All Forum Posts by: Matt Devincenzo

There was a member on here a decade ago that focused on these type of deals...K. Marie Poe...her account is deactivated, but a search may turn up some of her info if you search the name and someone mentioned her in their replies. The other is Rick H (https://www.biggerpockets.com/users/rtpg1) he's also commented on quite a few title issue/ AP/messy deal threads over the years and has quite a bit of experience. 

Your reading of that section isn't exactly what I would take away. He doesn't say no inspection, he says no inspection contingencies. Meaning that if you fund a $5K EMD and then decide not to close you lose the EMD, or you pay for an inspection up front and risk missing out on the deal while you're waiting for the report. Typically those purchasing cash aren't inspecting every home, they're walking it or having their go to GC walk it and already know what they see that may be a concern.

The wholesalers I purchased from it was always the same. Any DD you want to do, inspections, code enforcement lookup etc you're welcome to do but there are no contingencies so once you go UC you buy or lose the $5K. 

Here's a post I made on "non-conforming" vs "illegal/unpermitted", understand they are NOT the same thing. It sounds like you have an un-permitted unit, which is essentially always a risk since there has been no notice to the AHJ that it exists and they can therefore initiate a code case to have it removed in most cases. The challenge with S8 in this scenario is you always have a piano over your head and all a tenant has to do is call the code office to create an issue for you. 

Where do you live, and where are your units? At those price points I'm assuming this is a more cash flow area like the rust belt, or other mid west geography. Is your $$$/mo CF a true CF, or is that your net right now without any maintenance coming up? Do you have a PM or is this your job now? 

Overall I would personally consider how I can still grow with the freedom that I have focusing on my real estate. Consider offloading an underperformer, or a high equity property and getting better, larger or more assets. Do it very intentionally, not just for the sake of scaling up, but to get better quality or easier to manage properties that will replace lower quality or harder properties. 

As far as financing, if you have real CF then it shouldn't be an issue. Try talking to local banks who want to do business with you. Also listen to them if it is difficult to get financing...they're telling you that your math may be off. I have a friend who is a banker locally, he's seen business bank numbers for 40 years...he know what makes a strong business client and when it is a weak business with some good years. If it is a good business with a hard to finance issue, he'll work with the loan team to figure out how to lend to them. He knows the loan will pay and they won't default because he knows they're solid. 

Well anyone can write anything into a contract, but whether it is legal and enforceable is for the courts to decide...

It is State law here that a contractor must call 811 or they are liable for the costs. If they call and then hit something incorrectly marked then there is some relief from that liability. I'm not sure if they can realistically pass that liability off to you simply by stating it in their contract. So ultimately this may require a discussion with counsel, and you may have to settle on splitting the cost. I had a project last year that a sub hit a conduit that was marked out and the utility made a claim many months later. The GC and the sub ended up sharing in the cost mostly (I think) because it was better than the finger pointing game that had already started, and realistically the attorney's were the only ones about to win...

@Drew Sygit @Gregory Schwartz From this HUD map it is 17 States/DC, and another site says 22 States which may reflect some more recent updates. But either way, it is a fairly substantial number of States and many of which have large population centers. Also many other Counties in non-covered States also include it. 

You can reach out to the Title company and see if there are any funds remaining for dispersement, if so then ask if there is a way to make a claim to those funds. The other thought, is there a way that the tenant can reverse their payment? I'm not sure how they paid so that may or may not be a solution here...

The other thing is technically your tenant owes you still, and the prior LL may be liable for fraud. They accepted rent for a time period they knew would not entitle them to the funds. Your tenants obligation was to pay you on Jan 1, so it doesn't matter if they paid someone else they still owe you...obviously details re: notice and dates all come into play here and from a practical perspective I'd work with the tenant and not move to evict over this. But maybe your tenant reaching out and mentioning that they're going to be forced to file a police report for fraud could generate some traction...obviously the real objective here is to just get the seller to call you back...

Assuming it wasn't addressed in your PSA specifically then it likely should be them, but the reality is it is likely you. You have the most to lose now since you'd be out all of your investment if the FC goes ahead. I question how you got here though? No one pulled a payoff to confirm the balance or looked at the latest statements before closing? 

I'd look at the closing docs for something related to the pro-ration of expenses etc and see if you have anything there that could be a clause you point to for them to cover those payments. Was it included as a credit/debit on the HUD so it should have reduced your cash to close? But if they don't willingly make the payment your only option would be to sue, and they have the upper hand to let the lender know about the sale possibly triggering DOS. They were already headed to FC, so in a sense they have nothing to lose...

@Anca R. no I'm saying the opposite. You can do an exchange for less than the full amount, but you will owe taxes on the boot. As far as some other comments about like kind etc, you can sell this SFR and then buy a warehouse, or vacant land or even exchange into a DST there are many other assets that are considered 'like kind'. So the question becomes based on their individual and personal tax situation what is the estimated tax burden they'd save?

Once Dave chimes in I think you'll have a better perspective on what that could be...

I don't know that @Dave Foster earlier mention worked...

I'll let him chime in as the expert, but you can 1031 for less it just results in 'boot' which is taxable. Whether it still makes sense will depend on how much you can defer vs. the basis.