All Forum Posts by: Tom A.

Welcome to BP, Brian! You've found a great source of information. Check out a few local REIA groups as well.

I'd recommend these three:

- Michigan Real Estate Investors - Great REIA run by Wendy Patton of Lease-Option fame, meets in Troy, http://www.michiganrealestateinvestors.com/

- Renegade Detroit Investors - Another great REIA, run by Jeremy Burgess. Smaller, no selling from front of the room allowed (no guru pitches). Meets in Berkley. http://www.facebook.com/DetroitInvestmentClub

- REIA of Oakland (County)- Grandaddy of local REIAs. Meets in Madison Heights. http://www.reiaofoakland.com

I'm a member of the first two and used to be a member of the third (a good group, more guru pitches than I like but worth checking out).

Hope to see you...

That was a really slimy move. I'd bet she could unwind the deal with the slimeball investor, since she has dementia and may not be competent to execute a contract. Unfortunately the article also said the house is in foreclosure so that may take it away anyways.

What ever happens, this type of thing does make investors look bad. I hope that investor gets smacked down hard.

You've gotten some very solid advice from the BPer's here.

To help you get your mind around the concept that you bring a lot of the value to the deal, I can tell you that if you were to stand up at your local REIA meeting during the "haves and wants" portion and announce you have money to loan, and your partner were to announce he had a rehab project lined up and was looking for funding, you'd be a lot more popular. And some of the folks who talked to him first about buying the house would talk to you next to see if you'd fund it for them. You may just be starting out but you have a valuable commodity -- money.

If I were lending in this scenario, with someone I hadn't worked with extensively before, I'd want the borrower to bring some money to the table at closing. If they have $10K - $20K of their own money in the deal their incentives are different than if you've provided every penny.

When you talk to your local HML, ask what loan-to-value (LTV) they will lend. If they go up to 50% of after-repair-value (ARV), which is what one of my local HMLs does, that means your potential partner would have to have some skin in the game AND pay the points and rate, and perhaps an appraisal and other costs you may not charge.

Bottom line, your position is fairly strong.

I'd recommend these three:

- Michigan Real Estate Investors - Great REIA run by Wendy Patton of Lease-Option fame, meets in Troy, http://www.michiganrealestateinvestors.com/

- Renegade Detroit Investors - Another great REIA, run by Jeremy Burgess. Smaller, no selling from front of the room allowed (no guru pitches). Meets in Berkley. http://www.facebook.com/DetroitInvestmentClub

- REIA of Oakland (County)- Grandaddy of local REIAs. Meets in Madison Heights. http://www.reiaofoakland.com

I'm a member of the first two and used to be a member of the third (a good group, more guru pitches than I like but worth checking out).

Hope to see you...

Just kidding (but sometimes I wonder...)

I wouldn't even bother to run this by an attorney. I just wouldn't do it. You're putting money from your pocket into your IRA, that sets off a red flag right there. The penalty for crossing the line is way too large to make it worth trying to be that aggressive.

Plus you'd probably have to pay Unrelated Business Income Tax (UBIT) on profits made in the IRA by the PM company.

I haven't seen any hedge fund activity in metro Detroit. Probably because most hedge funds seem to be targeting markets with what they think is better long term price appreciation potential. The rental cash flow just takes them down the road to their eventual exit where they realize their (hoped-for) capital gains. The type of house they seem to be buying in a few markets I'm familiar with (not Michigan) seem to be selected for resale, not top rental cash flow.

Metro Detroit has stabilized economically but the job growth predictions are pretty flat. Its a good rental market but home prices have really firmed up as supply has dropped. Its putting the squeeze on some of the turn key rental operators' margins as their customers aren't willing to pay more.

[Edit: Whoops, Mike posted again before I hit "Send", some questions have been answered]

Mike M, is the sales price of $580K what you'd consider fair market value? The reason I ask is that the 5% rate for 30 years seems pretty favorable to the buyer. Are you trading price for terms?

I'd be happy to borrow at 5% for 30 years but I'd hate to be "the bank" on that loan. What if we have a few years of high inflation?

Looking at it another way, 30 years of $2,335 monthly payments also correspond to a note $334K at 7.5%. That's $101K less than the $435K face value of a 5% note, so that's like a purchase price of $479K.

Can the buyer get institutional financing? If you can get close to the $580K with their financing you could do better than 5% yield by being a private money lender.

Just some thoughts, these things aren't always just about the numbers.

While I agree with the comments above, and would run, not walk away from that custodian, part of #3 is OK. You are allowed to manage the contractors. Not sure if you knew that.

GFCIs are designed to trip when their is even a small current imbalance between the hot and neutral. I'd suspect an issue with your wiring, connections, switches, fan or light. Since it seems to occur in response to turning the fan on or off, check the switch, the wiring in that junction box, and the wiring at the fan.

The swap-out of the GFCI is a good approach but I'd wouldn't discount the possibility that there is a genuine electrical issue.

Good write-up on GFCIs: http://www.thecircuitdetective.com/gfis.htm