All Forum Posts by: John Jacobs

I just had my sewer line replaced at my primary residence last week.  This was not a pipe bursting job.  Rather they dug a trench and put in PVC.  No work was done inside the home, that is, the pipe was replaced in the front lawn from the home to the curb.  Cost:  $6,521.00

My self-directed IRA is the lender on the refinancing of a property. This is a duplex. This is a B- asset in a B+/A- suburb of Indianapolis. The value of the property is $125,000-$140,000 as is. With a little cosmetic improving it would be worth $165,000. Both sides are rented at $750 a side. The property is owned free and clear. I have put a note on property for $85,000. This is a 30 month note at 7.5% per annum interest only. The refinancing was done at a title company where I got a Lender's Policy of Title Insurance. My Mortgage will be recorded. The note will be serviced by a third party servicer. The owner of the property has several other properties that are just sitting there. He is going to use the $85,000 to fix up those other properties and then sell them.

I requested that my self-directed IRA be put on the Property Insurance Certificate and the Liability Insurance Certificate as Additional Insured for the property as that is what I have always done. The borrower came back to me and said that he understood the rationale for me being on the Property Insurance Certificate as an Additional Insured and thus had no problem doing that. He also said however that he didn't understand why my self directed IRA would need to be listed as Additional Insured on the Liability Insurance Certificate and was thus questioning doing that. What should I tell him in this regard?

Thank You

My self-directed IRA is the lender on the refinancing of a property. This is a duplex. This is a B- asset in a B+/A- suburb of Indianapolis. The value of the property is $125,000-$140,000 as is. With a little cosmetic improving it would be worth $165,000. Both sides are rented at $750 a side. The property is owned free and clear. I have put a note on property for $85,000. This is a 30 month note at 7.5% per annum interest only. The refinancing was done at a title company where I got a Lender's Policy of Title Insurance. My Mortgage will be recorded. The note will be serviced by a third party servicer. The owner of the property has several other properties that are just sitting there. He is going to use the $85,000 to fix up those other properties and then sell them.

I requested that my self-directed IRA be put on the Property Insurance Certificate and the Liability Insurance Certificate for the property as that is what I have always done. The borrower came back to me and said that he understood the rationale for me being on the Property Insurance Certificate and thus had no problem doing that. He also said however that he didn't understand why my self directed IRA would need to be listed as Additional Insured on the Liability Insurance Certificate and was thus questioning doing that. What should I tell him in this regard?

Thank You

I am the private lender on a single family home flip. The purchase price is $192,000. The rehab budget is $30,000. The ARV is $280,000. The flipper is experienced. I have lent on approximately 15 flips with other people before but this is my first deal with this flipper. I had asked that the property be insured for the amount of money that I have in the deal ($192,000 + $30,000 = $222,000). I would be listed as an additional insured on the policy. The insurance agent came back with a reconstruction cost of $167,300. So the flipper came back to me asking whether I wanted the home insured for $167,300 or $222,000. The flipper preferred insuring for the lower amount but was willing to insure for the higher amount if that is what I wanted. The flipper mentioned as an aside that the land on which the home sits would be "pricey" but did not provide an exact number to substantiate that claim. In my dealing with other flippers I have always had the property insured for at least the amount of money that I had in the deal. So in this case that number would be $222,000. What would you do here?

I posed a similar question the other day.

I have been asked to make a loan with a 3 year balloon. The borrower who is in real estate characterizes the purchase as a "live in flip." Nevertheless he and his wife would be living in the home. I had a concern as the private lender that creating a note with a 3 year balloon is not allowable under Dodd Frank as I would consider the borrower (despite the "live in flip" characterization) to be an owner occupant, and, as such, balloon payment notes are not allowed when dealing with owner occupants. Do I have this correct? Would I need a mortgage loan originator? It was suggested to me that one way to circumvent Dodd Frank in this regard is to have the aforementioned borrower buy the home in his LLC. By buying the home in his LLC and not in his personal name then the balloon payment issue relative to owner occupants would not be applicable. I was wondering what others thought.

Clay,

I have a name for you.

How do I get a hold of you?

John Jacobs

Broker/Investor

Indianapolis

@John Fedro    @Andriy Boychuk

Thanks

@John Fedro

@Andriy Boychuk

Thanks

To John Fedro,

Do you have any experience in purchasing a MH within a MHP which is a Planned Unit Development (PUD)? This is a vacant 1988 3/2 MH in pretty rough shape which is a listed Homepath property. There is a monthly $20 PUD fee. I am learning more about this space and plan to make some phone calls on Monday. Am I correct in saying that in a non-PUD MHP I would own the MH if I were to buy it and then pay the MHP owner lot rent. Whereas with a MHP-PUD situation I would be buying not only the MH but also the land on which the MH sits? I say this because MHs typically can't get conventional financing whereas this MH had a mortgage on it as Fannie Mae now has it in its possession. Thus a mortgage with conventional financing must have been placed on the MH and on the land on which it sits. I presume then that I would be responsible for the property taxes in the PUD situation? Do you steer clear of MHPs which are PUDs? Do you have any experience in buying Homepath MHs?

Thanks!

John Jacobs