All Forum Posts by: Steve Gordon

Please review Rule 506(b) regarding raising funds for your deals.  If you start soliciting money from people you want to make sure it doesn't constitute a violation by creating a security as defined in this rule.  The link is an article to better articulate the rule.

A good rule of thumb is that whenever someone raises money from private investors and then makes decisions on their behalf, a security has been created.

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Unfortunately you will have to decide how to proceed but from my limited reading of the information you provided I would consider:

1) Provide him a price for your time spent and collect that money.  You have completed work for him, provided him deliverables, and have kept your side of the deal.  Get paid.

2) Continue your business and begin to update your buyers list so that you are not solely reliant on this buyer for your business.  Feast or famine is ok as long as you are in control, when you had over control to a specific client you are much more at risk.

3) Evaluate your marketplace for service you are providing.  Are there more players and therefore deals are spread thin OR are there less deals to be had?  Either answer should give you an idea on where to concentrate on improving your business by shifting focus to where the most likely area to succeed remains.

It's always tough when a long term relationship hits a bump, wish the best for how you proceed and let us know what you choose.

Steve

I have done this one time with a local community bank.  It was an underperforming asset which was ready to enter the foreclosure process.  We received a small discount (next time I would look for a larger discount) and after first missed payment started the foreclosure process.  Very long process.

Your highest likelihood would be similar, under performing assets at a local community bank.  Performing assets won't be sold off unless in a package at an institutional funding level ( 10m?)

Good luck and let us know why you are interested as there may be another alternative.

Are you dealing with an agent or the owner directly?  If the owner you will likely have no way to validate, buyer beware!  For an agent I thought there was a code of ethics that are to be followed...

If you are uncertain and uncomfortable, simply resubmit your initial offer as your best-and-highest.  

Let us know how it goes.

The loan is dependent upon the type of property not the type of owner.  If you are 4 units or less it will be residential financing, if you are a commercial property or residential with more than 4 units it will be commercial financing.

A lot of institutions won't create a standard mortgage for less than 50k so it will more likely be along the lines of either a persona loan or something similar [if going to a bank or credit union].

Yes the bank will run your credit scores as it's a residential deal.  Although the bad credit person may not disqualify you, your rate will likely be much higher and possibly a larger amount of financial assets will be requested to ensure safety. 

If you go a non-bank route perhaps they won't look at your personal credit, hard to tell.

Transferring from an individual to an LLC won't NECESSARILY trigger the due on sale clause but I would probably inform my mortgage holder before taking those actions.

As always, seek professional guidance as my information above is based on my understanding.

Although someone else may give a better answer, they are two separate beasts. We have insurance on buildings while they are owned by the LLC. The insurance is for legal liability, the LLC is to limit the personal loss above the insurance limit.

I believe that if you exceed the umbrella policy limit the owner of the peoperty may be liable for the costs above and beyond.  In this case you may possibly be personally liable for all costs above the umbrella policy limit.  This would, if it's true, include your personal assets.

In the case of the LLC the limit is 'limited' to the assets of the LLC. Unless you are doing something incorrectly [mixing llc and personal bank accounts, using the llc assets for personal use, etc] the LLC assets won't include your personal assets [personal home, 401k, etc]. In most cases the LLC will contain, other than the property, very lttle assets and therefore you have a safer form of protection.

Of course your accountant and/or your attorney can explain quite a bit more thorough so please check with them before taking action.

Good luck.

You have several options in order to try to find missing property owners.

1) Your local country has recorded the previous transactions against the property including any liens, transactions [sales/purchases] and mortgages recorded.  This is a great starting point to see who is the recorded buyer.

2) You can peer into the mailbox [DONT OPEN IT] and see if there are any names on the mail items.  Tread lightly here as I believe it's against the law to take anything out of the box or possibly open it without permission

3) Knock on the neighbors door and simply ask.  Anyone in the neighborhood may know, be friendly and approach.

4) Leave a letter for the owner, perhaps they still go by the property and take the mail.  Leave something and hopefully they will call.

Although not extensive this list should give you a few options to take in order to get the ball rolling.

I don't believe the paperwork would differ based on a flip or subject to, simply the wording in the subject to would be inclusive of the condition of assumed financing.

Flip is simply buying the property, adding value to the property, and reselling without holding for up to a year.  No special forms or contracts.

Subject To means the property is 'Subject to' the existing mortgage on a property. In a traditional property purchase, a buyer either pays off, or assumes a sellers loan, and then takes title to the property. The buyer at that point owns the property, and is liable to the lender for the payments on that loan.

Again no specific contracts or forms, simply the wording in the form indicating it's subject to. 

Hope this helps.

We've had good experiences with pets and bad experiences.  The good have been well behaved, quiet, and a positive experience in the unit.  The pet didn't negatively impact the unit when the owner left and overall was something we would do again.

The bad experiences have been really bad, as in destructive to the unit bad.  Not just in 'going' all over, but in damaging walls by 'eating' the drywall, being aggressive to neighbors, and overall disturbance to the building.  The security deposits haven't covered the damage done, we've increased the rent for pets as well as the deposit to cover anticipated costs.

Whichever way you choose, just make sure you mitigate the potential risks.

isuf - congratulation on taking the plunge and I hope you success in your first property!  What type of help are you asking for, with more direction perhaps we can give targeted advice/assistance.

In absence of specifics I would recommend ensuring that you know the following

1) current going rent for similar size 3br/2br within about 2 blocks of your new property

2) specific information and/or service you will use to screen potential tenants

3) understand your expenses and identify candidates for reduction [e.g. water saving shower head, water saving aerators, weather stripping leaky windows, etc)

4) source of potential tenants to target, method to gain their attention [fliers, online, rental service, etc.] 

5) Needed repairs and/or improvements to get the building to 'operations' level - meaning so that you will be in standard maintenance mode instead of constant repair.

Just a few items that immediately come to mind.

Good luck and let us hear about the experience.