All Forum Posts by: Kevin Yeats

Switch it around. A new tenant passes your screening, pays the first month's rent and security deposit and says "I'd like to move in on the first." You, the landlord agree. Then on the last day of the month (the day before move in day), you, the landlord, call the new tenant and say "sorry I need to do a few last minute things to the property so I can't let you move in until the 3rd ... but I'm charging you for the full month anyway."

Would that go over very well in a business relationship?

If not, why should the landlord accept the tenant NOT abiding by their end to the rental agreement ... that is on time payments?

Will, another two months have passed. Have they vacated? Any good news?

Have you documented your troubles ... other than here on BP ... so that you can either write a book or have a reporter cover the story or share it with your state legislator (like that would do any good)?

Ben, keep reading these forums and your will find many posts from investors in a very similar situation ... the investor wants to "help" a homeowner who is in a bad situation and wants to stay in the house.

In your case, this family "consider this their home until they die."

Consider that phrase carefully. They are fighting their current lender so they can continue to stay in this house.

How hard will they fight you if you help them out and then things again turn south on them? Do you have the foreclosure experience and the financial strength to battle this family if they stop making payments?

If I were in your situation, I would wait until the house is foreclosed and buy it from the bank after this family has vacated the property.

If you want to help this family, your financial assistance very well may become a charitable donation.

My $0.02

No snow is Florida.

Rob, read Freakonomics and Super Freakonomics

Most lenders want to see the borrower have some "skin in the game" .. that is some of their own money so if something goes bad, the borrower won't just walk away.

Most sellers or anyone else holding a second mortgage on this property will probably want something more than small interest. After all, if that something goes wrong, that lender is in second position and may lose everything.

But approach a banker with your idea and see what the banker says.

WARNING: develop a thick skin first.

Jacob, this really appears to be a situation where his problems will become YOUR problems if you extend this loan to "Ed."

Jacob, do you want to be a banker also?

Your GC, I'll call Ed, wants to borrow from you to complete what he has already been paid to complete. The additional information states that Ed and you have a good history (Ed has character) and that Ed got over extended (Ed has capacity).

Does Ed have collateral to pledge?

Does Ed have a good credit history? (If yes, why doesn't he just tap his credit cards or get a bank loan or ask his subs to in essence extend a loan by delaying all or part of Ed's payments to them?)

Does Ed have rock solid jobs lined up that you know will pay Ed in the next 30 or 60 days?

If you do extend a loan to Ed, what will happen if the worst occurs next week? What will you do when that worst case scenario happens?

If I were in your place and thought that extending credit to Ed in this situation, I would keep Ed on a VERY SHORT LEASH

The woman sounds persistent.

Hindsight is 20/20 but it sounds like a 24/7 security guard or a live in house watcher would make sense.

When they finally remove this woman, they will find that everything inside that can be ruined, will be ruined.

No, Lynn, I mean why do you, the buyer of a property want 100% financing?

I certainly understand using "other people's money" but I also understand that real estate investing is NOT a business that goes straight up. Vacancies happen, markets turn sour, competition can pop up right across the street. In short, the value of an investment CAN turn down. When that happens, the lenders typically want to protect their interests and require more payments or otherwise make life harder for the borrower. Your 100% loan is probably NOT the lender's first rodeo.

100% financing could allow you to accumulate a large number of underwater properties.

Steve Babiak, I understand that the analogy that I made is not strictly comparable. Those who use 100% financing still make monthly payments.

The point I was trying to make is that 100% financing is risky to the lender and thus those lenders seek compensation in the form of higher rates, fees and perhaps with a strong legal team ready to move when something turns south on the deal. That means higher costs to the borrower (= lower profits) and perhaps worse if the deal becomes entangled in legal troubles.

Zero rent would also be very risky to the landlord/landowner. I'm sure such a landlord would request higher compensation in some form to account for the additional risk.