All Forum Posts by: Robyn Henderson

 The seller refused to offer additional credit at closing. Too much credit could also modify the loan. Based on the walkthrough, there's lots of unanticipated hidden costs.  At this point, the lender had denied the mortgage so it's too late.  

During the summer, I signed a contract to purchase a 100% occupied 6 unit multifamily in Monmouth County, NJ. My inspection took place in July and I worked with the seller to address structural issues raised during the inspection. The seller spent ~$25k to make repairs and offered an additional ~$25k as a credit.

When I went under contract, all units were tenant occupied. 1 tenant was on a MTM lease and voluntarily moved out in August and the unit remained vacant. During the late summer, the seller evicted another unit (while under contract and without my explicit permission). I was informed that the tenants were being evicted as the process was already started and did not have a say in the matter. I expressed my concerns of having 2 vacant units multiple times with the seller. The evicted tenants left the unit in very poor condition and not able to be rented without extensive repairs. I arranged multiple contractors to look at the unit and provide estimates for renovation/repair.

Fast forward to October, I was given permission to market but I was unable to find a qualified tenant. My bank informed me that I would not be able to close with the current vacancies. I informed the seller who then quickly produced a lease for a tenant. The prospective tenant withdrew 5 days later in which I informed my bank who issued a mortgage denial. The bank indicated that I did not qualify for the mortgage due to inadequate cash flow and occupancy requirement (85%). It took some time to get the formal denial letter.

In the meantime, the seller scrambled to find a tenant without proper tenant screening and pushed through a candidate with prior eviction history and who I did not approve. She did this to satisfy my lender’s occupancy requirements. At the same time, the seller’s attorney issued a time of essence letter for closing and claims I am in breach of contract.

The seller claims that I was the reason why the units remained vacant and refuses to return my deposit due to the mortgage contingency.

At the end of October, prior to the tenant withdrawing the lease and in anticipation of the closing, I conducted a final walkthrough of the building where I talked to the tenants for the first time. They informed me about pests, rodents, mold, and safety issues. After the eviction, tenants began experiencing roaches and mice. About the time of the eviction, there was a water leak into a neighboring unit from the apartment where the eviction occurred. The tenant shared pictures and video of the leak. This leak occurred after my home inspection and I was not informed about it until the tenant told me during the final inspection. The tenant said no one fixed the leak for 2 weeks and was concerned about mold. I have written statements from tenants indicating the issues written, dated, and signed by them.

Between the mortgage contingency and the mold, I’m requesting my $10,000 deposit back but the seller is refusing to do so.. In addition to the deposit, I have spent ~$20,000 to acquire the property including inspections, phase 1 environmental, bank fees, attorney fees, etc.

The real estate attorney that I used for this contract is very transaction-based and has provided very limited legal advice the few times that I’ve been able to get a hold of her. I’m seeking alternate counsel.

Besides talking to attorneys, do any of you have any advice? I realize litigation will be expensive. I am open to representing myself in small claims court but that puts a cap on what I can recover. The seller is an LLC.

If you have any attorneys (who litigate) based in Monmouth county, please private message me.

This post is for a close friend of mine who has been having to deal with this issue for more than a year and asked me for guidance. I'm hoping that I can get some advice from the forums. So my friend owns a top floor condo in her building in Jersey City. The building is self managed. The condo association has elected members but the President essentially runs the building and all decisions go through him. He treats the building as though he is the landlord and does most of the maintenance himself or with a close friend who is a contractor. The building has lots of deferred maintenance (ie 4 years work in progress to paint the hallways, unfinished siding, etc). 

In Nov 2018, my friend noticed water coming in from her second bedroom window and it progressively got worse. She alerted the association immediately and they were slow to respond. She received estimates from roofers who all advised that the roof was end of life and needed to be replaced. The roofers offered to patch but one said that doing so was only a band-aid. The Association President did some dye testing and patched the roof himself by February 2019. The leak returned in April 2019. The Association President and an unlicensed handyman patched the roof at the end of July after multiple false starts and that did the trick. 

Fast forward to this week (Oct 20th 2019): The leak has now moved from the bedroom to the main living area. After a recent rainstorm, the walls are moist and mold/water damage professionals have quoted $3800+ to remediate the damage. Meanwhile, the Association has not taken action to replace the roof. The Association has adequate reserves that will cover what the roofers have provided in estimates. The Condo Association President does not trust the roofers estimates and is paranoid that the roof replacement will be significantly more money.  

My friend does not want to call her insurance provider since her rates are likely to go up. She can file a claim with the building insurance. As a condo owner, she will be responsible for damage inside her unit and the Association is responsible for the common areas, including the roof. My friend wants to threaten legal action but I warned that this approach is very costly and if you lose, you will have to pay the legal expenses of the association. She feels stuck and the association moves at a snail's pace. 

Also note, she has experienced severe asthma this year, potentially due to mold exposure. She is ready to do a mold test which is $700+. 

Has anyone experienced something similar? What advice would you give to my friend? 

@Nicholas Covington This is an income producing property with gross rents of $6600 a month and plan to keep the property. I'm just exploring my options to take out cash and get additional cashflow from another investment. I'd actually like to see the difference between longer term financing and the shorter term by crunching the numbers. 

I know banks in Northern NJ who will do it but only do it in properties located in Northern Jersey so I'm looking to see if anyone has experience with other banks in the area. 

I'm interested in doing a cash out refinance on on non-owner occupant 1-4 family in Cobble Hill worth about $3M. Are any of you aware of portfolio lenders where I can find non-agency/nonconforming loans? I'd like see how much I can pull out at a reasonable rate. 

Freddie/Fannie limit loans to $1.1M. One bank offered me agency loan of $1.1M for 5.75%. I'm trying to see if there are local banks that will allow me to pull out more so I can purchase additional properties into my portfolio. 

I posted something similar in the Starting Out forum and did not get many responses. 

I was hoping to get the advice of more seasoned professionals who know the area. My family has a 3 unit investment property in Cobble Hill Brooklyn NY which has appreciated from $40k when my parents bought it to about $3M today. The mortgage has been paid off for many years and it currently grosses $6,300 a month. My parents live in Boca Raton Florida and just collect the rent checks every month with minimal upkeep.

I was thinking of getting a HELOC on this investment property. I was able to find a credit union who would do a 5 year draw and 15 year repayment for 4.75% up to 70%LTV, 5.75% up to 80% LTV and 6.75% up to 90% LTV with no maximum cap on the amount as many banks that I researched seemed to have.

Another option would be to get a nonconforming mortgage from a portfolio lender. Most banks will lend up to $1.1M as a conforming loan but there is still lots of untapped equity if I go this route. 

My parents would prefer to keep the property as the area has good renters and continues to appreciate. Besides, the NYC market is slowing and I dont know how fast this property would stay on the market if we did sell.

I feel there is lots of money trapped in the home equity and I want to put it to good use by acquiring real estate elsewhere. I'm very familiar with residential real estate (1 to 4 units) but I think we would be able to use this large sum of money and get into commercial multifamily properties. Alternatively, with a HELOC, I could buy smaller properties for cash and then use the BRRR strategy.

I'm looking for buy and hold (and not flips) and I'm open to investment areas (preferably in the tri-state area but if I can find good cash flow, I'd be open). 

For those of you who have done similar transactions, what's the best approach? What has worked for you?

I'm new to BiggerPockets and was referred to this website by a friend. I was hoping to get the advice of more seasoned professionals. My family has a 3 unit investment property in Cobble Hill Brooklyn NY which has appreciated from $40k when my parents bought it to about $3M today. The mortgage has been paid off for many years and it currently grosses $6,300 a month. My parents live in Boca Raton Florida and just collect the rent checks every month with minimal upkeep. 

I was thinking of getting a HELOC on this investment property. I was able to find a credit union who would do a 5 year draw and 15 year repayment for 4.75% up to 70%LTV, 5.75% up to 80% LTV and 6.75% up to 90% LTV with no maximum cap on the amount as many banks that I researched seemed to have.

Another option would be to get a nonconforming mortgage from a portfolio lender. I am just beginning my search so I haven't researched this yet.

My parents would prefer to keep the property as the area has good renters and continues to appreciate. Besides, the NYC market is slowing and I dont know how fast this property would stay on the market if we did sell.

I feel there is lots of money trapped in the home equity and I want to put it to good use by acquiring real estate elsewhere. I'm very familiar with residential real estate (1 to 4 units) but I think we would be able to use this large sum of money and get into commercial multifamily properties. Alternatively, with a HELOC, I could buy smaller properties for cash and then use the BRRR strategy.

For those of you who have done similar transactions, what's the best approach? What has worked for you?