All Forum Posts by: Mike Mazzucco

Quote from @Joshua Kemp:

Mike,

I am currently looking into this exact situation on a home and lot attached to an FHA loan. This house is on the MLS and has been for about 6 months, but has not had any success in going under contract. I know that this home is also has absent owners, as they have moved to another city.

I will preface this information with the fact that I do not have the exact answer as I have not completed this transaction, nor have I ever attempted this type of transaction, yet.
First off, it is my understanding that all FHA, VA, and USDA (Fannie and Freddie MBS) loans are considered assumable with "appropriate buyer qualifications" by the lender. Second, in what I have researched specifically on FHA loan assumption, someone looking to "assume a loan" MUST BE INTENDING TO LIVE IN THE PROPERTY (with the exception of loan originating prior to Dec 1, 1986) in order to assume the loan, with some considerations/restrictions:
     "Mortgages originated before December 1, 1986 generally contained no restrictions on assumability, while those originated after that date have certain restrictions."
     "...the lender may require a creditworthiness review of the assumptor["buyer"]."
     "Lenders should note that some mortgages executed from 1986 through 1989 contain language that is not enforced, due to later Congressional action. Mortgages from that period are now freely assumable, despite any restrictions stated in the mortgage."
     "This requirement applies to both those borrowers who
      take title to a property subject to the mortgage without assuming personal liability for the debt, and
      assume and agree to pay the mortgage."
****PLEASE NOTE******* :
     "An assumption solely in the name of a corporation, partnership, sole proprietorship or trust is not acceptable if creditworthiness review is required."
    "private investors are prohibited from assuming insured mortgages that are subject to the restrictions of the 1989 act. This restriction applies whether or not there is a release from liability by the lender of the selling mortgagor"
     "Mortgages subject to the 1989 Act require that the lender automatically prepare the release from liability, thereby releasing the original owner, when he/she sells by assumption to a creditworthy assumptor, who executes an agreement to assume and to pay the debt, thus becoming the substitute borrower."

This information seems to say that if the loan was originated prior to Dec 1, 1986, which should not be the case as this is greater than 30 years, then the loan is automatically assumable with no stipulations. However, if you are assuming a loan that originated post Dec 1, 1986, then you must have intention to live in the property. Also note that in the event that you are assuming a loan as an investor, the loan must be originated prior to December 1, 1986, and you must have no greater than a 75% LTV either of the original appraised value or the current appraised value (which should never be the case since, again, the loan is greater than 30 years old).

PLEASE REFERENCE: HUD.gov website, for HUD 4155.1 Chapter 7 Assumptions: https://www.hud.gov/sites/docu...

After doing some research via calling a loan servicing company, they sent me a bunch of good info sheets on the FHA/USDA/VA loan types that concur with what you stated. Has to be owner occupied.  

Bummed to hear this, but definitely will be leveraging this for my owner occupied buyers going forward!

Hi Guys,

I am a real estate agent in Arizona. I am trying to get creative for some of my buyers/sellers out here in regards to seeing if loan assumptions may be helpful to piece some deals together for my primary buyers and even investors. One question I had for you all, can FHA/VA/USDA loans be assumed by an investor or does it have to be a primary buyer? Also, for those of you that have experience doing assumptions, how long did it take from start to finish?

If you respond to this, please also comment if this is something you have actually done before or if its just something you are knowledgeable about.

Originally posted by @Mark Tomseth jr:

Hey Mike - Did you end up dividing the lot?

I ended up passing in the project. So never got to go through the process.

We have sprinklers in the house already. The tenant is making any other modifications required to be complaint for their licensing 

Jason,  do u insure AZ property?

Hi Guys,

I am a landlord and considering renting a residential house out to a business that wants to operate an assisted living facility out of the house.  I've talked to a couple of my regular insurance guys and none of them seem to really have any consistent answers for me regarding if this requires commercial or residential insurance for this type of set up... Specifically since I am a landlord and not the business owner AND property owner.

Curious, anyone been in this situation?  What insurance carrier did you go with?  How much higher was your insurance?

Hi Guys!! Quick backstory about me. I have worked in the aerospace engineering industry for 8+ years. I quickly saw that path led to a long miserable 30-40 year career with little freedom and flexibility to find time to enjoy life and family. I made a decision 3 years ago to start a transition that could lead me to financial freedom and a career path that would give me that flexibility. I decided to get my real estate license several years ago. Shortly after I had a coworker tell me about all the mad money he was making AirBNBing private guest suites out of the house he lived in. Most people would have been focused on the $$$ amount, I instantly saw that as a path to freedom. Specifically, I saw it as a way to create a stable cash flow that would allow me to go all in with my real estate career without putting the family at risk! Time to implement... My wife and I decided to buy the biggest house we could to set up shop. We bought a 6 bed/3 bath horse property in AZ with the intent of converting 2 of the rooms in to private guest suites. If numbers panned out, this would produce about 4k a month of income for us and cover the mortgage and utilities! Once we had things up and running on AirBNB I also started advertise them directly on FB and craigslist, which led to a lot of realtors calling me. Specifically realtors were trying to find a place for their clients while their new builds were being built... After seeing the demand, this inspired me to start offering my units for FREE to any of my real estate clients! I found a lot of success doing that for lead generation! Fast forward 6 months, I am sifting through Offerup and I see someone selling a tiny house near by for pennies on the dollar. I had a Eureka moment and decided to take my marketing to the next level and start offering my tiny house for free to clients! It has been a ton of fun seeing this project come to life! I have rebranded myself as "#TinyHouseRealtor" and have been having a ton of success with it! Not only am I able to rent it on Airbnb, but its also a lead generating machine! To pay it forward, I now offer to work with individuals who are trying to seek the same thing. I work to find clients houses that they can Airbnb private guest suites while living there. I even coach them all the way until they get their first booking on AirBNB! It is so rewarding to get to change the financial future of my clients lives! The moral to the story for folks who are house hacking... Don't focus so much on the money your bringing in, understand the value it adds by giving you the financial freedom to go explore entrepreneurship or other business ventures you have. I think that's what most people seek more than anything who are miserable at an 8-5PM. You can create a unique opportunity for yourself by having a baseline revenue stream to rely on why you push yourself in other ways! -#TinyHouseRealtor

Originally posted by @Doug McVinua:

@Mike Mazzucco

Have you tried speaking with the Town of Gilbert regarding this prior to submitting the request? 

I often find the Cities to be pretty helpful and knowledgeable regarding what is possible.

This is on my bucket list as far as the zoning variance process is concerned.  However, I do not believe I'll get a straight forward answer as far as the ability to do so as it is subject to board approval.  Most of the uncertainty in this deal is related to the lending side.

@ Dewitt, there is a property on the parcel currently.  So I would be looking to do one parcel as .85 acres (with the house), and the other as 1 acre (without the house).

@Michele, I understand the zoning laws wont allow it.  However, that's why I wanted to inquire about a variance for it.  In this particular situation, there are these little pockets of acreage amongst high density housing throughout Gilbert, Arizona.  This is not in a rural area.  I would hope that maybe I could even subdivide into .925/.925 acres if the city were stiff about it.

Hi BiggerPockets Community!

I am approaching my first flip deal involving a lot split in Phoenix, AZ.  Its a 1.85 acre parcel in SF-43 (one acre lot size min).

What I would like to do is a lot split to make 1 acre parcel, and an .85 acre parcel.  However I have no experience doing a lot split.  In this particular situation, no easements would be required as the lot stretches along the street.  Does anyone have any experience getting a zoning variance so split less then the zoning minimum?

Additionally, I would like to finance this deal with conventional financing if possible.  I think my wife and I would like to do a move in flip.  What is the process like if we were to want to subdivide while having a mortgage?  From what I read online, its at the lender

discretion.  Has anyone had a similar experience that they wouldn't mind sharing?

I am trying to avoid having to get a hard money loan until the zoning variance request is approved.  Perhaps this route may prove to be most cost effective/straight forward then trying to do something with a mortgage involved.  What's a reasonable amount of time to expect a zoning variance would take? 

-Mike