All Forum Posts by: Melanie P.

@Nate McCarthy What makes it worth a renter's money to pay rent is possession of the premises. That is it. From day one. 

You're free to call it "weighted deal" and there is no law against a bad deal - anything you can talk another person into is technically "possible." Don't expect these people to have anything to do with you once the transaction is over and a lot of bitter, nasty fights along the way. 

You didn't find the property, you're not doing the rehab work, in fact are going to delay and interfere with the rehab by moving in while it's still under way. If you need a house to rent to live in - go to Zillow. If you want to have ongoing relationships with people you have to create some value in the transaction. I do not see that here. I see you trying to pull one over on a couple of people... In my opinion this will not lead to long term success - if that is of any interest to you focus on saving up enough to purchase your primary residence. Once that is squared away you'll have more experience to explore investment property. 

 It is a violation of the HAP contract to charge more rent for voucher recipients than market rate tenants. Frankly, we would not participate in the voucher program if it didn't have above-market upside in year two and beyond. The inspections have become so nitpicky over purely cosmetic items there has to be an extra $1-2k per year to keep up with the punch list every 1-2 years. When they create costs they have to cover those costs. On the plus side the rare times a Section 8 tenant moves the unit is in rent ready condition because it hasn't been ignored as occupied for 6-10 years.

@Jared Haxton You are not going to be able to do an owner finance transaction without paying off the existing loan. So if you go that route the $125k down payment will be directed to your mortgage company at closing - not you. 

What your deal would ultimately entail is a buyer who trusts you enough to give you $125k and trust you to pay it back while his property is encumbered by both your seller finance note and your original mortgage for $125k. This is not gonna happen. 

You can simply list it as a $300k sale and list Seller Finance as one of the financing options in the MLS. You will get plenty of offers but bear in mind you'll need a lot more cash to pay off the mortgage and walk away with dollars at closing. If you're going to reinvest the proceeds you might want to consider a 1031 exchange or a cash out refi to generate the investment funds you desire for your next project. Good luck.

@Greg Scott I apologize for questioning your integrity as that is not my intent. I actually think your company, Drive Home Capital, does have a good track record in the space. You've had lots of investors, nobody is complaining, you aren't over hyping your past deals but they are easily verifiable and have the proper filings. I respect you and what you've accomplished.

i do suffer from a rush to judgment when someone who is in the business of raising money brags about 45% returns for LPs. Please take another look at the graphic you created. For example a 326% return for an investment held 5.6 years is an annualized return of 29%. Annualized Return = ((Money Out - Money In) ^ (1 / number of years held)) - 1. Undoubtedly a good return, but for it to be worthwhile you have to send a lot of money away and out of your control for a very long time. 

I credit you as an expert marketer and believe that when you post returns and create these graphics at least sometimes people reach out to you for information on how to participate. That makes me nervous - because if the investments could be proved up to sophisticated investors why hunt for the guy who gets excited seeing 45%? I say this only to relate activity that sets off alarm bells, not to impugn what you are doing, which is better than 90% of what is hustled around these parts.

From what you wrote it sounds like the rental you own is your sole, pre-marital property. If you continue filing taxes jointly the income you realize from your separate property will still need to be explained and redacted, regardless of the type of entity holding the real estate. You could file "married filing separately." Your taxes are none of the ex wife's business and this would seem to address your concerns.

I would also put her on notice that future requests for financial discovery will be two-way and if a discrepancy is seen in the other direction you will seek support from her. I would also be keeping a log of any incidents that give rise to new custody issues.

@India H. Do you own your primary residence? If so, for how long?

The two of you would need to sit down with an attorney together and have a partnership agreement drawn up. I cannot tell from your description what either of you would be bringing  to the partnership. 

As the person with the money, I would ask you how much rent you intend to pay the partnership each month while occupying the investment property?

Flips must be completed FAST. Moving into a flip is going to slow down the process and thus raise carrying costs. Getting you to finish the work and then to leave are other problems I see in your "deal structure." 

Other than living at the work site what is your contribution to this transaction?

Cash out refi either the 300k rental or your primary. Proceeds to segregated account to be disbursed ONLY on rental property improvements and expenses to preserve the deductibility of interest on your Schedule E.

@Jared Haxton What is the balance of your mortgage on the property?