All Forum Posts by: Daniel L.

I'm a newbie investor and heard a rehab gal Robyn Thompson vehemently state one time that she would never buy materials for her renovations because it would open her up to being considered as a GC/employer if ever sued by an injured worker and another investor she knew had their wealth wiped out as a consequence of this. Does anybody here have any great insight into this/options to mitigate such liability? Before the suggestion gets made of placing investment properties in separate land trusts or separate LLCs...One difficult consideration Memphis imposes is something called Hall tax which imposes a 6% tax on the investment proceeds of entities like LLCs & trusts but not properties held by an individual (If I understood a lawyer correctly).

http://en.wikipedia.org/wiki/Hall_income_tax

So are there insurance offerings that address this liability and a person would just buy sufficient insurance coverage? Your insight is most appreciated!

Thank you Don for your thorough response...this newbie is most grateful! I'm pretty good at tracking persons down and could maybe reach the property owner who for 3-4 reasons I believe to be in financial distress. Should I attempt to reach out to them before/after the demo? I'm trying to understand the part about bringing the demo order to the attention of the lender because Mr Gully suggested I fax record of the demolition order to the lender. See here

www.biggerpockets.com/forums/44/topics/79394-consolidating-multiple-parcels-for-urban-condos-infill-development

Can someone help clarify the bit of confusion please? I can't thank you guys enough for your expertise!

I just got my first deal under contract as an owner occupant...There's a good chance I'll be buying an adjacent lot because there’s compelling value in combining lots in this area and building condos. I may even buy a 3rd adjacent lot. I'm working with metro planning and know the combined lots would rezone to one of two types. I may even be able to get a definitive answer from planning dept or a civil engineer that I intend to have do a feasibility study on the parcels. It's my understanding that subdividing/rezoning/building a new structure all reset the clock on the 2 year primary residence tax exclusion for gains. As such rezoning via quitclaim for example would start the 2 year clock all over. I’m wondering if there’s a strong argument to defer rezoning until absolutely necessary/leaving it up to prospective developers it gets shopped around to. To start the 2 year primary residence clock right away…It's been suggested to me to come to an agreement with whatever development group the land is to be sold to that they provide the lionshare of compensation for my owner occupied lot and a nominal amount for the non-owner occupied parcel. I don’t need to tick off Uncle Sam and want to stay above board so I appreciate any insight that can be offered!

I have a property under contract of which the adjacent lot has a dilapidated home scheduled for Dec 5 demo by codes dept. Codes chief tells me neither the homeowner nor the lender USAA I believe in this case have reached out to him for any remedial effort. Codes chief says he'd have to see bids from licensed contractor & POF to halt the demo. I believe there's compelling value in my purchasing the adjacent property to package together with mine & sell to developers (my structure is worth demoing also). My situation seems a bit like this

http://shortsalesuperstars.com/group/spsselectporfolioservicinginc/forum/topics/sps-matt-hollingsworth-ceo-and-the-investors-of-deutsche-bank

Since the adjacent property is most valuable to me demolished should I allow codes dept to demolish it and only then pursue the bank/property owner or to my surprise would it somehow be better to try & make a concerted effort to get hold of a loss mitigation person at the bank tomorrow on some crazy premise the owner might have no recourse to keep the property? I don’t know much about the laws surrounding laying waste of the collateral being a violation of the standard deed of trust. Am I correct to think the scenario would still be considered a short sale or might there be a different legal process in lieu of “laying waste of the collateral”? Best I can tell, the mortgage only has 70k to payoff and the dirt for this property may actually be worth 65k (tax assessment of 30k for structure & 65k for dirt). I’m retrieving the mortgage docs later today to make sure the $70k isn’t just a 2nd mortgage. If the borrower is current on payments, can one even be sure the lender would even initiate any action?

I appreciate the info Bill! I would love to pick the brain of loss mitigation specialists/loan recovery negotiators. I just registered at shortsalesuperstars.com which seems to have the most persons with that expertise. E.G.

http://shortsalesuperstars.com/group/spsselectporfolioservicinginc/forum/topics/sps-matt-hollingsworth-ceo-and-the-investors-of-deutsche-bank

Am I correct to think it would still be considered a short sale or might there be some legal process in lieu of “laying waste of the collateral”? Best I can tell, the mortgage only has 70k to payoff and the dirt for this property may actually be worth 65k (tax assessment of 30k for structure & 65k for dirt). I’m ordering the mortgage docs later today to make sure the $70k isn’t just a 2nd mortgage. If the borrower is current on payments, can one even be sure the lender would even initiate any action? I’m going to ask this question on the BP forum sections for pre-foreclosure/shorts since it’s most appropriate over there : )

Outstanding Kenneth! Thank you.

Is it better to seek out a local realtor with good short sale/REO experience or rather go with a short sale guru/company with tons of experience (previous loss mitigation specialist/negotiator) that services nationwide? What might the pros and cons be?

Thanks Jon for your thoughts : ) I understand your concern about getting in over one's head. I know nothing and have everything to learn! I've already been having those lunches with various investor types...developers are next on the docket : ) I will continue to talk to the planners/visit the planning dept. I stated the taxes are in fact current. I was inquiring as to methods of discerning other persons mortgage status. I believe that's something that lenders cannot/will not disclose but human ingenuity never ceases to amaze (E.G. bandit signs). I'd think the bank should know about the impending demolition but things don't always work that way in the real world. Once it's demolished is it such that USAA may call the loan? Might somebody need to bring it to USAA's attention that it's demolished?

For those of you that can tolerate a novel...Here's what's going through this novice investor's mind : ) After a year of REIA meetings & a reading a shelf of books I've just gotten my first property under contract as an owner occupant. Woot woot! It's a vacant foreclosed duplex needing $30-$50k work to be rent ready for what yuppie renters in the area desire. I may be able to rent ready to low income tenants for something like $15k (wild guess) with most of that going towards one side of the duplex needing more costly repairs to meet FHA guidelines. I'm not a yuppie and could slum it on the side of the duplex in greater disrepair if need be.

There’s an adjacent boarded up house on the city’s demo list for Dec 5. This adjacent property is owned by the same gentleman, Mr J, that owned the duplex I have under contract, yet he allowed foreclosure on the duplex I'm getting. Surprisingly Mr J still holds the adjacent property (USAA holds a $75k mortgage on it since 2006). Mr J is current on his property taxes though he pays months late every year. Per what’s online, I DO NOT see that the adjacent property is in foreclosure/pre-foreclosure. What's the easiest way to find out if he's missed a payment on it?

The area is going through revitalization such that condos are going up all over the place (even same block) with compelling sales prices. Best I can tell, condos in the area are being erected on combined lots…not single lots… Mr J even submitted to metro planning building 5 condos on these lots. I have the metro planning meeting minutes suggesting metro council was thumbs up. Metro codes chief tells me he’s been unable to track down Mr J. The only thing that can stop the teardown is Mr J or USAA bringing forth bids from a licensed contractor bringing the house to code+verification of funds.

I’m pretty good at using the internet to track people down. I’ve a pretty thorough bread trail on Mr J and am optimistic I could reach him if he’s still alive/not hiding. I can’t think of any reason/circumstance for which I’d want to engage Mr J until after the demo takes place in a week? Can any of you? Metro legal tells me they only pursue demo liens each September. It’s been suggested to me that banks pay off these demo liens after foreclosing since the demo lien is first position. I’m told if the property doesn’t get foreclosed on, the demo lien won’t be pursued like tax liens are…It won’t go to tax sale : (

I really need to get my game plan sorted out. If I’m going to pursue the adjacent property to sell to developers, then there may be no sense in my spending $30-$50k to make my duplex yuppie rent ready. I’m left wondering what’s necessary to trigger USAA foreclosure/the timeline in which USAA is handling their foreclosures? Is it impossible working short sales with USAA? I if I rent ready to low income tenants, I figure I’d net $5k less in rents annually with greater maintenance/management hassle without improvements to plumbing/HVAC/etc.

I'm trying to get this done with FHA or conventional financing. I'm concerned the appraiser may make me do a whole bunch of things that needlessly over improve the property (if it were going to get torn down). Tax assessment is as follows: building 70k+land 65k=135k. My contract is for 75k only 10k more than the parcel is supposed to be worth. I suppose there's no way to get the appraiser to give some kind of consideration to the land/development value & not beat me down over improving the unit in substantial disrepair? I searched BP for "land mortgage" but don't see any commentary. The top two Google results suggest best case scenario for a land mortgage would be 20% down & the interest rate would be a few pts higher : ( Hopefully when the appraisal takes place I would be able to go back to my mortgage guy & compare the pros/cons/tax implications of doing this as a land mortgage. I can cover 30% downpayment+805 credit+good income so a land mortgage should definitely be an option. Hopefully switching the mortgage type wouldn't require another appraisal. It just occurred to me that Freddie Mac might balk at me doing it as a land mortgage : (

I know nothing about condo development. I’m trying to discern reasonable valuation/equity sharing of adjoining parcels like this. I've spoken with metro planning & there's support for my proposal...it would just change zoning from residential to multifamily or special plan. Though only marginally relevant, I’ve got this book on order

www.amazon.com/gp/product/0821377094

I’m most interested in the long haul. If there were a developer that would mentor me through the process I’d be happy with tens of thousands of dollars less for the parcels (assuming I can secure the one I’m chasing). Within 1 & 2 blocks from my property, developers have been able to adjoin 2 parcels to build 8 condos (combined sales of 2.3 million) or 3 parcels to build 16 condos (combined sales 3 million). I don’t have any delusions of grandeur should I just sell to developers…I’m fully prepared to go the way of renting the 2nd unit & netting $10k annually slow income. However, it would be wonderful if a developer were willing to part with a compelling sum of money that would make me not want to hassle with landlording this property. This example makes me hopeful.

www.biggerpockets.com/renewsblog/2009/10/16/residential-land-developing-real-estat-determining-economic-feasibility

As it relates to partnering with a builder/condo developer/bank my folks have held investment property before & would be willing to put up 200k from their HELOC. I can get a mortgage for $200k myself not including rental income. Another option though I don't think it best & highest use would be to build the nicest quadplex we can afford, live in one unit & sell after a few years avoiding cap gains or 1031 exchange. Of course I've already won the lottery in that my property value rises a smidge as soon as next door gets demo'd. Mine rises a bit more if I just allow someone else to build on the adjacent lot. However, I imagine the work of adjoining these parcels is worth the leg work/premium. I can even pursue the other lot adjacent to mine held by another investor to adjoin 3 parcels...as was done with the 16 condo development. Unfortunately it's a much higher hanging fruit roughly valued at $165k. Metro planning tells me they have 200 pages of permits/design docs for the other nearby condo projects that I can review if I drive up there. Should I do that and specifically what should I be looking for?

I’m immensely appreciative of any insight offered!

Hello Glenn. I'd say the opportunity has already struck in a lot of metropolitan areas going through gentrification. Lofts and condos cater to this demographic. Here's one such example [REMOVED] You and I are catering to the same demographic. I'd say a couple main things define this demographic...FHA financing and contemporary design...use houzz.com & pinterest for design ideas. Best of luck!