It was all going sooooo well.....

5 Replies

Not-so successful isn't strictly true... more a learning curve!! I've been involved in Real estate as a broker for 23 years, and I recently started investing for myself (What took me so long is a whole other topic....) Now, because of experience, I thought I knew what i was doing, but I'm in the process of slipping on a banana skin. I closed my second deal, a BRRRR property. The numbers are great, and I purchased with private money, structured on a one-off balloon payment to reduce the carrying costs while i Rehabbed. I've now owned the place for 6 months, and am trying to re-fi, and here is the banana skin..... I closed on the property in my S-corp.... and I had no idea that owning in this entity would give me such a headache on the re-fi!!!!!

I know have a $30,000 balloon payment due, and I'm not sure how to pay that.... I'm going to try and re-negotiate with my lender to an amortized schedule, but I think this mistake is going to sour this relationship. What a disaster..... Oh well, we live and learn. I just really hope they don't try to take the property, because the deal was a diamond... 25k purchase, 20k rehab, ARV 75k and $900 in rent....

If anyone has suggestion on portfolio lenders who might do a cash out re-fi on this I'd love to hear. I'd also welcome any ideas on how to take this to my private money guy without getting my legs broken, or loosing the property..... <Face palms>

@David Sisson , yes, an option, but then it has to season for six months, because it's an Scorp, not an LLC. Have to figure out making it worth my private money guy's time to wait, and hope he doesn't have other plans for the money...

@Wayne Brooks , yes, this is what we are trying to explore, maybe portfolio lenders too, or other private money on a longer term.. 

Buy it from yourself w/a standard loan? IE: the S-corp sells to you as an individual, at closing you pay off your investor. I'm no expert here, just spitballing. 

So what happened with this situation? If it was me, I probably would have just sold the property, made everyone whole and started over.

Free eBook from BiggerPockets!

Ultimate Beginner's Guide Book Cover

Join BiggerPockets and get The Ultimate Beginner's Guide to Real Estate Investing for FREE - read by more than 100,000 people - AND get exclusive real estate investing tips, tricks and techniques delivered straight to your inbox twice weekly!

  • Actionable advice for getting started,
  • Discover the 10 Most Lucrative Real Estate Niches,
  • Learn how to get started with or without money,
  • Explore Real-Life Strategies for Building Wealth,
  • And a LOT more.

We hate spam just as much as you