All Forum Posts by: Eric Mcginn

No more for me. I had section 8 tenants involved with drugs and prostitution. They lied to me about so many things. 

Is there any way to take advantage of these listings without having 20% down? 

Looking at buying a SFH in the San Fernando valley, Lake Balboa area of Los Angeles.

The most we could really pull together is $20k +/- which is more like the 3.5% we'd need for an FHA loan on $5-600k which is what we're looking at. I'd love to find a fixer upper in the area but not many left. I'm very handy and would want some sweat equity. A built in rental unit would be great too (unofficial is ok)

I do have a 3 unit rental property in Maine that I could use equity in, but I'm hesitant to spend the money on appraisal and refinancing and increased taxes. 

Looking for advice on the best process to to build equity, also I need a loan because my FICO dropped 40 points last month from 830 to 791 because of "lack of installment loans" my rental unit is owned by LLC so it's not on my credit. My fiancees FICO is 815, we make about $8k/ month.

Our only expense is rent and her student loans and utilities. Insurance is a couple hundred a year, we own our vehicles. And have been with current employers for 5+ years. 

charming urban oasis

I'm dealing with this right now also. Niall, is it a commercial loan? That seems to be the only option, residential seems almost strictly off limits, I think I found one local bank that said they might be able to do a residential loan in my LLCs name. 

No matter what, I have to be a garuntor seeing that the LLC is new without income / credit history.

Two other issues in dealing with:

National commercial lenders require 5+ units, I have 2-4

Residential loans require a seasoning period usually and I'm looking to refi out of private note in <30 days

commercial is the answer I think. Terms arent great but thats what its got to be.

two main issues are:

owned by LLC

no seasoning for appraisal

also I want to put in a mobile home

All of this is allowed with a commercial loan, Im learning. Its amazing how much the conditions can vary from one establishment to another. 

So I'm officially a homeowner as of last thursday. 

I'll start with the down and dirty facts:

Property has two duplexes (4 units) but one building is uninhabitable and will be demolished next week.

I purchased using LLC partly for liability and also because lender required it.

because of condemned building, banks and mortgage companies wouldn't touch it so I found a private lender and got some pretty expensive money for 90 days. 

sale price $70k, wrapped in $7.5k of demo for total loan of $77.5k, paid cash for closing and asbestos abatement ($4k and $3k)

previous appraisals came in $106k for land, $40k for building, appraisal for closing came in significantly less at $93k assuming the building has been demolished. 

I'm confident the value will go up as its an up and coming neighborhood and excellent location across from the river in Biddeford Maine 04005.

the good building has nice paying tenants in each unit @$700 each, so it will cashflow

OK, I figured once the building was down it would be easy peasy to refinance, however that doesn't seem to be the case. 

having under the LLC is impeding residential loans, no seasoning on the appraisal is impeding others. I've still got a lot of phone calls to do and I'm sure I'll figure out the best deal but I'm hoping you all might have some input.

two different scenarios I'm looking at are:

1) Commercial finance @ about 6% @75% of recent appraised value of $93k = $70k and I would get $8k in private loan (also at about 6%)

2) since I'm only member of LLC, switch to my name personally for refi, then switch back after successfully refinancing. I know this pay be against some stipulations, but if I'm paying on time, will they care?

lastly, to throw a monkey wrench in the deal, I would love to take advantage of the grandfathered zoning the city has extended to me for 1 year to replace the two unit building. with current zoning I would not be able to add residential units but they will allow it for one year after demo. The only way I see this being worth it long term (and Ive put a lot of thought into this) is to lay a slab and get a used single wide and convert into two studio apartments for a total cost of <$15k. The city has no problems with this, but some residential loans have stipulations against it. 

Ive found myself in quite an unusual situation. thankful for any light shed onto it,

Eric

why don't you just drop the claim and try to sell it in its current known condition? If the buyer accepts it's condition then sell and be done with it. Pocketing the up front part of the claim sounds like a questionable proposition to me...

Its an R2 zone with basically no restrictions, code enforcement has said that a mobile is ok. From what I've seen, a crane is not needed to place a mobile home, they use a machine more like a big pallet jack on tracks. Access to my lot is plentiful, tons of wide paved drive way space. 

I know that it would be more attractive to building a stone castle, but what I'm going for is cashflow. 

I figure that if I spend $15k said and done all expenses included to get a mobile duplex on to-code concrete piers, I should be able to recoup that in a year and a half. Beyond that, rent goes straight to my pockets. 

When its time to sell, because of its mobile nature, I should be able to remove the mobile home for a couple thousand dollars, and maybe even sell (flip) it for a profit. 

ok and what about putting in a seperate, free standing mobile home to rent out? 

Also, can I convert a 2 ba 2 br mobile home into to two studio apartments? I am very handy and will try to salvage the breaker panels from the building I'm tearing down. 

Lol I don't have a problem with white trash as long as it makes me money. Honestly though, with proper landscaping and aesthetics it could looks fine. 

I have been in contact with code enforcement. I have a year to rebuild once I demo the old duplex. I don't need to keep any of the  

The reasoning for making it attached would be for better comps, but maybe that won't be the case....

So I think I'll be putting in the mobile next to it, as a seperate building. At $5k for pier footings, $8k for a mobile delivered and another couple thousand to reconnect services, I'm looking at a $15k building ready to rent, that should pay for itself in a couple years rent wise...