All Forum Posts by: Todd Michaels

Hello,

I plan to close on a 2-flat in a month (week of June 22) with one unit vacant and the tenants in the other unit moving out the end of June.  We will be receiving their security deposit.  There is an issue with the tub in the occupied unit - the faucet of the tub leaks when the water is on and the leak hits right where the tub and wall tile meet, and of course there is no grout / sealant between the tub and wall tile so the leak goes directly below the tub.  The bathroom is on a slab foundation so there shouldn't be much of a problem with anything below the tub. 

So my question is, can I use the security deposit to off set the cost of fixing this issue?  Or as this issue is known when I bought the place, I can't use it for that and only for any damage done between closing date and the move out?

The lease is month to month and I do not know if the tenants even told the current owners of the problem.

Thanks.

I am fairly handy with most tools but am no means an electrician.  When doing some work on a condo with track lighting I installed a dimmer switch and it was pretty easy and straight forward.  The problem was that once it was installed the lights made a very noticeable hum or buzzing noise.  After spending a couple of hours reading up about it online, I ended up just returning the dimmer switch and putting the normal on/off light swatch back in its place.

I guess it had something to do with the dimmer switch basically turning the lights on/off very quickly to get the lower light affect, and that made the humming noise.

Hello,

I am set to close on a duplex on June 16 with one vacant unit and one unit on a month-to-month lease.  We want to move back the closing date to June 30th at which time the tenants will be moving out, waiting to see if the sellers will move the date back so that the place is vacant.  If we do not move the date back and we have the tenants in place for the last 2 weeks, I just want to make sure I have everything in order as to what I should receive at or before closing.  Here is my list to my attorney:

1) we receive half of the final month rent

2) we receive the security deposit

3) we receive a copy of the signed lease from the current tenants

4) we receive documentation of the 30 day notification to the tenants

5) we receive a signed estoppel from the current tenants (is this a requirement?)

Anything else I am missing?  I have been in the unit currently rented and it is in decent shape, but I don't want to have people living for 2 weeks for free at my new place and have no recourse if they trash the place after closing.  We have no desire to renew their lease as we will be living in the unit they are in.

Thanks!

Should note that the $1750 monthly mortgage payment includes insurance and taxes, and as I will be living there I will be doing the property management, lawn care, snow removal, etc.

Hello,

My fiancee and I am about 6 weeks from closing on a 2 flat in Chicago (60618 zip code, west of the river, good neighborhood) - One unit is 3 bed / 2 bath and the other is a 2 bed 1 bath.  The larger unit is recently renovated but will require some work to be contracted out (largest thing being dormer out the attic bathroom to make it a true 2nd bath, all the plumbing / tub / toilet is already in place but the ceiling is so low due to the angle of the roof that is it silly) and some HVAC work needs to be done (adding central air and replace one of the furnaces) - we are guesstimating $50k up front for all the contracted work which we plan to finance.

We are doing 20% conventional 30 year mortgage, purchase price $315,000, monthly payments will be $1750 a month.  We will live in the smaller unit which needs some TLC that we will do ourselves over the next couple of years.  So that will burn up some money but we will fix it as we go - it is livable now but really dated.  Comps for the larger unit run right between $1700 - $1800 a month, smaller unit should be ~$1050 a month after we fix it up and move into the larger unit.

Does it seem like a solid investment, noting that we plan to live there for the next 10 years or so?  I also have a rental property in downstate IL and she owns a rental condo in Chicago, but we both kinda fell into those being rentals and they were not bought with investment / income in mind.

Thanks!

My fiancee and I have been looking for about 4 months for a place and have run into this issue on almost every 3-4 unit property we would use FHA for. And the thing is, the rental survey (when the FHA inspector gives the "market value" of the rents) is one of the last steps in the buying process. And like you mention, the monthly payment HAS to be meet the 85% rule, so more down payment (the whole point of FHA is a lower down payment) or lower purchase price. If the rental survey came earlier in the process it might not be that much of an issue, but the fact it is done ~6 weeks after the agreed upon price really makes it tough.

 Hello @Dmitriy Fomichenko

Just to be clear about the Roth IRA to be used for a first time home purchase, you can use all of your contributions and up to $10,000 of earning tax/penalty free correct? This is assuming the Roth is at least 5 years old, under 59.5 years old, and for owner-occupant.

Thanks,

Todd

Hello All,

Let me try to lay out our situation.  

My fiancee and I are looking at 2-4 flats in our area (north / northwest side of Chicago) to buy and owner occupy, renting out the other units. We have been pre-qualified for a mortgage no problem - we both have excellent credit (>750 each), both have long term work histories, etc. Basically, we are low risk borrowers. I own a rental house in southern Illinois (mortgage paid off). She owns a condo on the north side of Chicago which we have been renting out for about 9 months now, she moved in with me (I currently rent) after living in the condo for about 9 years. There is about 10% equity in the FHA backed loan on the condo, and we had planned to pay off another 10% of the loan value to get to 20% equity for the refinance.

Now, to buy a new place we plan to use FHA as 5% down for a multi-unit would be no problem with our cash savings, but 20% down for a conventional loan isn't happening with our wedding 5 months away, and the honey moon after. As the condo is now considered an investment property, the lender we have been working with states "A "full review" is required for any Fannie Mae or Freddie Mac purchase or refinance with a ltv or cltv above 80% (so...less than 20% down payment or less than 20% equity). Full review is also required for a purchase or refinance that would not be owner occupied (investment).

The "full review" requires a copy of the budget. So in any of the above cases... The mortgage would be denied based on the sole fact that the proposed 2015 budget puts less than 10% of the total annual budget toward reserves for future expenditures."  

The condo association will not increase its reserves from 8.5% to 10%.

So, we are at a loss as to where to go. Do lenders have different requirements for a "full review" for refinancing the condo? Can we get an FHA loan together if she already has an FHA loan? Would I need to get the FHA mortgage on my own? Do we need to move back into the condo once the current renters lease is up, refinance it as our primary residence, and then we can buy a new place? We plan on buying a place soon, before we get married, if that makes a difference.

Thanks.