All Forum Posts by: RaeLena Morrison

Late to this, but how would this work as an owner occupied? Would you be able to get any better deal that way? I know FHA won't touch two separate buildings (at least that is what all my lenders say) but could an owner occupied conventional work in this situation?

We have our eye on several properties with multiple buildings on them but plan to owner occupy. 

@Andrew Johnson So I talked to the contact for the tax credits today and the building does qualify for the 20% and the 25% together for federal and state. She explained they can be used to "bridge the gap"on funding as well. She also stated anything related to the building and the current structure or "envelope" of the building perimeter would more than likely be covered. 

It is a long process from what we have discovered so far, however she let me know that NO ONE has ever received tax credits in that district or the whole county! She explained that since most buildings in such a historic county are more "common" most people don't bother and many aren't officially on the register or in historic districts. Because there have been no other awards, our application, if approved would receive the maximum credit allowed. 

This project is scaring the s&#* out of me but I cannot wait to see if we can pull this off. I'm thinking of all the sleepless nights and gray hair while watching this building come back to life for a new purpose (to make me money). There are a lot of empty buildings in the town and the county and most investors out here go for SFH and MH. Not sure if I'm going for it yet, have to talk to the team ;) and go from there!

Looked through BP and could not find an answer so here goes ;). 

I am looking at a property located in a historic district in a small town in Ohio. The property is from the 1830/1850s and has been so many things no one seems to know anymore. 

https://www.sibcycline.com/Listing/CIN/1563276/13-...

The space on both floors is huge with about 2840sq ft per floor. I walked my contractor through and we think we can easily do 4 studio apartments on top and either 4 one bedroom units on the bottom or 2 units and a retail space. The local community has a USDA loan they are offering me at 3% as they are desperately trying to get this historic buildings rehabbed and re-purposed. However, I don't believe the funds they currently have available are going to cover the cost of rehab and constructing units. We know the following;

Roof needs replaced  (gravel slant)

Back wall needs restoration work and windows replaced

Several Joists in basement need to be replaced (new concrete block posts were put in 5 years ago)

Second floor corner flooring needs to be repaired

The electric has already been converted from knob and tube and plumbing is currently available on the 1st floor

I have been researching the Ohio Brownfield Fund which provides a grant to cover the cost of a phase 1 assessment and have reached out to the state requesting information about other funding sources. 

Our contractor believes it will cost $25-$30K per studio apartment and $45-$50K per 1 bedroom to build out. (These seem a little high to me but haven't gotten a second estimate yet)

I have run the analysis based on average rents for the area converting the whole building vs building out the top floor and running a business from the ground floor. We would love to be able to fit out the whole building with apartments though both strategies are above a 10% ROI with the numbers we currently have.

Does anyone have experience using HUD or other government loans/guarantees to fund a project similar to this? I believe that these funding sources put restraints on who can be tenants but unsure of other pitfalls.

We are also looking into multiple sources to cover housing/historic/low-income community/small business/micro-enterprise/rural area/anything else to off set some costs. Also would like more information on selling off the tax credits at the beginning of the project to bridge the gap in financing.

I am liking the idea and numbers of the project are promising. The area is desperate for new rental units as all the current units have no vacancies and have waiting lists. I have reached out to the local government and need to find new resources and ideas. If we can create a good strategy then I would be inclined to look at the other buildings in town later on.

Sorry for the length but I am trying to branch into a new area here and trying to get my feet under me. All help is appreciated.

I would be interested in this too. Currently looking at a project that might qualify 

I'm also in Ohio and researched a lot of different lease agreements, most here on BP, before drafting one myself and having my attorney look it over. With one or two minor adjustments I had a working lease, one for the seller and one for the tenant. After going through our first tenants in the property and they have decided to not use their option to purchase, I know what I need to adjust for this specific property for next time. Research and Research some more, you will find things in other agreements you didn't think about. 

@Steve Babiak- I did, one of them is a school teacher at the local school and teaches driver's education during summer. Other one works for building contractor (who should have plenty of work during summer)

First time landlord here with first tenants who looked good on paper..classic mistake I guess. First payment comes due and they forgot they had a car payment. Grace period goes by and husband hasn't been working much lately (he was just telling me how he got promoted to 1st shift two days before). Can't pay rent but insist on asking me about MY mortgage obligations. They wanted to see clear deed to property because their cousin did a lease option and owner never paid mortgage causing property to be foreclosed on. They sat straight faced and asked me about how they could trust I would pay MY obligations when they weren't paying rent after one month. 3 day notice is posted.

Thanks Rick! I am getting under contract this week and the actual closing won't happen until June. Hoping to line up a buyer by then but if not asap after. It's a good amount of equity we're getting but not worth it to hold long term for us. Just trying to make sure I have all my ducks in a row since its my first one and we want to keep going after this! Hearing some disheartening things in Ohio about DOS and didn't know if banks and CU handle it differently. Do I even need escrow or title company at this point then? She is closing the refi thursday so the title was just checked...and do I NEED escrow to secure sale?

Thank you for your reply! The land contract may work... just getting nervous because it's my first deal and it's the in-laws. In this case would I need escrow  or could I just do the closing with the lawyer? 

I have been researching and reading everything I can get my hands on for about 6 months now about creative financing and subject to deals. We are in the process of putting my in-laws rental property under contract in Ohio. She needed cash now so she refinanced the property for an agreed upon price between us and then we are to take the property subject to. The tenants are moving out and we are planning on marketing this right away for a local buy and hold investor or occupant. The refi was done through a local credit union and my in-laws are worried about the due on sale clause and it ruining their relationship with the credit union. Obviously we are hoping to have the property sold ASAP, but things happen. How is the due on sale clause differ between traditional banks and local credit unions if at all? Are there things I can do to protect both parties that I may have not come across? My attorney is advising against a trust because he says it offers almost no benefits. Any advice would be great on this as it is becoming a frustrating 8 month journey....