All Forum Posts by: Brianne H.

Hi @Saeid Safarmehdi, I have not found a lender yet, but I also haven't been putting much effort into looking. Since I originally posted this, we had an unexpected change (in a good way) with our primary residence. We happened upon an opportunity to land our dream property much sooner and for cheaper than expected, so we're just in the process of finishing development and about to move in. Once it's done and we're refinanced it, I will then be looking much more seriously into US options. I am also considering Cincinnati, though I haven't made a trip out there yet - still working on preliminary research. Let's keep in touch, and maybe share some knowledge that we come across that's relevant to Canadians investing in the US! 

Thank you for the explanation. You poor people in California, I don't know how landlords can ever win with so many restrictions (just took a gander at the tenant's rights in SF). Is the OMI process $16k because the LL would have to pay certain fees and costs to them? But not able to re-rent for 5 years afterwards right? 

As the LL already offered cash for keys, does that affect the ability to do an OMI as it could then be considered an eviction in bad faith? These tenants have a screaming good deal on rent and they know it. They won't be going anywhere easily unfortunately. 

I am also considering investing in the Cincinnati area in 2018. For those of you who are local, what's your opinion of buying south of the river on the KY side? Pros/Cons? Decent or rough areas? Are property taxes lower? How much demand is there, and what are the demographics? 

Forgive my newbie ignorance in this area, but what are the costs associated with Owner Move In, and why are they so high? If I understand correctly, the tenants turned down $21k to hold out for something closer to $100k for cash for keys? Is there a reason the landlord can not terminate if it's a month-to-month lease, or else wait for the lease to expire and non-renew? 

@Ben Morrow how far is the closest town/city? What types of properties are the neighbouring properties? Have you asked around with the financial institutions if there are financing options that open up if you were to put a well on it? In our case, no big bank (and in Canada that's probably 90% of the lenders) wants to touch raw land that doesn't even have a well, so we went through the one provincial credit union, who were willing to do 50% down. However, if you spend a few thousand and get a well on the property, most lenders will do a land loan for 50% down since it's now considered serviced (our power was at the property line, natural gas is almost a mile away so we have propane brought in) and our credit union will do 75% LTV.

Is there a need for acreages in your area? If it were to sell, how much do you think you could get for it? Could you rent it to a local farmer to hay it? Could you talk to a lumber company and selectively log it? Is R-2 multifamily (or up to 4 units), or a single dwelling? 

A few more questions, what are the allowable uses under an R-2 zoning? What is the size? What desirable amenities or qualities does it have or are in close proximity? Is it serviced with any utilities or have a well on it if it's rural? 

I'm in Canada so our rules are a bit different, but most banks here will only finance serviced land at 50% LTV with a land loan. We went through ATB, a provincial government-owned credit union, and they are one of the only ones willing to do 50% LTV on raw land, and 75% LTV on serviced land. But again it is a land loan, at a higher interest rate (I'm paying 5.2% variable 25 yr am and most 5 yr fixed mortgages these days are at 3.34%). If your equity lines of credit are like ours here, they tend to be a little more picky than mortgages.

@Ben Morrow is this vacant land in the city or rural? I'm envisioning rural, so this may or may not work for you. My dream has always been to have my own little acreage and have my horses in the backyard, but still be close enough to the city to commute to my job there. In my area, to get an acreage with a decent enough house for a small family, and at least 4+ acres for animal zoning and pasture, with halfway decent fencing and animal shelter, within 30 mins of the city limits, you're looking at about $550,000+. You're lucking out if you find something that meets the criteria for $500,000. 

This summer we bought 7 acres of raw land with lake view, cut right out of the Alberta prairie and right on the edge of that "reasonable commute" radius. We paid $150,000, which I think was a pretty good price since 3 acres down the road a ways sold for $170,000. We were able to get a loan through a provincial credit union for 50% LTV. As soon as we put a well on it (and we lucked out with the well, 12 GPM at 65' deep of clear clean water) it turned into serviced land, which we then refinanced with the same credit union for 75% LTV. We then used that 25% that came back to us, plus virtually all of our unsecured lines of credit to dig and pour a foundation, bring in utilities, build a horse shelter and fencing, and we moved a house onto it. The house is a 1961 3/1.5, 1236 ft2 that was going to be bulldozed as the previous owner wanted to build a 2 story. Perfectly good house, well taken care of through the years, just cosmetically still living in the 60's for the most part. 100% liveable as-is. For the house, the move, and the deck that came with it, it was only $56,700 all in. In this area, it was much cheaper than building, and when it's done it'll be just as easy to finance as any other house. If we were to put a new mobile/modular on it, we'd be looking at about $150,000 new, and then you'd have a whole lot of depreciation, stigma, and more difficulty in financing.

In our case, this is going to be our primary for at least the next 10+ years. We'll gut all the cosmetic stuff, and I anticipate spending about 30k for renos. With some landscaping and a detached garage, I'd say we're all in for about $370k, and we're looking at it being worth conservatively $550k when it's completely done. We put in $80k of our own money, and are looking at an equity gain of about $100k. In the future, if I found a nice parcel of vacant land, I would probably do the same thing again, except this time I would look at trying to get my hands on at least 10+ acres with the ability to subdivide and do it twice. 

Lowering it onto the foundation. (It's also looking pretty terrible along the front as they had to remove the brickwork as it wasn't safe for travel, but we'll put new stone on.)

I forgot to also mention that in our case for the draw mortgage, the lender also required us to have 15% of the project's total costs in cash sitting in our bank account as a reserve for overages. Not on a line of credit, cash in the bank. 

@Derick Passram I am doing something similar at the moment. However I'm in Canada and I'm certain there will be some differences in how the financing structure works. Here's what my project looks like: 

In Aug I bought 7 acres of raw land (dream is to finally be able to get an acreage with horses in the backyard) and did 50% down since it was raw land with no services yet. We put a well on it and it now became serviced land, allowing us to refinance the land loan with the same lender (an Alberta credit union) at 75% LTV. From here, we had the option to either get a construction loan (also called draw mortgage here) or to put all of our costs on unsecured lines of credit. We opted for the LOCs and here's what the numbers breakdown sort of looks like:

LOCs: Between my husband and I, joint and separate, we have 8 unsecured LOCs and 4 credit cards (1 very low interest) to float all of our construction expenses. The LOCs range from 4.4% - 8% at the moment (variable rates). We're estimating we'll end up paying about $2000 in interest between our land loan and the LOCs until we can get our mortgage funded. We don't have the same seasoning rules here as you guys do in the US so we can do immediate refinances if there's a clear appreciation in a property. Once our house is complete, we will then get a mortgage + improvements, which will essentially be a regular mortgage but allow us extra cash to do interior renovations, landscaping, and build a garage. We likely won't be able to do all of the above but we can pick and choose. 

Draw Mortgage: We were originally planning on going this route, but the costs were quite a bit more than just interest, and we were able to swing it with the LOCs and CCs as back up, so we opted for those instead. There was going to be a fee for registering the draw mortgage on title, about $1200 or so (all $ are in CAD $) in lawyer fees, and our project would have had 3 draws. After each stage of completion/draw, we would have to get it inspected ($300-$400 x 3 draws = $900-$1200), and also for each draw, we would have to get the lawyer to verify the title and add the new amount onto the title, which was also going to be about $500 or so per draw, x 3 draws = $1500. The interest rate on a draw mortgage is higher than a regular mortgage, and similar to those on the unsecured LOCs, so let's say again about $2000. 

So for us, costs of using LOCs: $2000 for interest. Cost of using a draw mortage: About $5900. 

Also note that our project is a little different than if you want to build from scratch. We did a brand new foundation, 9' basement, and all brand new utility hook ups and set ups, but we actually moved a 1961 bungalow onto the foundation. Once our regular mortgage funds, we will gut it and renovate it. In our case, it works out cheaper than building new, and we saved a perfectly liveable house from going to the dump. 

Are you a property manager? Evicting 100+ people per year seems like a LOT of evictions