All Forum Posts by: Trent Zimmer

To update everyone, we bought it for cash today. Closing in two weeks and seller is thrilled.

 Glad you found the thread useful. There are so many little intricacies and its always nice to get others thoughts and perspectives.

 Amazing!  Thank you for these perspectives.

 Appreciate all of the above!

 I am working with the servicer right now to confirm it can be assumed. If it can, it will increase the chances of him getting a bit more for the property.

FHA guidelines require owner occ, so I would not be able to assume this. This was never my plan to assume it. I simply wanted to find out if this were possible so I can market it this way, if we get to that point.

I do have to disagree with you about putting him in a bind or not honoring my fiduciary to him and here is why: 

1. We can list the home and he will likely need to bring $3,000-$5,000 to closing, possibly more. 

2. I can give him $1,000 which is a sizable swing compared to option 1. He takes on no real risk. The risk is to me, which is that the loan gets called due and I need to refinance or sell it at a loss. Either way, he is made whole. 

I've made it really clear to him that I am 100% good with whichever direction he wants to go, but listing it on the market will likely cost him money. 

Maybe I am missing something here, but how is him netting more money and closing sooner NOT a win for him?

Hi All!  I have a potential opportunity that I'd like to run past the brilliant minds of BP....I'm a sub to/wrap virgin, so be gentle.

Seller is a friend and purchased this townhome direct from landlord in May of 2022 for $206,000(200,000+6k in closing costs). The current loan balance is 199,XXX. He has a 5.5% rate, which is assumable, but FHA guidelines would require owner occ.

He just took a job out of state and is needing to sell the property, but has very little equity and when fees are factored in he would likely end up needing to bring cash to closing. I feel like this is the perfect time for a win/win creative finance deal. Open to suggestion and also curious to hear of anyone doing creative finance deals when there's an FHA mortgage in place.

Here's my thoughts:

- Offer him $1,000 to accept the agreement, which is about a $2,000-$3,000 swing from what he would make[lose] if he were to go to market. The property does need carpet, paint, and some simple updates.

- Create LLC in the name of the address of the property. I've heard this may reduce the off chance that the loan is called due.

- Deed transfers to new LLC.

- Current owner continues making monthly payments, we pay him after he shows he paid the mortgage on time. Curious if anyone is paying the mortgage directly themselves and if that could or would create any issues not coming from the original borrower?

- 5 year balloon. He's a young fella and while he won't be ready to buy anything in the immediate future, he will want to be out of this deal at some point so he can free up his credit, etc... I'm considering the wrap option so that this time frame could be extended and he could be free to go get a new car, house, etc... without this mortgage effecting his ability to finance. Thoughts on this?

Comps are $210,000, but subject needs probably 5-10k in updates. If we really made this property shine, we might be able to get just north of $210,000.

Current PITI: $1401.87

HOA Fee: $236.00

Total Mo: $1,637.87

Estimated Rent: $1,800-$1,900

Mo Cash Flow: $162.13 or $1,945.56/yr

CoC Return of 194%. If I factor in additional $5,000 in upgrades it still hits a 30%+ CoC return....

It certainly is not a grand slam, but for the extremely low barrier of entry, it seems like a solid base hit. The end game would likely be to improve it and rent it out for a few years, possibly mid-term it to increase cash flow, and then sell before the 5 year balloon. I am also a real estate agent in the area and constantly have people looking for this sort of thing, so it would be likely I'd be able to sell it to my own client in the future.

What am I missing or should I be thinking about here?

Thanks for your time!

TZ

Appreciate all of the responses. I ended up filing a claim and they are covering it. Will keep you all posted on how it unfolds after that.

My situation is slightly unique in that my tenants are on a county supported service that helps find housing. The perk, I get consistent and above market value rent. The downside, these tenants dont have insurance. 

Luckily, after speaking with the program leader, we are going to require all tenants to pay one year of renter's insurance up front and it will get rolled into their monthly budget. Moving forward this is a huge win.

Building is 100 year old Main Street Mixed-Use Building. I pay about $650/mo for insurance. These buildings can be tough to insure because only a few providers will cover them.  Last night, a tenant overflowed a sink which caused havoc in the salon down below. I had a water mitigation company out(a friend) and he thinks we could get to 10k in just water remediation. I'd expect it be another 5k or so in remodel(floors, kitchen cabinet, etc...). So, 15k or so total. 

In speaking with my insurance broker today, he shared with me that theres some risk in filing a claim because these providers are getting finicky and he's been seeing them drop coverage for people after the claims. One recent example was a gentleman with 4 similar buildings to mine who has never filed a claim in 20 years of coverage with my broker was dropped from coverage on ALL FOUR buildings after filing a hail claim on the roof. 

Here is where I am stuck. My deductible is $5,000. By filing a claim I can have all of this covered by insurance, but risk them dropping my coverage. If I were dropped, he suggested we could try state provided insurance, which "the coverage is not great." to which I argue, does coverage even matter if I am going to be afraid to file a claim every time theres an issue??  

The other option is of course to just pay this out of pocket, but then, why am I paying nearly $8,000/yr for insurance?  

It seems crazy, but I feel like the best option is file the claim, risk losing coverage but get this issue covered, then find some catastrophic/liability plan only and ride it out?  

Insurance is a racket.

Thanks all for your replies!  I did get it open, but it cost me $200 to the locksmith to drill it out. I get a replacement box from a local laundry store for about 30 bucks and we are back in business. Lesson learned, dont forget to pull coins!

One appliance guy basically told me, 'Good luck.'  I refuse to take that as an answer with nearly $200 in the machine ha!  Anyone ever run into this issue before?  Im assuming the coin box is full and so it wont open. Can't find ANYTHING online about this sort of thing happening.