All Forum Posts by: Christian Beebe

So you ready for this?  We are in the process of selling some of our portfolio in the Midwest, apt buildings.  Have a couple groups out of NY who place good bids and to which our broker stated they would go with.  This started in July 2021.  They then proceeded to go through the normal process, earnest money, etc and then needed an extension, to which they put in more earnest money.  Then right before closing, they stated they had "issues" with the properties...issues that were never stated before in any of their six inspections NOR written down, nor communicated, nothing.  They then claimed we breached contract and didn't close.  Then after weeks of no return calls to the brokers or lawyers, they come back stating that they have reservations about the properties not being maintained (which of course is false) and that there is a leak on the property (that was fixed, they inspected) that they still don't believe was the cause of the water leak....even though the plumber told them so and showed the videos.  Nothing major, just a bathtub pipe leak behind the wall on a first floor unit on a slab.  They then went silent, of course won't release the escrow money, and even after months of attempted contact to them from everyone, no one, not even their NY lawyer answered anything.  So we sent a termination letter per the agreed contract to them and the title company, Riverside Abstract.  Again, nothing.  Then out of nowhere TWO MONTHS LATER they show up on Jan 2nd from their lawyer stating that "my client is ready to close by Jan 5th for a credit of $20,000 and my client believes the contract is still open and valid and my client has reinspected the property and is satisfied with the condition."  Upon correcting their lawyer from our lawyer, with facts that they can't refute among which are there is not way they could have inspected the property as that would be illegal and violate the contract (even if it was open) and they stated very clearly before the first date of closing that they had issues with property conditions and didn't close due to that BUT now are fine with somehow.  When all this and a ton of other legal facts were presented, to which I won't bore you with here, they simply stated that they had full rights to the sale of the property and will enforce those rights.  And what is slightly interesting is that they just happened to show back up after we had signed a deal with another buyer.

So this went back and forth between lawyers and nothing happened, dead silence again for another month UNTIL 8 days before closing with the other buyer.  They show up with a local attorney in our state claiming the same thing they did before and sent a legal letter to our company claiming they have ownership and then filed an affidavit with our local country to state they have claim to the properties and block anyone else while at the same time claiming they still want to close BUT now they want an additional inspection.  

Come to find out that a good amount of certain NY buyer groups have been doing this and what they are counting on is that no one wants to litigate as evidently they have held people up for months and years on this.  They are counting on someone giving in, stating they can have the earnest money back AND they will release their claim for additional money.  Literal blackmail.  Guess is they are only doing this with certain dollar amount properties as the understanding that they may not have the money to fight money nor want to, guessing they are not doing this with $50mm+ and up deals.  

So one, beware and get the word out.  The truth is, it is only NY groups dealing using money from a certain circle.

Two, what would you do.

Appreciate this I'll give him a shout.  If you have any more information, feel free to message me.

Originally posted by @Scott Wolf:

@Christian Beebe, never heard of them, but Riverside Abstract is a legit title company.  Did you send them proper notification of the cancellation of the contract?  I know a few litigation attorneys that may be able to help if you need some assistance.

@Scott Wolf, appreciate this.  Yes, sent cancellation of the contract to Riverside BUT the previous buyer is claiming "breach of contract" with no legal basis at all, I mean none.  They disappear for months and then show back up a WEEK before we are closing with another buyer, out of NY, to claim they still have rights and the contract is still open.  They are threatening to file something to try and block the sale, again with ZERO and I mean ZERO legal basis.  Evidently they and others out of NY, have been doing this alot, essentially blackmailing sellers to give them some money or something else for them NOT to file.  It's a poker game to them and see how far the sellers will go before giving up.  Our lawyer in Ohio has seen them do this THREE times so far to other sellers.  So if you have ANY contacts in this regards in the NY area or anyone who can make this problem go away very quickly, please let me know.

Hello,

Curious as we had deal in place with this company/people from NY back in July.  They literally dragged it out till October, missed closing three times, out of contract, went quiet for two months (after repeated attempts and telling them we are moving on) and now they show back up out of the blue trying to force us to sell the real estate or try to hold up the deal that IS in progress with someone else.  They are 100% out of contract.  So with that being said, curious to see if anyone knows Joel Werzberger, A1 Equities, Samuel Lowinger (lawyer), Mark Nussbaum (lawyer), and they are only using their title company Riverside Abstract.  

Appreciate any help or knowledge you have as.  

So looking for a second and third opinion on a situation.  My partner has amazing credit.  She also has a 2019 Honda Accord at 60 months at 1.9% that is a year old loan and owes about $22,000 on it.  She has a house worth $160k and owes $105k at a 4.9% rate THAT she only plans to stay in less than three years.  So here's the deal, I have mentioned to her to refi the house, pull the cash out and payoff the car, which would take an additional $3900 out of pocket.  The refi of the house would put her payment about the same as her current payment, possibly a little more at obviously a lower rate.  Paying off the car would save around $400 a month.  So on my end she recoups out of pocket in 10 months and pockets an extra $300-$400 per month till she sells the house.  

Her concerns are making sure this is a good thing to do and the what "ifs" down the road...if the market goes south, does it make sense, etc.

To note, she lives in a decent area of Kentucky that the town really wasn't affected by 2007 at all so I have mentioned to her if the housing market goes south, she has 20% equity built into the home to play with for selling it.  Two, she will have less tax when selling the house due to having a smaller profit...even due to the refi.  The cash out is tax free.  And of course one less debt to worry about with a depreciating asset that she will never have to worry about again.  The added interest will of course be tax deductible.  

Hopefully this all makes sense, again looking for thoughts on all of this or may be a better way to show/explain to her how it is beneficial in the end for a mother of three teenage girls looking to save up cash.  To be clear, this does NOT make sense if she stays in the house longer than five years due to technically paying more for the car.  Again, the immediate goal for the next couple years is cashflow. 

Appreciate the time and help.

So we have a 48 unit complex with two buildings facing each other.  Next to them is a large decent amount of land, in southwest Ohio, filled with trees and such.  There is enough land to build another building easily but this is not our world so looking to figure out what to do with this land and having it sit there empty doesn't make sense to me.  So basic questions like any ideas, who to contact to work out development, where to even start, etc, etc.  Appreciate any thoughts.  

Brian,

That is somewhat incorrect. The building is still valued, to another investor, based upon the NOI...it's still a business so absolutely the value of the building is based upon the NOI and cap rate. Also there are lenders that will refi against the NOI value all day long, even on fours. The 30 year fixed is not a bad idea, still have to come up with the rehab money then and of course the 20% down, etc, which wouldn't be a huge problem but again trying to stay away from outlaying cash.

So our business has mainly been buy and hold larger multi family buildings but we have come across a 4 unit that we can not pass up but need some experience advice on which route to go. Currently we can pick it up for $95k and it needs about $30k in rehab. Part of that rehab is that the units are currently two bedrooms but HUGE so we are turning them into 3 beds AND putting hvac that runs into each unit and sub metering water so that the tenants will pay all utilities. They currently have gorgeous hardwood floors, roof is 15 years old but still in good shape and all the windows need to be replaced. Current rent is $685 for two bed, which is low and going to 3 bed would put the rent around $900 or higher. So NOI with this scenario would be around $31k and current cap rate is around 10.8%. So we could do a fix/flip loan and then rehab and fill with tenants and sell to first time investor or similar for a solid property or we could hold for a year, collect some income and tax incentives/write offs and then refi a year later?

From your experience, which route would be better for a profit plan at the end of the day? Meaning, we don't need immediate cash from a sale if holding it for a year or so would provide a better cash out option down the road but could we get the cash out from a lender based upon the NOI value?

Looking for some avenues and thoughts on ways to think about this or maybe things we are missing.

James, apt buildings are a good monthly and long term payout but looking for something that we can do with a "quicker" turn that allows for short term larger gains, like flipping.  Flip enough and we can get into more apt buildings, etc.  Been doing this long enough to realize that nothing is quick but it's definitely quicker than apt building investing.  

Sammy, like the private investor standpoint but obviously have no clue how to even get started with that.