All Forum Posts by: Dusty Cady

@Michael Reach @Rick Pozos - Thank you for the input and insight. After reading your posts and giving it some more thoughts we are going to walk (run) away from this 'deal'. There are way too many variables and red flags all around it. 

@Jason Dillard Great points. Thank you!

So I have stumbled upon a very unique deal and I would like to get some opinions on it. Here is the scenario.

Investor owns a property that has an assisted living business being ran out of it. They mortgage is currently being held by a private lender. They are behind on their payments and need to come up with a bulk amount in order to stop foreclosure. They have an agreement to sell the property and the business in August of this year. They are looking for a short term loan to get current with private lender. In exchange they will split the remaining equity after the sale of the property as well as holding second position on the property until the sale goes through. 

Numbers

• Appraised Value - $600K
• Current Private Loan Amount - $320K
• Late Fees/back payment: - $95K
• Requested loan amount - $130K
• Total equity after sell - $280K
• Total split after $130K payback - $150K/2 = $75K

So in total, for a two month loan of $130K my return is going to be $75K ~ 57%

These are fairly round numbers, not including closing costs, but the gist is there. 

Has anyone ever structured a deal this way? Any thoughts or advice will be appreciated. 

@May Emery I'm interested in the low FSS Scores. Do you have any numbers that show they are responding to DM?

Well done dude! Does your HM Lender lend in Nevada?

https://www.biggerpockets.com/landlord-forms

@Matta Nguyen Thank you for the insight! Hopefully you find another house! What we did was ask for the seller to pay closing costs, which basically equaled the cost of the roof ($7,500). 

@Matta Nguyen @Michael Boyle What the resolution here for you? We are negotiating right now for 2 units. One of the roofs has to be replaced. With an FHA loan you can now get a 6% credit back at closing to cover some costs. So we can finance in the cost of the roof ($11K) We are actually offering this to the seller today. I'll let you know how it goes.

@Brian Ploszay Thanks for the insight! Will try a new bank. Seems to be a solution there. 

@Jon A. Thank you as well. I wish my City were as accommodating.

Hi All-

Hoping I can get some insight to help us close a deal. We are currently in Escrow on a 2 unit property (Separate structures). During the Appraisal we found out that our lot is zoned R1 (So only one unit) and since there is second unit it is non-conforming. This means that our lender no longer wants to loan on the property. Since it is non-conforming the code states that if the property is damaged by more than 50% we can NOT rebuild two units, it would have to only be one unit. The city hasn't been very helpful in helping us understand if the other unit was legal at one time, if there was some variance or if it was grandfathered in. They also don't have any record of permits for the second unit.  Does anyone have any experience with this?

Some facts

• We plan to occupy one unit
• We are using FHA
• The second unit has its own address, trash cans, electricity bill etc. 

Thanks!!

Best,

Dusty