All Forum Posts by: Pavel Sakurets

@Pavel Sakurets

what was your intention when you purchased the property in your example? To resell it? 

"Somewhat limit yourself" is probably not the best wording to describe this. Account holder is prohibited from doing ANY work on the property. 

Has anyone ever purchased a commercial property using a "subject to" method?  

This has just fallen in my lap and I'm wondering if it is worth pursuing.

I have a lady that owes $275,000.00 on a beautiful little commercial building 4000+ SF that is used for a catering business, and is also rented out for weddings, receptions and has a lease for a church that meets there on Sundays. It has an upstairs apartment that the owner lives in. She is about to be foreclosed upon this week, and has contacted me through the Montgomery, AL REIT to see if we could work out something that would benefit both of us. She wants to lease it back, with an option to purchase it back in 2-3 years with an additional 15% of the original price (around $41K). She also owns a nice house in a nice neighborhood that is free and clear, worth $130K. She is renting it out at $850.00 a month.

I will be getting the numbers this afternoon, but she is frantic, and is willing for me to take over the 275K loan, deeding the property over to me, leaving her name on the loan.

This will be my first property if it goes through, so naturally I am cautious, and would rather take it slow, but her deadline is Wednesday, so I need to overcome my reluctance if we are to do this thing.

I'm wondering if I should just be a private lender to her, allowing her to get caught up on her loan without going through the bother of purchasing the building.

Has anyone ever purchased a commercial property using a "subject to" method?  

This has just fallen in my lap and I'm wondering if it is worth pursuing.

I have a lady that owes $275,000.00 on a beautiful little commercial building 4000+ SF that is used for a catering business, and is also rented out for weddings, receptions and has a lease for a church that meets there on Sundays. It has an upstairs apartment that the owner lives in. She is about to be foreclosed upon this week, and has contacted me through the Montgomery, AL REIT to see if we could work out something that would benefit both of us. She wants to lease it back, with an option to purchase it back in 2-3 years with an additional 15% of the original price (around $41K). She also owns a nice house in a nice neighborhood that is free and clear, worth $130K. She is renting it out at $850.00 a month.

I will be getting the numbers this afternoon, but she is frantic, and is willing for me to take over the 275K loan, deeding the property over to me, leaving her name on the loan.

This will be my first property if it goes through, so naturally I am cautious, and would rather take it slow, but her deadline is Wednesday, so I need to overcome my reluctance if we are to do this thing.

I'm wondering if I should just be a private lender to her, allowing her to get caught up on her loan without going through the bother of purchasing the building.

I would appreciate any advice that someone can provide on what my best rout might be for financing a flip. The issue that I have is that a little over 4 years ago my wife and I had to declare bankruptcy and our home was foreclosed by the lender. Our financial problems stemmed from a major medical issue that I had that resulted in medical bills that we could not possibly pay in several lifetimes! Since that time we have done our best to get back on track by saving every nickel we have. Our total assets are approximately $150,000 and include a rental home valued at $75,000, two lots in a subdivision valued at $25,000 and $50,000 in cash and stocks. We are now debt free. The problem I face finding a house to flip is because of what the bankruptcy did to our credit. My wife’s credit score is now 640 and mine is even worse. In order to finance a flip without financing I would need to sell our rental house which I am reluctant to do. I have checked out hard money lenders and read as much about them as I can on this site. Although this is an option, it does make me feel a little queasy based on what I’ve read. That leads me to my questions:

• 1.)Could my wife get a home equity loan for $20,000-$30,000 on the rental and would this be a good idea? (The house is under her name.) I’m afraid the 640 credit score will prevent this and wondered and if any of you had secured real estate loans after you went bankrupt? I thought about Lendingtree.com but was afraid my inquiry for a loan might hurt an already bad credit score. I’ve been told it might.
• 2.)Is it common for two people to invest in a flip as equal partners? If so, how do you find these people and would anyone advise me to not go down this road?
• 3.)Should I just bite the bullet and use a hard money lender? Are there other options I should research?
• I would really appreciate any advice that you might have. There are several properties I have my eye on and what I am trying to accomplish is to have my funds available/preapproved so that I can move on a deal quickly. Thanks, and I am very glad I invested in a membership for this site. There’s a lot of brain power floating around these forums and I look forward to learning from all of you

Regards,

John Taylor

I want to share something valuable with the Pro Members of BP Nation.

Maybe you already know this strategy. Maybe you don't. And - this is not buying 20 houses in Detroit. :-)

I know some Pro members who have used this strategy to accumulate a big portfolio of rental houses in a short period of time.

Personally, I don't use this strategy because my long term buy-and-hold are apartment complexes (I own a 133-unit apartment complex). I am still waiting on @Ben Leybovich to get me my next building :-)

If you like houses and you wanna be a BIG time landlord of rental houses, read on.

For this strategy to work, you need:

1. Access to properties in strong rental markets (B and C areas) you can buy at a steep discount

2. A hard money lender

3. A portfolio lender

4. $20,000 cash

Here we go.

1. You buy a $100,000 house for $50,000 (including repairs). You use hard money to buy-and-fix it. Hard money lenders charge points and fees and they want you to have "skin in the game" (usually 20% of the project cost - in this case, you'll spend $10K as downpayment plus $2K-$3K in points and you reserve $5K as your holding or carrying costs = hence, you need $20,000 total).

2. Once you fix the house, you then rent it out, say at $1K/month and make a nice cashflow once you do #3.

3. After you rent it, you use a portfolio lender to do a cash-out refinance, say at 70% LTV. By doing this, not only do you get your original $20K cash out, now you have $15K extra (I reduced it by $5K for closing costs, points and other lender's fees) as reserves. Also, by doing only 70% LTV cash out, you will have ample of cashflow per house and you have some equity left in the deal (so if you need to sell for some reason, you can easily sell).

4. The portfolio lender does not care how many loans you have with them. Conventional mortgage providers allow you to have 10 loans as your maximum. So...with a portfolio lender, you do steps 1-3 all over again for property #2, then property #3 and so on. The idea here is BUY-FIX-RENT-REFINANCE. In theory, you can buy more than 20 houses with $20K but if I say 200 houses, maybe no one will believe me.

Now the whole process begins with a very good deal. Finding 1 great deal per month is definitely feasible. It's not easy and it's a lot of work but doable. Even if you don't buy-and-fix at 50 cents on the dollar (say you go up to 60 cents on the dollar), this strategy will still work. And depending on the cashflow, maybe you can go as high as 75% LTV (assuming the portfolio lender allows that) when you do a cash out refinance.

The point is: the combination of having a great deal and the right lenders (or access to financing) will allow you to build a sizable portfolio of rental houses even if you start with just $20,000.

What about you BP Pro Members? Do you have a "cool strategy" like the BUY-FIX-RENT-REFINANCE strategy that you like to share? Have you used this strategy before to build your rental portfolio?

 They are on the roof, I have a 3050 sqft house but it's a 2 story with multiple roof lines so the system is split up into 3 sections, one section being the last 2 panels but they are also the highest producing panels because they are on the west side of the house and get the best afternoon/evening exposure.

I'm not sure about the square footage, you can do the math.  They are standard panels which I think are 39" x 64" x 34 panels.  I can't fit anymore up there.

@Pavel Sakurets

So glad you chose #4 - it is going to be beautiful.

My personal choice would be for the 2 car and larger living/dining rooms; however:

1) My husband's truck does not fit into most standard garages, so we just need room for my car and his two motorcycles.  We have a 30 x 40 shop for him to store his tools and build/repair as needed for his work. 

2) No kids, so don't have to worry about an additional vehicle now or in the future.

3) As a female, bigger garage would by my husband's thing, not mine.  I would want more square footage in the living space, he would be O.K. with that if he were allowed to park the bikes in the house (and, yes, we have had that conversation).