All Forum Posts by: Matt Inouye

@Bill Gulley, and @Jon Holdman

@Jon Holdman

I know this is an old thread but I have a similar situation to @Daniel Dietz with a bit of a twist.

What happens if a note is modified and a few years later the private lender passes away (leaving the note to the state - no heirs).

I tried to go to the county recorders office but was told that they do not record modifications to note terms.  How would the beneficiaries (in this case the state) know that the private lender and I had modified the terms if recorder's office doesn't record that information?

The document that I had prepared is notarized by the private lender and myself. 

Any thoughts and insights would be appreciated.

Aloha,

Matt

@Bill De Jong

Yes I did end up moving forward with the purchase. I will post some pictures once project is completed. I actually ended up moving forward with deal on the merits of the existing property itself. I did the deal more to secure the land which is literally across the street from a major OC university. If unable to find another deal in the same area I will be looking to deploy capital on adding the ADU.

@Frankie Woods

USAA gave me that offer in April 2018 and 0% until August 2019.  If you have a USAA account those are pretty legit CCs.  The normal interest rate is fair as well  8.5% on one, 9.4% on another.  Beats hard money in my opinion... but again, be aware of the FICO hit.

Aloha,

Matt

@Brett Leavitt

I have to agree with @Pete Schmidt and @Jay Hinrichs.  Your credit will take a massive hit which may not be worth the interest savings of 18months compared with potentially worse terms on a new mortgage down the road (some lenders give rate discounts tiered with credit scores).

I did exactly what you are proposing and have been wondering if I should just pay it all back.  USAA offered me 60K at 0% for 18 months with a $75max transfer fee.  Sounded great at the time since most charge 3% on the balance transfer.  I figured I could earn a money market return on the cash during that time and offset some a large rehab I have going on.  But my credit score dropped from low 800's to low 700s.  

As others have mentioned your FICO will pop back up after you repay it... but what if a really good deal comes along during those 18months and you have to lock in higher interest rates for a 30 year loan b/c your % credit utilization was too high.  Just some thoughts

Aloha,

Matt

Hello BP I know there are rules pertaining to originating notes (quantity/frequency) with Dodd-Frank. I was wondering if there were similar rules to being able to originate a reverse mortgage. if the answer is “yes” what resources are available to an individual to make sure I stay compliant. I know the big one is being 62... does this apply if the lender is a private party and not an institution. Thanks for the help! Aloha Matt

@David Friedman

Yes you are correct, it is almost like a reverse mortgage and yes there is a huge element of speculation to assuming a 2% increase in property value for the next 30 years (although it is in Irvine near the University!).

The risks I saw to purchasing the home with the seller carrying the note and living rent free is that liability now shifts to me as the landlord.   I am also trying to account for the eventuality that he could trash the place or a major capex item comes up while he is living rent free.

Do you see other alternatives to structuring the deal where I shift liability and also reduce holding cost?

One of my thoughts was a long-term purchase option.  Some lump-sum up front for a 5 or 10 year agreement to buy the house at a set price down the road (helps avoid liability but retains upside).

Any other ideas on how to structure the deal

Thanks

Matt

Hello BP Community,

I had an odd deal come across my desk and I wanted to gain some insight as to how to value it.  Long/short, a homeowner needs some upfront cash and is willing to sell their property at 480,000 when it is easily worth north of 1,000,000.  Owner is willing to carry the note at 0% for 20 years with the stipulation that they are able to live rent free.

Owner wants 30K upfront, $2000/mo and live rent free for 20 years.

I ran this through the BP rental calculator and obviously the CoC ROI is horrible (-2700/mo PITIA). However, if you take $1M with a 2% return for 30 years it ends up with a value of 1.8M. With no down payment, this is a 25% annualized return for those 30 years.

Do you guys see alternate terms to the deal?  I've considered potentially using the immediate equity to buy an out of state multi that produced enough cashflow to pay the 2nd position debt plus offset our holding costs over the years.  I'd be interested in hearing other views/thoughts.

Appreciate the help as always

Aloha,

Matt

@Peter Antipatis

I think you're numbers are pretty spot on.  I purchased a 3/1, 950sqft home in the Lowdermilk area (a little east of downtown Greensboro).  This was in January 2018 and specs were 35K purchase, 15K rehab and rented it out for $750/mo.  

I was a little high on my pricing but after about a month was able to get it rented.  This was also in March when there were some pretty decent storms coming through.  My PM told me that it would probably rent out at $700 and was surprised we got $750.  I like to go a bit on the high side as a built-in filter for tenant quality.

As a SoCal investor, it was a bit different to wait a whole month to rent it out (properties rent out with less than a weekend vacancy here), but the numbers still made sense.  In your case (being from NJ) I am sure you are used to the seasonality of renters and vacancy.

Also, current comps for my purchase are coming in around 65K (in-line with what you are seeing)

Best of luck/skill and let me know if you have any other questions

Aloha,

Matt

Hello BP,

I was wondering if anyone had referrals to quality and cost effective hard wood floor refinishers.

Mahalo,

Matt

Hey BP Community,

Has anyone had experience petitioning a rezone from R1 to R2 near Chapman University in Orange County California?  I have a 6000 sq ft lot with a 1600 sq ft primary residence.  

I am wondering if it might be worth rezoning to R2 and putting up another dwelling

R1 Comps:

750K for a single dwelling

850 for single dwelling + in-law unit

R2 Comps:

1.050M-1.2M for Two dwellings on the property

Mahalo,

Matt