All Forum Posts by: William Morgan

I'm kinda surprised at the lack of imagination regarding solar and rentals. Namely "the tenants pay the utilities so there's no ROI". Really?? Tenants pay to do laundry at laundromats too. Does that mean it's pointless to install coin-ops in your rentals?

Why not run the numbers:

• Estimate monthly usage and rates, accommodating seasonal variation.
• Calculate the cost of financing panels needed to offset usage.
• Is the monthly financing significantly less than the amount tenants are currently paying?  
• If so you can charge tenants a reasonable flat fee for electricity over and above the financed amount that provides you a ROI and tenants electricity that results in either a savings or cost neutral option that is better for the environment. So long as it's in-line (or less) with current electricity rates it will be a non-issue as far as tenants are concerned.

Yes there will be maintenance (simple enough for the landscaper to perform), just like laundry machines. With the cost of solar coming down, this type of analysis will begin to make sense for landlords, if not already.

Great answer @Chris Mason !  I never heard of GoE before this post and I'm not a fan of extending Seller finance in general.  All good points and caveats. The property is a good deal for it's condition and if he had not brought it to my attention along with his intention to buy, I'd buy it for myself.

One question:  Is a GoE taxable like a cash gift?

Hit me up with a colleague request if you do loans in FL for when the time comes.

I am buying a property that I will serve as a new home for my nephew. It's a foreclosure, needs minor repairs and does not qualify for FHA etc and he does not have the 20-25% down needed to do the deal. I will be buying it in my name only. I'm purchasing it for $103k and after repairs it should appraise at $150k after 1 year (or less) of seasoning.

The plan is to have him occupy using an instrument that will allow him to refinance after 1 year. This might be something like a Contract for Deed with regular monthly payments but where I hold the deed until I'm cashed out. If the property appraises as I expect he should be able to cash me out with a loan at 80% LTV thereby giving him low cost financing without the need for a 20% down-payment from him.

My question is what is the best instrument for this?  I was thinking a Contract for Deed (yes I know about Dodd Frank) during his 1st year of occupancy would eventually make him eligible for a refinance loan vs purchase financing and it's requisite down-payment.  It would show a payment history and ownership rights so should enable him to refinance it with out a downpayment providing the equity is there - correct?  

Can anybody weigh in on this strategy or perhaps a better one that would enable a Tenant-Buyer (for lack of a better term) to be eligible for refinancing vs purchase financing?

-William

@Brian Gibbons, 

"I'll joint venture with the seller, use private lender money for the rehab, give a short-term note with no payments for four months".

I love the creative approach! 

Why a short note?  It seems like you, the service provider, are bearing the bulk of the risk. Why not just a Tenants in Common your fraction reflecting your contribution to the deal?

I have a property now that has a DOM of probably 14 but a CDOM of over 190!! It fell out of escrow twice and is now on day 62 of it's 3rd escrow. In your model would you be on the hook for this unexpected delay?

-B

John,

You are in escrow.... this is the time you scurry around and verify that all the assumptions you made when entering into the purchase agreement are correct.  Call some foundation reputable foundation guys, have them out and get their insights and quote as soon as you can.  

It doesn't look like a big (i.e. expensive) deal at all, but the time  to resolve that question is NOW.  

Get going!

Hi all,

I recently rehabbed a Manufactured home (1996 vintage), put it on the market and have it in contract with an FHA buyer. It appraised well and no issues were discovered during escrow. The buyers received loan approval however the underwriter is asking us to provide its prior ownership history. It's not clear if it was simply traded between MH dealers and sold as new or if there was a previous owner #1 who set it up at location #1 and later resold it back to a dealer who then sold it to owner #2 who set it up at location #2. We are having to try to piece together and document its history before the underwriter will approve the loan.

At issue is FHA's rules for eligibility :

• Relocation [of Eligible Manufactured Homes] - To be eligible for FHA Title II insurance, the manufactured unit must not have been previously installed or occupied at any other site or location. Manufactured units may be moved only from the manufacturer’s or dealer’s lot to the site on which the unit will be insured. If a permanent foundation is to be constructed under an existing eligible unit, the unit may be jacked-up or under pinned in order to install a new foundation.

If the MH was sold and set up at a different location then it does not (i'm being told) qualify for FHA backed financing (Title II). It also would not qualify through a traditional lender either as they have similar requirements.

The MH is on land and on a permanent foundation. 

Does anyone else have experience with this?

How do I go about getting a buyer financed? 

Will, 

I don't know if this has been mentioned before but have you considered taking your story to various media outlets, local, regional or national?  Not only would it shine a light on how California's legal system enables this but it might shame the DA, Mayor etc into doing something about it.

I would also inform the CA Bar Assoc. and ask them to monitor the situation.

@Joe Butcher erentpayment shows when the Tenant submits the rent.  True, there is a 3 day delay before it lands in the bank account, but I'm curious why you wouldn't just specify the rent be submitted before a certain date? 

My policy is:  Due on the 1st, late if submitted after the 5th, very late if submitted after the 10th.  No partial payments allowed. The only time I need to manually step in is if it it's late beyond the 10th.

@Nick Edwards

"Will I be able to use that money or borrow on it for a non owner occupied property?"

Yes - well most likely.  I do not know your plans specifics but I suspect you can.  Typically you can borrow 1/2 of the value of your 401k up to $50k max.

Let's assume you have over $100,000 in you 401k. If you are borrowing to purchase a primary residence you should be able to borrow $50k and have it amortized over 15 years. You will be paying it back at a moderate interest rate that you pay to yourself. You pay it back with after-taxed money (like any other loan). The only difference is that your 401k account keeps the added interest, not a bank.

If you want to borrow for any other reason you can still borrow $50k.  The only difference is that it is amortized over only 5 years - i.e. higher monthly payments.

"Might I want to search for and attempt to swing Subject to opportunities?"

That's never a bad idea. But it's not your only option.  

I'm gonna withdraw my reply. I'm not out to prove anyone right or wrong. I just object to the assertion that one "needs to be educated" on Pit Bull breed profiles in order to come to an understanding that they are benign. The data is there for all to see. They, in conjunction with irresponsible owners IMO have earned their bad wrap. At least enough for me to seek any legal way to disallow them in my rentals. But to each their own..

Best

-W