All Forum Posts by: Account Closed

I'm not in CA, so can't help much. Are you buying the property in your personal name? If it was in a corporate name or LLC, could that make a difference on usury rate? Would you be willing to pay the 2 extra points upfront and only 10% interest payments?

Rich Weese, just to be clear, the property you're referring to, did the seller subordinate his lien place, taking a second position behind your private lender but still selling to you? Or did he allow for you to put a loan on his property but you hadn't transferred title into your name yet? I'm not trying to circumvent anything. The seller doesn't want to sell until July 10 for tax reasons -that's his right. I can very well wait until then to start. I'd just like to start earlier if possible.

thanks guys! I think I've decided the easiest thing to do is get the ball rolling with my money until July 10th, and do the closing with the lender then What do yall say to that? Any things I could do to protect myself in the meantime? I appreciate everyone's input, as I've learned a lot :)

Thanks for sticking it out with me so far. I threw this out to a few intelligent people at a REIA meeting last night. A few options were proposed:

1. Purchase a 1% share of property and reimburse the seller for short term gains on that 1% that he's selling. Purchase the other 99% in July when long term gains come in to play.
2. Lease option and record the option. Someone also recommended recording the option with a mortgage, which I didn't know you could do.

Would anyone care to poke holes through these ideas, or support them? Thanks :)

I was going to immediately point to apartments and skyscrapers as a fallacy in your logic, but J beat me to it. Anyways, I think you hit the nail on the head with this quote:

"I would not buy a house in these types of neighborhoods."

There's your answer-- don't buy there. Nobody forced anyone to buy there. Buyers made those decisions, and lenders made the choice to loan them the money.

thanks for the more in depth replies...

Steve Babiak, that does seem like a simple solution (one I hadn't even thought of), but I don't want to increase my lot cost either. If that were the only option, I'd just wait it out :)

Bill Gulley, thanks for the reply. It helped immensely. That being said, I still worry about death, divorce, bankruptcy, etc. If I do not have title, I am susceptible to anything that could happen to the seller in the next 61 days, correct? I understand the subordination now (thanks for the explanation), but if something crazy would happen in the next 2 months where the IRS wants to lien the property, that would still go ahead of the lender in lien priority, correct? Death could complicate things with estate issues. Maybe I misread your post, but just to be clear, I'm NOT worried about my filing bankruptcy or divorce. I wonder if the seller were to do that in the next 61 days how that would complicate issues since I don't have title into my company name. The build will take 4 months BTW. Also, I'm not one to put my resume out there, but I owned a pretty substantial rental portfolio up until a year or 2 ago when I decided to split with a partner and sell most of what I owned individually to get bigger into the retail market. All the rentals were rehabs. I have been flipping homes as well for the past few years, including some very large additions. As the market continues to change, so will my model, and thus, I got into spec building late last year. This will be my 2nd or 3rd spec (depending on which one I can start first). Not that I think any of that is relevant, but you asked, and I'm not one to hide :)

Bill Gulley, thanks for the ideas...i follow the 2nd part about buying subject to the finanching. I don't get the purpose of the subordination agreement. Could you elaborate on that? This wouldn't protect me or the lender from something crazy happening like divorce, bankruptcy, IRS lien, etc..would it?

thanks all for the replies..i gave everyone a vote (even you bill--actually you got a few for multiple responses)

Steve Babiak, you hit the nail on the head.. my big fear would be an IRS lien or something crazy that would go in front of any layer of protection I could come up with...

Bill Gulley, you're right, i do plan on arguing with everything you say. As much as you drive me nuts, you're a brilliant and creative thinker when it comes to real estate. I'll look to you for answers on tough questions like this. This property is a big deal for me, and I don't want to screw it up. Thus, if anyone can come up with an idea, I do plan on poking holes through it until all three of us (buyer, seller, and lender) feel comfortable. So far that isn't happening....

This most likely can not be accomplished, but I thought I'd ask the great thinkers on BP. As for the sham insult, I think you know I'm not trying to accomplish any crap like that. Thanks again for any input, and if anyone else would like to discuss, i'm all ears :)

J, thanks for your advice...everything except permit process is finished. to get permit is 2-3 weeks. that still leaves 4-6 weeks sitting while market is hot. a creative investor friend of mine suggested having the seller sign a mortgage to me, to encumber his title. I'm not a creative investor-- I just build/fix up homes :) It was over my head, but I thought it was worth a shot to put it on here to see if there is a solution. For what it's worth, it's a private lender (not a bank), and the seller and I are friendly. I know circumstances change when things are out of our control (death, divorce, etc.), but barring that, I feel confident he wouldn't screw me. In my opinion, the hard part is getting everyone on board. Well, everyone is open to the idea--we're all just wondering if there is a way to do it and protect everyone? The simple answer says no, just wait for July 10. We may have to do that, but if there is a way, I'd sure like to know! Thanks again :)

I have a lot under contract that the seller can not sell until July 10. Seller bought the lot last summer before things picked up, and now realizes he can make a small gain by selling on long term capital gains. He currently has no mortgage on the property. Is there a legal way to structure this so that all three parties (buyer, seller, and lender) all are safe? I would like to start the build asap. Thanks.