All Forum Posts by: Salomon W.

@Doran Summers

I am still not sure. I may refinance it and hold on to it or just sell it after the fix.

@Hai Loc

Good Idea. I'll talk to some lawyers to see about it. Thanks

Thank you for your input. 

So, can I have the $50,000 of the $75,000 (25% of house cost) down payment be held by the seller in an escrow account to be used for rehab. So, it would basically mean that the seller is financing $50,000. This way, the mortgage lender would see that 25% is been put down by the buyer. Does it make sense what I am saying? Just trying to learn.

Thanks.

Hello everyone,

I currently have a great deal on the table, the seller is asking $300,000, the value is about $450,000 or more.

The house needs roughly $50,000 in external rehab. 

I am currently eligible for a 75% mortgage. It would be hard for me to get the 25% down payment + the rehab cost. Is it normal to ask the seller to ask for a 25% seller financing as a second lien on the property?

Does it work this way? Do you have any suggestions on how I should propose it to the seller? Do you know if the mortgage company will have an issue with it that the buyer is not putting down any money? How should I go about it?

Any advise from past experience?

Thanks in advance.

Salomon

@Patrick Culleton

All those who answered "NO" failed the riddle. If you want to make a positive cashflow on this property then simple pay off 25% or 20% of the mortgage principle and then you'll get rid off the PMI insurance and have a smaller mortgage to pay. But, to be able to keep the property with no money down and have it fully paid off after 30 years and start a positive cash flow in just a few years as rental price ALWAYS go up year after year statistically, is a no-Brainer. Just look at the $2400 yearly loss as a part of the investment, instead of putting down 25% down payment, you're putting down $2400 for the first year and less for each subsequent year until you start positively cash-flowing.

@Dennis Nikolaev

Take out a heloc and purchase in the area that you are familiar, try to focus on atleast a 8% cap rate if possible. Then purchase this property or multiple properties and take out the most mortgage you are eligible for, so your cash on cash should get you somewhere like 15% interest on your invested money per year and in the meanwhile you're gaining equity by paying off your mortgage as well. I am personally against investing in areas you have not mastered, that's why stay in the area that you have experience. Out of state for most people not recommended.

Would you have husband and wife sign the lease or just listed as additional habitants?

Hi,

So, I have a couple that is about to rent our house and she has sufficient income and has been verified. Though, the husband's income is much less, should I have both on the lease or just the wife?

Hi,

So, I have done quite a few deals  in buy and hold but not in flipping. I am planning to start flipping properties (buying distressed properties and fixing it up) in a new neighborhood one hour flight away from where I live. I have a potential private investor that trusts me and is willing to invest into my deals. 

I currently do not have any of my own funds to invest, so I was pre-approved for a hard money lender which charges a fixed rate, 90% loan to purchase the property and 100% rehab loan. I do  need  the initial 10% to start of with all holding fees to make it work. The private investor is here willing to lay out the 10% and all holding expenses including monthly interest-only payments to the hard money lender.

Furthermore, I will be working with a local contractor that is not business minded, but is a very honest individual that a few of my close family members have happily done business with him for a little while. He does a good job. But, he wants to have some equity in the deals that I do. Also he lives local and I am a one hour flight away.

1) How and how much equity of the profit should I offer the private investor? 2) How would I connect the private lender into the legal documents of the deal? Should I put him on the LLC, or should I have a separate agreement between me and him about his share of the profit? 3) What are the different payment or equity options to provide the contractor?

Part of the issue is that the Hard MOney lender wants to verify the eligibility of everyone on the LLC, the problem is the investor has no income or experience on his name. The same issue would when we come to refinance the property with a conventional mortgage this may also be a problem as he has no income on his name.

Thank you all for your advise. It's highly appreciated. I know the tenant and I feel if I go the tough way, I got too much too lose as it's an expensive house and it may not be worthed. I will be trying to get the most in a nice way, I think I'll be better off. I do agree that I should have made it very clear when signing the lease that security deposit cannot be used as last month payment. The more you do, the smarter you become on how you could have done it better. Thanks again for all of your time.