All Forum Posts by: Gilbert Dominguez

I might suggest you take 3 distinct earth tone colors for the exterior to define each unit better and I would also add a back fence plus a fence to separate the units as well to lend more privacy. Then I would consider laying down turf not grass along with a tree here and there to provide shade and comfort. That would be it for the outside and landscaping unless you want to exercise more creativity but I would concentrate making improvements to the interior quality of the units small as they are. 

The only way I see this working is if you can get the tenants to pay all of their own utilities. That $1,500.00 is a killer. If you can get renters in that can also pay their own utilities I would say forget this deal as well. You are really stretching yourself. 

Yes essentially that is it. However make sure you arrange everything with your mortgage company and they know your intentions. Make sure they know you are offering to pay down the principle. The of course the interest payment part as well as your principle payment part will be lowered for remainder of your loan repayment period. 

If you take the example given to you above using a $20K purchase and end up with a $100.00 per door Net you can say you are earning 6% on your money. So if you are looking at a property where your purchase price would be $400K you would likewise want to earn 6% net on your money. 

Of course the ARV or market value as it relates to your CoC has allot to do with things but what you want at minimum is to earn a 6% of your money regardless how much is earns as a gross and what you pay out for borrowed money. This is the way I see it overall.

What is more ideal is earning between 10% to 12% on your money. There are ways to earn this much on your money without the headaches of dealing with actual properties simply by offering to finance other projects for people and participating with them on putting a deal together. I mean if you are having to buy with zero down. You have much more of a chance of earning significantly more if you put 25% down and borrow the rest. 

There are two types of people that are interested in zero down as far as I see it. Those that have no money and those that have plenty of money. Those without money are just trying to do any kind of deal they can period and those with money are working to leverage their own money to the max. 

Why would you want to earn so much money per door. It is simple because you want to make sure that investing in real estate is more profitable than other more simple types of investments. Bonds, mutual funds, stocks maybe pay between 1% to 5%. Maybe stocks closer to between 8% and 10% but not so safely as bonds. 

Real estate has the advantage over time because with time you will be paying off your debt and therefore building up equity. 

I would suggest that if you are a person with just enough credit to get a hard money loan to pick up or fix a property do not do it because what if your house does not sell? You will be in a panic knowing you have that hard money loan to pay. However I think its ok for those that have a little money put away and can maintain the payments. Also I do not recommend people take out short term loans of one year or less. Hardy money loans can be gotten with a 5 year term. That allows you more time to rent or sell a property. I know you did not ask about this but I am just throwing in for you to think about. 

Sometimes people get pre-qualified for conventional loan but they cannot apply that loan to a fixer upper. In this case they can go to a HML and get the money to do the deal. After the house is fixed up and in good living condition they can refinance it with their conventional loan. That is ok because they can handle it but its not for those that have no money and no credit because even if they do get the HML if the house does not sell they will hit a brick wall and be in worse shape financially than when they started.

If the owner or ex owner live only 15 minutes away I would go visit them as ask questions. Perhaps they can tell you what in going on of has happened with the property. Its always good to be able to talk with someone that has held the property under their ownership. 

You can consult with an architect, a structural engineer or a code compliance lawyer there in Los Angels. Anyone of these people can guide you about what you need to include in your plans. Sometimes a licensed contractors who has perform the work may know the process and recommend a good draftsman or architect or engineer. They might even have someone on staff that can draw up the needed plans but I would not pay for it if the plans need an engineer's stamp. Get an engineer to do it. Simply look up structural engineers in your area. 

The Haunted Mansion

There’s an infamous court case often cited when it comes to disclosure law, Stambovsky v. Ackley,that revolves around a haunted house.

Helen Ackley owned a big old Victorian home in Nyack, New York. The town sits about 30 miles north of New York City on the west bank of the Hudson River, in an area known for many haunted places, including the legendary Sleepy Hollow. Mrs. Ackley was well aware that her house was supposedly haunted. In fact, she claims to have seen several ghosts herself, including one that gave her approval for a new paint color in the living room and several dressed in colonial-era clothing. She described her home’s ghosts for the local newspaper and Reader's Digest and even got the house featured on a “haunted house” walking tour of Nyack. When she decided to put the house up for sale and retire to Florida, though, Mrs. Ackley suddenly got very shy about the ghosts.

Jeffrey and Patrice Stambovsky wanted to buy the house and agreed to Ackley’s asking price of $650,000. It wasn’t until after the couple gave Ackley a $32,500 down payment that they were talking to a local about their purchase and were asked, “Oh, you're buying the haunted house?”

The Stambovskys were not exactly thrilled to learn about the alleged haunting of their new home and attempted to back out of the sale. Ackley would neither admit any wrongdoing nor cancel the sale and return the deposit, so the Stambovskys took her to court.

They lost the case, with the court citing their caveat emptor (“let the buyer beware”) responsibility to uncover the property’s defects before committing to a sale. They appealed and the Appellate Division of State Supreme Court ruled in their favor in a 3-2 decision.

The court found that, regardless of whether or not ghosts are real and the house was truly haunted, the fact that the house had been widely reported as haunted affected its value. Ackley “had deliberately fostered the belief that her home was possessed by ghosts” in the past and was therefore at fault for not disclosing this attribute of the house to the buyers, who, not being locals, could not readily learn about the defect on their own. On that note, one of the justices joked, “Who you gonna call?... Applying the strict rule of caveat emptor to a contract involving a house possessed by poltergeists conjures up visions of a psychic or medium routinely accompanying the structural engineers and Terminix man on an inspection of every home subject to a contract of sale.”

The Stambovskys eventually got their money back and Ackley eventually sold the house despite, or maybe because of, the fact that she had to disclose her supposed ghosts.

Yes, as they say' You won't know if you don't try". I am just commenting based on my many years trying all kinds of ways to purchase properties under market value. Cities are one of the worse entities to try to work with and I personally have found it to not be worth my time. However if you feel strongly you can succeed where others have not be my guest you just may be lucky like the folks you say got a $1M lien down to $1K. 

I might suggest that you join a real estate investment club. The little money you could put in plus that extra $560.00/mo you are willing to commit to may help your investment club buy a couple of units for you that will earn you an extra $1,000.00 a month for you in return. That could certainly help you pay your house off sooner rather than take an entire 15 years more. Plus by providing your investment club with extra buying power over the long haul you could end up with more rental units to benefit from growing your cash flow for you rather than limiting yourself to what you can do all on your own. 

I would say forget about it. Cities are just not inclined to discuss those matters with anyone who is not the legal owner of the property and its really not worth the risk to you should the decide to play hardball with you and not reduce, forgive or stop pursuing the lien.