All Forum Posts by: Tiger M.

@Derek Petersen So you will be making the payments on the underlying "first" position loan to protect your position? Thats a suggestion really, not a question. 

@Nat C. is that "risk taker" or headache maker (LOL)? 

I get it, you see an opportunity and want to seize it, but there is this really cool concept called due diligence that is a nice addition to any purchase. I'm just saying take your time, the rush gets folks burned. The city building dept. sounds like a good start then. Getting the permit will always be a crap shoot based on the construction, money fixes all things in real estate, so don't run out.

Im just hoping not to see a post in six months that headlines, "I rented a house with illegal additions and the tenant is sueing me cause their cat(or worse) got electrocuted, what to do?"

@Nat C. City will usually give you a notice requiring the space be permitted. If you don't pull the permit and have the space inspected, they can require it demolished. Don't forget that you may have to get a demo permit in many areas,"This section highlights OSHA standards, standard interpretations (official letters of interpretation of the standards), and national consensus standards related to demolition.

OSHA

Note: Twenty-five states, Puerto Rico and the Virgin Islands have OSHA-approved State Plansand have adopted their own standards and enforcement policies. For the most part, these States adopt standards that are identical to Federal OSHA. However, some States have adopted different standards applicable to this topic or may have different enforcement policies."

Im wondering why your bothering with this kind of potential headache Vs. your desire for a peaceful, enjoyable investment?

@Arthur Mayer

The issue of being accredited factors in if your investing in a fund, not buying a note.

@Holly Nole

Know I have 500 properties in management so I see this concern often with new accounts. I never spend more than $250 on an emergency repair without having the owner on the phone. 95% of the time, repairs aren't an emergency. If nothing else calling the owner just so they know whats going on and don't get a surprise. I only consider fire and water flood an emergency(a snake once too), most items can wait until I call the owner and get an approval anytime there is a repair. If it is a large job, we will provide up to 3 bids from outside vendors upon request. We require the tenants to pay the first $75 of any service call in the lease. This prevents calls on items that usually can be completed by the tenant, like light bulbs, sprinkler heads, etc. Ask for pictures of the before and after the work. Then you can know it was completed. We use in house handymen to control quality and cost and its not unusual. Set limits with your PM so they don't just do whatever they want. I have owners that fix everything and owners that I must fight with to keep the homes in habitable condition. Communication is the key and we do what they want unless they slumlord.

I have to disagree with contacting the tenant. Given the chance, many tenants will bash the PM thats responsible for the enforcement of the lease. The issue you need to work out is between you and the PM. Contacting the tenant can open pandoras box and diminish the capability of the PM to do their job. Often once tenants have the owners number, they call then with every complaint and circumvent the PM entirely. I have seen many owners try and befriend the tenants, only to become the next tenant charity. Not always of course, I have owners that park their RV at the rental and go party with their tenants while in Vegas. But if it goes bad, the owners get sucked into the drama needlessly.

I wish you the best.

@Holly N.

Know I have 500 properties in management so I see this concern often with new accounts. I never spend more than $250 on an emergency repair without having the owner on the phone. 95% of the time, repairs aren't an emergency. If nothing else calling the owner just so they know whats going on and don't get a surprise. I only consider fire and water flood an emergency(a snake once too), most items can wait until I call the owner and get an approval anytime there is a repair. If it is a large job, we will provide up to 3 bids from outside vendors upon request. We require the tenants to pay the first $75 of any service call in the lease. This prevents calls on items that usually can be completed by the tenant, like light bulbs, sprinkler heads, etc. Ask for pictures of the before and after the work. Then you can know it was completed. We use in house handymen to control quality and cost and its not unusual. Set limits with your PM so they don't just do whatever they want. I have owners that fix everything and owners that I must fight with to keep the homes in habitable condition. Communication is the key and we do what they want unless they slumlord.

I have to disagree with contacting the tenant. Given the chance, many tenants will bash the PM thats responsible for the enforcement of the lease. The issue you need to work out is between you and the PM. Contacting the tenant can open pandoras box and diminish the capability of the PM to do their job. Often once tenants have the owners number, they call then with every complaint and circumvent the PM entirely. I have seen many owners try and befriend the tenants, only to become the next tenant charity. Not always of course, I have owners that park their RV at the rental and go party with their tenants while in Vegas. But if it goes bad, the owners get sucked into the drama needlessly. 

I wish you the best.

@Rob Cee stepping on you to answer @Jim Keller

That second is worth about $10,000 max. The issue seems to be the homeowner can't afford the home it sounds like to me. That means its a FCLS. Thats not an optimal situation unless you want the house. A reasonable work out would be a forbearance with the owner at $350/month if you were to buy at $10K. If you FCLS, 15% will be burned off leaving only $1,360,000. If the $1.45M includes the 2nd and 3rd you can come out with a payday, if the $1.45M is the first then your burnt. The question comes down to whether that owner wants to stay and put their money in their home(instead of an Escalade payment) or walk away. Go ask them.

@Rob Cee 

Seems you already have a good foundation(brokering, origination, private hard money, development), so are well educated and know what your looking for. I applaud your thesis. It does make a difference when someone has been through the cycles, as opposed to those that are new just focused on whats working now.  I wouldn't invest with out a strategy. Call it whatever you like, its a plan with an exit door. I know @Rick H. would be a good person to chat with. He has edge like a razor.

I guess I could try and type 20 paragraphs or I could simply say, "no reward without risk". Fear of the unknown in the note market almost prevented me from moving forward and buying. Eat the elephant in small bites (start slow). Its a great niche to be in. Especially when you have all the doom and gloom telling folks its illegal or your a fool. That info will keep many out of the game.

Couple questions. Whats the appraised value? Is there an underlying mortgage inside the land contract and if so, does it contain an acceleration clause? Will you be in first position? Is it owner occupied? Where is it geographically?

I added info on a project to the BP analyze form. You should be able to get a "rough" back of the napkin idea of monthly expenses per unit from it http://www.biggerpockets.com/buy_and_hold_results/...

I had estimated total expenses in my market should average around 45%. I have since received the actuals from the owner and its 44.5%.

Hope this helps.