All Forum Posts by: Tamas Z.

@Andrew Postell well I wasn't exactly secretive about it when they asked; didn't know I was supposed to be (am I supposed to be? :)) But I imagine this is really easy to figure out with whatever investigation they do. I'd rather be upfront about it than go down the path only to have it fail in escrow just before the transaction goes through.

Yes, the tenant is both living there AND running a business out of there, and that business is a nursing home, so they're getting customers who live there.

Hey all,

Would love some advice. I'm trying to purchase a residential property that has an existing tenant, which is running an adult family home business from the house, while also living there. It's a large property.

I got a couple of loan applications rejected because apparently, any lender under Fannie Mae has a rule against lending for purchase of a property where the tenant is a caretaker. This is because Washington State has a lot of eviction protections for those kinds of organizations.

My understanding is that if I defect on the loan, the lender would have a really hard time clearing out the house, and they don't want to shoulder the risk of having to deal with that.

That makes sense, but two things don't make sense, and they haven't been able to coherently explain it to me:

1) They say that this is only an issue because I am not operating the business. If I were more than just the landlord/property owner, and got involved with the business, they'd be able to go through with the loan. How is that different? If I defect, they STILL would have to deal with the fact that the care facility is there, so I'd be able to squat a long time, just like the business would if it's not operated by me.

2) How is this any different than if I were to purchase an empty property, and then accept an adult family care home as a tenant after the fact? It's the EXACT same situation once that tenant moves in, and there's nothing the bank can do, since AFAIK they don't get a say on who I accept as a tenant after I purchase the building.

Ok, with that out of the way, I'd love to hear some insights on where to get a loan for this kind of situation (Freddie Mac lenders? Some sort of special circumstances lender?) And should I expect unreasonably high interest rates from lenders that will process the loan? What would the more experience real estate investors here do in this situation?

Thanks!

Thanks for the insights! Sounds like it's a pretty big risk factor if I'm looking at short term.

Hey all,

I'm considering an investment property that I'd likely want to hold for maybe a small handful of years before selling. The current tenant is an adult family home with a handful of residents, plus the owner's family is living in the place.

I'm concerned that a prospective buyer, who would likely want to convert the place to something else, would not want to deal with this building, because of the nature of the current tenant's business. It's one thing if there's a gym and they buy out the lease, and the gym closes, but I bet there's all kinds of complications if somebody lives there and, for a living, takes care of the elderly.

As a buyer, how much would this situation influence your decision? When I go to sell in a few years, will the presence of this tenant make the deal highly unattractive because of logistics?

Thanks!

Hey all,

I was hoping to start a discussion about trade-offs involving how much of the purchase price of a property is done through the loan, versus separately handled contract between individuals.

Assuming the seller is okay with receiving a portion of their payoff in installments separate from the lump sum from the loan/escrow process, what are some of the more subtle considerations?

The big one seems to be the tax write-off in paying more interest, so depending on the length of time you want to hold onto the property, there's probably an optional balance point. If you intend to hold it a very long time, then maybe it's best to pay it off aggressively and not pay all that interest, even though it can offset your taxable income. If you plan to flip it, then might as well get all the interest in the world for a lower monthly payment, so you can invest in whatever improvements you want to make.

But are there other major factors that should play a big role in deciding where this balance point should lie? (Aside from "trust" - assume we trust over another and just want to create the best deal)

cheers!

Hi everyone,

I'm going to need a contractor to get some minor work done on my property. I've read some of our fine articles on finding a good contractor, but they didn't really talk about the "commercial license". That is, I believe only a contractor who is licensed to work on commercial properties is allowed to be hired to do work on my property. Or something like that....

What are the rules around that? Is a commercial contractor the same as the "licensed contractor" discussed in onr of the BP articles?

Are commercial contractors generally held to higher standards than regular residential contractors (e.g. "must know what's to code, and are liable if they do something not to code/quality standards")? I've seen too many friends get huge headaches because of having hired a subpar contractor that did a subpar job (or didn't finish, etc.) Are the same concerns still a thing, even with a properly-licensed, commercial contractor?

Thanks!

@Kathy Henley thanks for the sober and lucid insights. I'm definitely leaning towards the "do nothing" option at the moment, though might run the sample proposal templates I'm getting through my attorney, to get a better sense of the specific implications.

@Oliver Pilco Can you give a bit of insight into the specific mechanics of how to run that market rent and competitive site analysis for other available rooftops/towers? Is there like a "Zillow for towers" I can look into, with current rates? Or is it more a matter of talking to the owners of neighboring buildings that have rooftop antennas?

@Bill Gulley It's a 2-storey commercial property.

Re: "Any lender will want an assignment of leases" - are you referring to my mortgage loan here?

One of the entities I've spoken to mentioned they want to purchase the lease assignment for a set term, rather than get an easement. The thing I don't understand is, how that works, when the assignment they're proposing is for 40 years. The lease they're buying out doesn't go nearly that long. There's clearly a detail I'm missing here. They wouldn't give me that money if they didn't have guaranteed access to the rooftop for their purposes for that 40 years, but without an easement, what do they get, and how is it different?

@Bill Gulley Ah, also an interesting perspective.

To address some questions:

- It's a rooftop antenna (not ground)

- Technological need: They've mentioned this is part of a network redesign (and actually probably related to a merger/partnership on their end). They do need more access to the roof, and possibly more space, to install some equipment.

Thanks, everyone! Some useful food for thought here.