All Forum Posts by: Cherie Orellana

I would talk to your lender.  The lending side is where the issue is.  Explain the situation and brainstorm ideas.  The checks will have to be direct from title to contractor.  The excess you should be able to work into the deal somehow as mentioned above.  If none of the other idea work , you could just reduce the purchase price that left over amount.  I would try to apply it in other ways first though.  Like closing costs or buying down your rate.  

I typically work with Scott Morgan with old republic when working in utah county.  

On complex or creative deals, Debbie Hemingway with Utah Title has been great.
she is one of the only escrow agents that can follow my crazy and creative ideas and help make them happen on her side of the business.    

@Marc Macialek

I would have the title company pay the invoice. If you want it paid in increments or you want to hold the check, you could have the title company cut the check written to contractor but you pick it up.

I have done this a few times where I also ask they divide the payment into 2 checks. This way, I pay the contractor half up front and the other half I give them upon completion. I imagine you could divide the payments any way you want. As long as the money is direct from title to contractor.

I just read more of the replies and the problem you will run into is lender requirements.   Even if buyers and sellers agree to the terms, a lender will not allow money back into a buyers pocket. I would imagine there are some creative ideas you might be able to work out to make it work.  
For instance, they could pay $16,500 in repairs to be paid to contractor and the other $3,500 they contribute to your closing costs.  Use the extra to buy down your rate, have them pay a couple year home warranty, etc.  

SLC is such a great place to invest right now.  It’s like getting in before everything skyrockets over the next 10 years as so many people are moving in from out of state.   The low supply and high demand is hard to keep up with.  So many larger multi unit developments being built and it doesn’t even make a dent in it.  

Buying a duplex owner occupied with an FHA loan is fairly straightforward. The hardest part would be beating out other offers since most properties end up in multiple offer situations in this market.

An owner occupied triplex or Fourplex is Much more complex.  They have to meet a specific formula based on purchase price and rental income .  Properties in the Salt Lake market rarely meet the criteria.  It is not impossible, but far more difficult than a duplex.  

The type of property you purchase may be influenced by your overall long term goals. Most cities in the Salt Lake and surrounding counties allow renting a MIL when it's owner occupied. However if your plan is to purchase a second home in the future owner occupied, and plan to keep the last one as you build a portfolio.. Make sure Each property you purchase makes sense legally and financially whether owner occupied or strictly an investment property. Duplexes do come at a premium and may have to use FHA financing for minimal down payment. However the premium you pay may be worth including a multi unit in your portfolio within your first few properties. If you simply intend to buy a home to offset your mortgage then a Mother in law makes the most sense. You could always sell it in a couple years and use the equity to purchase 2 homes. An owner occupied with 3-5% down and an investment with 20-25% down.

There are some homes that can be grandfathered in as legal nonconforming if they meet the city requirements.  Others that are listed as single family but have a duplex overlay could legally rent to 2 families.    Some cities you could also rent to individuals on a lease with a MIL property as well.  For instance in Salt Lake City, 3 unrelated individuals can live in the same single family zoned home. Or one side of a multi unit I suppose.    Where West Jordan you can have up to 5 unrelated individuals.  Always research and verify all info during your due diligence on a property.  As sometimes zoning and planning rules may change, landlord tenant laws, building requirements etc are subject to change from time to time.  

Is the rental a single family home or a multi unit? I think that may play into what the best strategy. 

In my experience a basement entrance runs $7,000-$15,000.  I would plan $10,000 as a general estimate. 

I may have a couple of options if it’s the end of September in the Salt Lake Valley. 

My husband works in corporate for a commercial Construction  company.  They primarily build large multi unit developments.  I know the owner has considered doing his own development projects.  You should get lunch with my Husband sometime and see how you may be able to help each other.  

I would also reach out to some builders directly. 

Are you thinking more residential or commercial ? What area?

I agree with @Elijah Rosett. Low rates, a shortage of homes for sale and the fact Utah didn’t have an actual shelter in place order has kept the market busy.  I honestly don’t see much of an impact in the market in The salt lake and surrounding counties.  The main impact I have noticed is stricter financing guidelines such as additional documentation needed for underwriting and difficulty obtaining Jumbo loans etc.  

The lower priced homes under $300,000 tend to go under contract extremely fast since there are not a ton out there anymore.  In all honesty I think it’s the investors that are holding back a bit, watching and waiting over the last couple of months.  Personally, I feel great about the local market and feel that values will continue to rise in the area despite the pandemic.