, I'm going to receive a copy of the bylaws tomorrow I believe and can dig into it. Is it possible I could lose in decision making even though I would own majority stake? I don't imagine so, but I don't want to be blindsided haha. 

@Luke Miller Thank you for that response, very insightful. What do you mean by "outside people that will have influence over your investment", who do you have in mind? Others who vote on the Association board? 

I'm going to add a bit late to this thread, but what wasn't really discussed was strategy, do you want equity or cash flow. 

If you want cash flow, then that $200 can go a long way, that's 2X on a 30 year compared to 15 year loan in cash flow. 

But if equity is important and predicted to increase in 15 years barring any housing plummets, then a better investment is 15 years. 

My thoughts: If you plan to keep the place that long and having an extra $100 cash flow isn't critical to you, 15 is the way to go, if you just want to milk the home for what you can and ditch it, 30 year loan would be better. 

I have found an excellent related article on buying condo packages: https://www.biggerpockets.com/renewsblog/purchased...

I'm having difficulty finding this information. 

I am looking at a condo package deal in which I would purchase multiple condos and own majority stake in the association. The 3-5 year goal is to convert it into an apartment building (deconversion). 

What are potential foreseen risks of a deal like this? 

It has a cap rate I'm looking for. I understand running an association likely takes a more work. Anything I should be weary of?