All Forum Posts by: Matt Devincenzo

Someone was talking about this awhile back and had ideas to help prevent the seller from doing just that. So depending on what the deal is worth you may want to consider the memorandum to motivate the seller to keep working with you.

http://www.biggerpockets.com/forums/51/topics/72097-seller-backing-out

I think your bigger question is not what socio-economic area to target but what are your buyers looking for they'll probably tell you exactly what zip they're looking in. You can get 5x the response but if no one is buying in that area it won't matter.

http://www.biggerpockets.com/renewsblog/2013/03/24/deals-moving-forward/

Corey Gentry you can look at it as the same as a rehab, only the intent is to exit at a lower value, but also to not have to put as much work into the property, and leave those sweat equity type items for the end buyer who gets a deal by being ok with those outdated kitchen and baths or vintage pink toilets haha.

Arnie Guida would it be possible to just update a panel at a time like during each vacancy do that one, at least then the cost will be buffered by being spread out.

I don't think anyone is trying to badger you, just give some constructive advice on the potential liability that is looming. And you definitely have every right to take it or leave it, it is after all just advice.

I've been looking at the spec build threads recently and have started some research into doing one though not just yet. I did however have a goal in mind for something I did want to do when the time was right and it appears the time may be now or closer to now than I thought. Some background on the situation.

My parents live in Orlando in a house they bought back in 1993 in one of the older original areas of Orlando that is on 1 1/2 lot which is very large for downtown. The original house was a 2/1 and the plan was to build a garage with an apartment above and move into it and then remodel or tear down and rebuild the main house. The garage apartment was built in '01-'02 and the main house was torn down in 2006 after some major hurricane damage, however the main house was never built though my parents still live there in the garage apartment.

My Dad lost his job in 2010 and was out of work for 2 years, fortunately they had savings and he received a decent severance and were able to weather that time, though it has obviously set them back financially quite a bit. They never missed a mortgage payment or a bill though it was tough at times. He is now working again though for about 60% less than his prior job, and they are working on paying down all the debts that have accrued during that time.

The best option is to get rid of the property and the associated debt and downsize now that it is just the 2 of them with no children at home, but it appears that it will probably be difficult to sell a property that isn't quite what a family needs but also not quite an investment either though it has the benefit of the additional lot but it looks like it would be barely break even to sell as is. There is a large disparity between what 3/1-3/1.5 smaller homes are selling for at about 220K and what larger newer 4/2-4/3 homes are selling for at about 340K, and homes with additional apartments touching the 600K range.

The best use of the property would be to complete the main home and sell as a home with an income/mother in law suite, and is what they would prefer to do but are not in the financial position to do so at this point.

Mixing investment as a family is not a problem as we've already done that before, and my Mom just posed the question of if I would want to do that. The goal for them is just be able to move into a better position to financially recover, and for me to be able to realize the profit of doing the necessary improvement.

My question is if structuring this deal would even be possible in a way for me to obtain the necessary construction financing. My idea for a way to potentially make it work is to purchase the house sub2 the financing in place on the property currently, I would now be able to apply for a construction loan since I would now own the property, and could have the main house built and the garage apartment painted and freshened up to a like new condition and sell.

I'm looking at what the potential sale price would look like (600K I believe so far from recent sales) minus the construction costs and current loan payoff (275K and 200K respectively) these are just initial numbers and my goal for next week is to begin to call and research if they are realistic or not.

Would this sort of a structure work to obtain the property and the necessary financing or is there a better way to structure it to accomplish this. Would a construction loan allow me to just purchase the property outright and then finance the construction also? Again just beginning to look at options, and the numbers may not work just yet with the current market, but it may be the time as the market continues to improve in the area.

Any advice, ideas or critiques are welcome as this would definitely be a new venture for me and I would only consider it if the numbers truly would make sense.

regardless how many there are the point he was making was change them out before you end up with a pile of ash.

Yeah I'd go with corrosion is the problem, because barring your specter being the culprit, the fuses are still good and the electric isn't getting a chance to get to pass through them or they're bad and doing their job. So sounds to me like the corrosion before the fuse is the problem.

I think that Joe Bertolino brought up big point here that I thought of but didn't necessarily think of, there are two ways of doing this. For a long time the solar installs were purchased by the homeowner and installed and you got tax credits ect and the benefit of the solar energy.

About a year ago I heard about the companies that it sounds like Joe is using/looking at, that they purchase and own the panels and you let them use your roof space(simplified but the way I understand it feel free to correct me), you don't get the tax credits (if they even still exist) but also don't have the capital outlay .

So that also goes a long way to determining what decision you make and what benefits you realize. Joe that brings up a question for you if you don't mind, when the company sells the electric where do you make the money?

Let's assume all rates are static for a minute for easy math does it work something like this.

Tenant's pre-solar use 10 Kwh= $10/mo bill

Solar produces 8Kwh shown on a new meter installed for the solar.
Tenant's post solar use is 10Kwh=They still pay $10/mo
Utility/solar leasing company cuts you a check for $6/mo and they net $2 for their equipment ect.

I haven't personally done solar, however I believe that in a normal home situation the power is fed through the meter to the utility. So if you have a net excess in power produced the utility will pay you for it and if there is a net use you just pay your now lowered utility bill.

I think that the easiest if you look at doing this is to find out how to keep the tenant out of it, so you AREN'T considered the utility and subject to regulatory issues ect. but you also don't just want to lower your tenants utility bill $100/mo and not be able to charge a proportional rent increase.

If you can have the electric metered so your generated electric is sold directly to the utility and you get the normal rent amount and the tenant pays their full electric bill then I think it would be doable otherwise I think that you will end up with a big installation expense and no big rent increase to cover the costs.

If you would like to make an offer based on what you think that prop will bring in in terms of rent then make the offer and have it contingent upon receiving the sellers sched E by XX date.

Personally if I was selling I would be more than happy to provide a sched e AFTER an approved purchase contract. Reason being I'm not going to be throwing my business out there to every looky loo that thinks they are interested in the property, but would be more than happy to verify income to my actual buyer.