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All Forum Posts by: Ty Coutts

Ty Coutts has started 9 posts and replied 401 times.

Post: Energy Efficient Mortgages

Ty Coutts
Posted
  • Lender
  • Colorado
  • Posts 436
  • Votes 210

Hi James,

We at Aslan do these types of mortgages, however there are some limitations for most lenders.

For FHA, VA, and Conventional Energy Efficient Mortgages the property must be occupied as the borrower's primary residence, so they are not eligible for investment properties. Most lenders, will not be able to do this as from your post it does not seem like you are looking to use this property as your primary residence. However, we do have a large breadth of products at Aslan Home Lending, and we will be able to find something that would work for you, although it may not be exactly what you are looking for.

Let me know if you would like to discuss further! 

Post: What's a true OPEX ratio for a 10 to 15 units property?

Ty Coutts
Posted
  • Lender
  • Colorado
  • Posts 436
  • Votes 210

Hello, Albert Lubin, the 50% rule is a general guideline used by real estate investors to estimate the operating expenses (OpEx) of a property as a percentage of Effective Gross Income (EGI). Effective Gross Income is the total potential rental income minus vacancy and credit loss. The 50% rule states that approximately 50% of EGI will typically be consumed by operating expenses.

While the 50% rule provides a quick estimate, actual expenses can vary widely depending on the property type, location, age, condition, tenant mix, and market conditions.

Here's an example: if a property generates $200,000 in EGI per year, the 50% rule suggests $100,000 would go towards operating expenses like taxes, insurance, utilities, and property management. However, an additional amount should be set aside for CapEx and repairs.

While the 50% rule provides a useful starting point, it’s essential to recognize that it primarily covers operating expenses and not CapEx or repairs. For a more accurate financial projection, factor in these additional expenses separately. Tailor your analysis to the specific property and market conditions to make informed investment decisions. I hope this finds you well!

Post: Single Fam Hold

Ty Coutts
Posted
  • Lender
  • Colorado
  • Posts 436
  • Votes 210

Hey, Christopher Berra, I love how you navigated the project, and can tell that you care all about profit. I would love to hop on a call with you to discuss lending options for your future projects, because financing your properties to the best of your ability will greatly benefit the profit of your projects. Call me anytime at the number below. 

Hope to hear from you, have a great day!

Post: Help with writing a "subject to" offer

Ty Coutts
Posted
  • Lender
  • Colorado
  • Posts 436
  • Votes 210

Hey Joey, 

Here is my understanding of the subject:

Key Components of a "Subject To" Offer:
Clear Identification of Conditions: Clearly state the conditions ("subjects") that must be satisfied for the offer to be binding. These conditions typically protect the buyer and ensure certain requirements are met before finalizing the sale.

Contingencies to Consider:

- Financing Contingency: Specify that the purchase is subject to the buyer obtaining satisfactory financing. Include details such as the type of loan (conventional, FHA, VA) and the maximum interest rate acceptable to the buyer.

- Home Inspection Contingency: Include a clause allowing the buyer to conduct a professional home inspection within a specified timeframe. Outline that the sale is contingent upon the inspection report being satisfactory to the buyer.

- Appraisal Contingency: State that the purchase is contingent upon the property appraising for at least the purchase price. If the appraisal comes in lower, the buyer may have the option to renegotiate or withdraw from the offer.

- Title Contingency: Include a contingency that the buyer receives clear and marketable title to the property, free of any liens, encumbrances, or legal issues.

- Seller Disclosures: Specify that the buyer's acceptance is subject to reviewing and approving all seller disclosures and documents related to the property's condition and history.

Timeline and Deadlines: Clearly outline deadlines for completing inspections, securing financing, and satisfying other contingencies. This helps ensure the transaction progresses smoothly and in a timely manner.

Earnest Money Deposit: Specify the amount of earnest money the buyer will deposit with the offer. This demonstrates the buyer's seriousness and commitment to proceeding with the purchase.

Additional Clauses:

Subject to Sale of Buyer's Property: If the buyer needs to sell their current home to finance the new purchase, include a clause making the offer contingent upon the sale and closing of their property.

Specific Repairs or Improvements: If the buyer has identified specific repairs or improvements they want completed by the seller, include details about these requirements as conditions of the offer.

Review by Legal Counsel: Consider having the "Subject To" offer reviewed by a real estate attorney to ensure all contingencies are clearly defined and protect the buyer's interests.

Final Steps
Negotiation: Once the offer is submitted, be prepared for negotiation with the seller. They may counteroffer or request modifications to the conditions outlined.

Documentation: Ensure all parties sign and agree to the terms of the offer in writing. Keep copies of all documents related to the offer and any amendments made during negotiations.

Hope this helps! If you have any further questions or need any assistance please feel free to reach out to me directly!

Post: How do I know if I shoud accept an offer or relist?

Ty Coutts
Posted
  • Lender
  • Colorado
  • Posts 436
  • Votes 210

Hello, Mark Svendsen, based on the information provided, here’s my analysis and some considerations regarding the trustee's decision and your options:

1. As the trustee, there might be legal obligations or fiduciary duties to act in the best interest of the beneficiaries of the trust. This often involves accepting the highest reasonable offer, considering market conditions and appraised values.

2. The house has received significant interest, as evidenced by seven offers within two weeks. The jump from the first appraisal to the second ($2.40M to $2.65M) indicates potentially increasing market value, possibly due to staging and improvements.

3. The trustee accepted an offer of $2.855M, which is below the highest offer received ($3.15M).
Relisting could potentially attract higher offers, especially if the second appraisal suggests a market value closer to $2.65M.

4. Relisting involves certain risks, such as market conditions changing or not receiving offers as high as $3.15M. The earnest deposit of 40% from the accepted offer is a significant indicator of buyer commitment, but it may be forfeited if the deal falls through due to relisting.

While the second highest offer of $2.855M is attractive and already under contract with a substantial earnest deposit, the decision to relist for potentially more (up to $3.15M) involves weighing the risks and rewards carefully. Consulting with a real estate attorney or financial advisor who understands trust law and real estate transactions could provide valuable guidance in navigating this decision, ensuring it aligns with the best interests of the trust and its beneficiaries.

I hope this helps you out, good luck!

Post: OKC rental areas

Ty Coutts
Posted
  • Lender
  • Colorado
  • Posts 436
  • Votes 210

Hi Ashwin,

I do not personally know about this area, but I can give you some insight on how to go about finding out: 

Investing in properties near I-44 around 63rd and Kelley in Oklahoma City requires careful consideration of neighborhood dynamics, rental demand, and property condition. Begin by assessing the area's overall appeal, including factors like crime rates, school quality, and amenities. Properties in this location may vary in age and upkeep, impacting maintenance costs and potential rental income. Research local rental market trends for 3-bedroom, 2-bathroom homes to determine competitive rental rates and ensure they align with your financial goals.

Consulting with local real estate professionals can provide valuable insights into market trends and potential challenges. Conduct thorough property inspections to identify any maintenance needs or structural issues that could affect rental income. Financially analyze your investment, including expected rental income versus expenses such as taxes, insurance, and vacancies. By leveraging local expertise and conducting comprehensive due diligence, you can make informed investment decisions that align with your long-term financial objectives in the Oklahoma City market.

Post: Seeking advice on Seller finance terms

Ty Coutts
Posted
  • Lender
  • Colorado
  • Posts 436
  • Votes 210

Hi, Victoria E., it’s common to ask for a down payment of 10-20% of the sale price. 

1. In your case: For a $200K house, a 10% down payment would be $20,000, and a 20% down payment would be $40,000.

2. Check current mortgage rates as a reference. As of now, mortgage rates vary but are generally around 6-7% for a 30-year fixed-rate loan. Rates for seller financing are typically higher than conventional mortgage rates to compensate for the increased risk. A good range might be 7-9%.

3. As for fees, you should consider origination, processing and late payment fees. 

4. Loan servicing companies charge for managing the loan, collecting payments, and handling escrow. Fees can range from $15 to $50 per month, or a small percentage of each payment. You can pass these fees on to the buyer, include them in the monthly payment, or pay them yourself. If the fees are passed to the buyer, ensure this is clearly stated in the terms.

5. The closing costs to consider are the recording, legal, title search, insurance, appraisal, and escrow fees.

6. Some terms you may find helpful:

Repayment Schedule: Clearly outline the payment schedule (monthly, quarterly, etc.).
Balloon Payment: If applicable, specify the amount and due date of any balloon payment.
Prepayment Penalty: State if there’s a penalty for paying off the loan early.
Default Terms: Clearly define what constitutes a default and the consequences, such as foreclosure procedures.
Insurance Requirements: Ensure the buyer maintains property insurance.
Maintenance Responsibilities: Clarify that the buyer is responsible for property maintenance and repairs.

I hope this helps you out, have a great day!

Post: Reluctant end of a partnership

Ty Coutts
Posted
  • Lender
  • Colorado
  • Posts 436
  • Votes 210

Hey Nick,

Navigating the end of a 10+ year real estate partnership without an operating agreement demands a strategic approach. Begin by seeking legal counsel to understand default partnership rules and facilitate negotiations. Assessing the portfolio's current market value through a professional appraisal is crucial. This valuation will serve as the foundation for discussing buyout terms or the equitable division of assets between you and your partner. Considerations should include existing debts and liabilities associated with each property to ensure a comprehensive evaluation.

Communication is paramount throughout this process. Despite any reluctance to address the situation, maintaining transparency and professionalism is essential. Procrastination can lead to misunderstandings, increased legal costs, and the potential for legal disputes if negotiations deteriorate. Furthermore, delaying decisions may prevent both parties from pursuing new opportunities aligned with their respective goals.

Evaluate your long-term financial objectives and personal aspirations for the portfolio. Whether considering a buyout, division of assets, or a complete sale, clarity on your future direction is key. By prioritizing open dialogue, seeking expert advice, and focusing on equitable solutions, you can navigate the partnership dissolution with minimal friction, respecting each other's contributions while safeguarding your financial interests.

Hope this helps! If you need further assistance or some recommendations, please feel free to reach out to me directly. 

Post: How to find future development?

Ty Coutts
Posted
  • Lender
  • Colorado
  • Posts 436
  • Votes 210

Hi Tim,

There are several effective strategies and resources you can use to stay informed about future development planning in your area, without solely relying on attending city council meetings:

City Planning Websites: Most cities have planning department websites where they publish upcoming development projects, zoning changes, and long-term planning documents. These websites often include project proposals, public notices, and contact information for city planners.

Local Newspapers and Publications: Stay updated with local newspapers, magazines, and community newsletters. They often report on upcoming development projects, zoning changes, and issues discussed at city council meetings.

Online Forums and Neighborhood Groups: Join local online forums, neighborhood Facebook groups, or Nextdoor. Residents often discuss upcoming developments and share information they've gathered.

City Council Agendas and Minutes: Review city council agendas and minutes, which are usually available online. These documents can provide insights into discussions and decisions related to development projects.

Network with Real Estate Professionals: Connect with local real estate agents, developers, and property investors. They often have insider knowledge about upcoming projects and market trends.

Attend Community Meetings and Workshops: Many cities host community meetings, workshops, or open houses specifically for discussing future development plans. These events provide opportunities to learn about and provide feedback on proposed projects.

Utilize Planning Apps and Websites: Some apps and websites specialize in tracking real estate development projects. Examples include BuildZoom and Zonda (formerly Hanley Wood).

Property Records and Permits: Monitor building permits and property records. Significant renovations or demolitions in certain areas can indicate potential future development.

These are just some recommendations. There are numerous other ways to go about getting insights into future development planning. Please feel free to reach out if you would like more suggestions or if you just want to discuss. Hope this helps!

Post: Renting basement Tax write offs

Ty Coutts
Posted
  • Lender
  • Colorado
  • Posts 436
  • Votes 210

Hello, Lee Israelsen, when you build a house and include a basement apartment that you plan to rent out, you may be able to write off a portion of the expenses associated with the construction and ongoing maintenance of the rental unit. I would consider the business uses of your home, the basement apartment is considered a rental property if you rent it out. This means it is a business use of your home. You will need to allocate the expenses between the personal and rental portions of the house. Only the expenses related to the rental portion can be written off.
Allocation can be based on the square footage of the rental area relative to the total square footage of the house.

As for your deductible expenses, you will need to allocate the expenses between the personal and rental portions of the house. Only the expenses related to the rental portion can be written off.
Allocation can be based on the square footage of the rental area relative to the total square footage of the house. Any costs directly associated with building the basement apartment, such as separate entrances, kitchen installations, and bathroom fixtures, can be directly allocated to the rental portion. If the basement apartment has separate utility meters, you can deduct the actual costs. Otherwise, you need to allocate based on usage or square footage. Expenses for maintenance and repairs specific to the rental unit are fully deductible. Shared maintenance costs should be allocated. The portion of your homeowner's insurance attributable to the rental unit can be deducted.

Building a basement apartment can provide valuable tax deductions if you rent it out. By carefully allocating expenses between the personal and rental portions of your home, you can write off a portion of the construction and ongoing costs associated with the rental unit. Consulting with a tax professional is highly recommended to ensure compliance with IRS regulations and to maximize your tax benefits. I hope this helps.