All Forum Posts by: Gilbert Dominguez

What I would say is to first determine if you want to purchase a multi-family unit that is occupied or one that is not occupied. There are pros and cons to both. With an occupied building you are already generating income or should be but its hard to make physical improvements tot he building and hard to get people to accept that you will increase the rents. You have to deal with landlord/tenant laws in your area. With an empty building certainly you can make repairs, improvements or modification far more easily but you do not have income until you get the place rented out. 

I would not say its a mistake but what if you have a 62 year old renting a part of your building. In some places they are entitled to a long term lease and a fixed rent amount. Just things you should think about when purchasing and rental unit whether single family or multi-family. There really is allot to think about but I am sure you will find out all you need. The more people live in your building the more things will come up for you to deal with. 

If you are cash flowing $500.00 per property which are in better neighborhood and renting to more reliable tenants that take good care of your properties then you should be doing ok. The 2% rule is meant to protect you in the case you have unexpected major repairs to do and maybe higher insurance costs. Sounds to me like you know what you are doing and doing what works for you. Formulas are used to account for contingencies of the unexpected or the probable but if your properties are good quality then you should experience less breakdowns of systems which in effect offset what the formulas are meant to account for. Still it would be a good idea for you to always have a nice cash reserve. 

With your projected ARV I would say the number are just too tight. You could easily go about $20K in repairs and updates plus have insurance, property taxes do cover. What will be your share of closing costs?. What is your reason for buying this house?

Hud usually is thinking of owner occupants not really investors. Hard to say but just from the initial numbers I do no think there would be enough in this deal to bother with it. I mean if you afford to buy this house at $157K or there abouts you can probably find a better property to get into. 

Essentially wholesalers find you the deal, that is they put in the effort to get the properties you might want to work with if you are either an end buyer or a rehabber. You may not have the time to find all your own deals and that is what wholesalers are working to accomplish, that is find you the deals and hold them long enough for you to make contract with them. You obviously need to value their services and be willing to pay them for their effort. 

If you do not see any use or value for using wholesalers and prefer to put in the time to find all of your own deals then of course you are free to do so. 

I do not think anyone on this forum including myself is pretending to or playing at amateur attorney. We are discussing only what Dodd Frank and the Safe Act say. No one is attempting to cover the entire of lending laws or real estate laws in any given area. Our discussion I believe is meant to be more limiting. However in any case it does appear there is more reason to always consult a specialist in lending law wherever one might be considering owner financing. Thank you all for your comments. 

Ken Rishel, 

Thank you for your input. It would be nice to understand these new laws in any area so we know how to go about doing things and of course we would consult with those knowledgeable in this area of law at any particular given area. I do not mean to make statements of fact I am questioning my understanding of the facts with regards to Dodd Frank and the Safe Act. Thanks again. 

One really good reason we would want to understand these laws very clearly or as clear as we can for now is the stiff penalties if found to be non-compliant and worse if found in direct violation. There is a very big hammer ready to smash you painfully into pieces if you think you will just be nonchalant about these new laws. 

Yes. Any owner financier or would be financier has to be both federally compliant and state compliant. The states will differ but you have to be compliant to both in your given area. 

There are expected changes that might but might not be made to the laws as discoveries are made on the effects and consequences these new laws bring to bare. 

This is why I posed my information in the form of a question. I would not be satisfied I knew exactly what I was doing in another geographical area just because I got it down where I am currently transacting. I would make sure at every location through consultation with a knowledgeable attorney at any given area. That's about the best we can do for now. Both interpretations and policies, meaning local laws and requirements are, and will be different according to your state. 

Sellers are sellers, they want to sell. In real estate it is always, " Buyer beware". No one cares if you are protected they simply have a job to do and that is to sell the property by whatever means. If you want to buy a property at what you estimate, calculate or know for a fact is a discount do not expect everything to be smooth or a bed of roses. Everyone from banks, to agents to auctioneers, it out for themselves. It up to you as the buyer to watch out for yourself. You may not have enough time to properly evaluate a deal but when it comes to foreclosures and auctions its pretty much take it or leave it. Get yourself ready or stay out of that particular way of obtaining a property. 

I have read several posts on here by newbies who make the darn mistakes imaginable and well known to others but not to them. 

Take more time to evaluate what you will put into the property and what you will earn. What will it cost you to pay the owner plus maintenance, insurance and repairs? What will be your part of any escrow fees? You have to account for every dollar that comes out of your pocket. Ask yourself if you have a way of saving money for when you will move forward with your plan to get it ready for higher rents. Base is on today's rents because you will not know what tomorrow's rents will be although we all do in the back of our mind. The point being is that you have to look at things as is not speculate about tomorrow.