All Forum Posts by: Jim D.

Try calling Tad Shady Credit Union.

List price means nothing. 

If there were several other cash offers looking to pay about the same as you, then you most certainly are not overpaying. That's what it's worth.

Don't spend the money to separately meter. Follow Joe's advice above; just take an average of the historical cost, divide it by 4, and next time you sign the lease let them know there's a $35/month payment for utilities. 

I do this on several properties that don't have separately meter water, gas, or electric, and have never had a single complaint. I actually think the tenants like the stability of the fixed utility payment.

I have an opportunity to make some money by providing a short-term bridge loan, and am looking for advice on what pitfalls or risks I might not be seeing. 

Sandra bought a property on land contract 3 years ago for $180,000, with a $20k down payment and monthly payments of $2,000. Her intention was to refinance into a conventional loan by the end of the 3 years; however, due to lack of planning and her self-employed status, she has been unable to qualify for a loan. The owners of the property are looking forward to re-possessing the property on December 1. It was recently appraised at 206,000. Remaining balance due on the land contract is around $140,000. She has a lender lined up to give her a conventional loan, but she needs 5 months to complete their requirements to qualify.

Since she is about to loose all the equity she has put into the property, she has offered me the following terms: I'll pay off her land contract, she'll make monthly payments to me of $1,200, and then in 5 months she'll refinance out and pay me out a lump sum of $160,000, for a profit of $20,000. The property will be collateral, so if she doesn't refinance, I can foreclose. Her incentive to do this is that she'd rather loose $20,000 than the entire $66,000 she has in equity.

Clearly, I need to verify the creditworthiness of the buyer, verify that they will in fact be able to refinance, verify they have strong homeowners insurance, walk the property, get title insurance, have lawyers draft the needed documents, and make sure it's all properly recorded and collateralized.

What else am I missing? Anyone here done a similar loan and had a good or bad experience? All advice is welcome. 

Thanks Brian--he's not doing a refinance, just dropping the PMI if he gets a high enough valuation. His loan terms allow him to drop it off if he has done "substantial improvements" and if his new valuation puts him at 80% LTV or lower.

Thanks to all for the tips.

Right, same story from the people I've met. However, I know there are plenty of investors who made it through those years just fine--for those people, what were you doing differently? How did you mitigate the risk?

When I think of a portfolio that is well-positioned to get through a recession, a commercial loan seems like the exact opposite of what I want to be holding.

One of the units was actually owner occupied, sorry that wasn't clear from the original post. 

Short answer: most new investors in your shoes will be much better served by buying a property that already in good shape for their first purchase. 

There's enough to learn as it is on your first purchase; no need to complicate it further by throwing a rehab into the mix. It'll just make it feel more overwhelming and prevent you from actually getting started. Buy 1-2 nice rentals first to learn the ropes, and then think about doing a rehab after that.

Not sure I understand your question; do you mean that you own these 30 properties free and clear (no loans), and when you went to apply for a HELOC the bank wouldn't give you one?

Only some banks will do HELOC's on rental properties; you just need to find one that does. I got an 80% LTV HELOC on a rental from a credit union.

Hmmm, they didn't cover this one in "Flip or Flop".

Have you tried talking to the neighbors? They could be able to tell you when the phantom renter has been coming by or have some more information.