All Forum Posts by: Michael Caldwell

Hi folks- can anyone guide me towards an attorney that can put together an operating agreement and set us up with a series LLC structure that will be funded using a preferred equity investment?

Hello- I own a single family home that is leased to a special needs nonprofit. If the nonprofit fails to make payments multiple months in a row, would I be evicting them in the same process used to evict a RESIDENT or a COMMERCIAL entity? I ask because it is much easier to evict entities, but this is a SFH leased to an entity so it may be different.

Thank you Chris! Does this involve any complexity on the mortgage side? IE do we need to avoid telling the first lien creditor that the down payment is coming from a promissory note? Or do we tell them at the last minute?

Hello, my real estate investment partner and I are in talks with a party about getting a $1-2M promissory note in place, which we would draw on to make acquisitions of 12-25 single family homes over the next year or so.

Our counterparty has an attorney, who I believe would draft up the promissory note and personal guarantee documentation. I believe we’d also need to cross-collateralize our 2 existing properties (Florida and Virginia) as part of this. I understand there’s some nuance state-to-state in terms of deed of trust usage vs. using a mortgage for the second lien position (our investor in this case).

So that we can arm ourselves with the most knowledge going into discussions, could anyone advise what the setup process actually looks like here? How much in legal fees to prepare for?

also open to attorney recs who could help us with this 

Quote from @Joseph Chiofalo:

Hi Michael, 

What location are you building these properties?

Not a building strategy, we buy them as SFH and rent as is to partner group organizations. I’m trying to solve for a lack of funds to put up down payment, not sure another lender is the solution here but open to perspective if you have something in mind 

Hi all- my partner and I are building a portfolio of group homes. For those that don't know, group homes are single family homes that house "by the bed" and therefore come with many benefits, the primary being that they bring in anywhere from 1.5x - 2x the monthly rental income that a standard single family home would. 

As we're running out of personal capital to continue acquiring with, we're exploring a structure where we give investors an 11% preferred return that we buy them out of in 7 years. If payment isn't made OR if they aren't bought out in time, they own the common equity 100%. Does anyone have feedback on this approach?

Thank you for this helpful insight! My ultimate question is if, in a contract for deed sale, the property tax steps up. Does it? Or does that not happen until full transfer of title? And at what point does that transfer of title happen?

Hi all- I’m in a unique / fortunate situation where I’ve found some older homeowners looking to remove the burden of managing a rental property that are willing to seller finance their property to me at $0 down and 1% interest on a 30-year note, no balloon. 

To get this, I’m paying them about 10% over asking price in total purchase consideration, but the terms and monthly payments are so favorable that it really doesn’t make much of a difference.

Although I’ve read extensively about these deals, this would be my first and my big question is around the taxable basis of the property. Does the basis remain in place since the seller would presumably hold the title until the payments are complete? Or does it step up to the purchase price number that I put on paper?

Additionally, if anyone knows good title / escrow folks and RE attorneys in LA county that could help me with this deal, that’d be fantastic!

My understanding is that DSCR appraisals are on the basis of market rent and property value based on comps. Do any DSCR lenders appraise on the basis of ACTUAL rent?

I ask since a property we're purchasing is going to be leased to a group home organization, and if we were to get the home appraised after a seasoning period, we could refinance and pull our down payment out. Any tips on how to find a lender that would work with this are helpful.
 

I’ve heard of folks borrowing from their personal network for a down payment, but is this actually used in practice?

My partner and I have an opportunity to buy a home that’s going to be leased to a non-profit, and we anticipate we’ll have the opportunity to do so with many other properties with them.

Because of the rental rate we’re able to charge the nonprofit, our cash flow would support a note to our down payment lender at up to 11%, but we’d need a term of 5 years or so on that. Does anyone know of resources we should look to as we try to find such lenders?