All Forum Posts by: James Park

Hi all,

I'm a real estate investor in California, but I also own multifamily in Indiana.  I have a private lender here in California that lends against homes that I flip.  He's always been resistant to lending on anything in Indiana because he doesn't know or understand the state. And he doesn't want to have to learn a whole new set of rules, regulations, etc.

However, he's now open to doing a few small refi loans for me on some houses in Indiana that I own.  What he's asking for is for me to put together a summary of all the things he needs to know in order to provide loans in Indiana.  Essentially, it's on me to educate him on all the aspects of providing private loans in Indiana to him, and he can make a decision from there.

Does anyone have information or resources you can point me to, in order to learn about what is involved when providing private loans against real estate in Indiana?  I can do some google searches, but it always helps to learn from someone who is knowledgeable on forums like this.

Thanks!

James

Investment Info:

Large multi-family (5+ units) buy & hold investment in Peru.

Purchase price: $1,150,000
Cash invested: $200,000

I own a portfolio of 4 mobile home parks in Peru, IN. Aggressively looking to buy more parks to reach my goal of 1,000 units. Looking for good partners who are as gung-ho about this space as I am!

What made you interested in investing in this type of deal?

The demand for affordable housing is endless. And the demand will keep going up as our housing crisis gets worse every year. This is a recession proof business, easy to manage once stabilized, and highly profitable!

How did you find this deal and how did you negotiate it?

I bought my first two parks with nothing done. Just assumed the bank loans. The next two parks I purchased with seller financing

How did you finance this deal?

Assuming bank loans and using seller financing.

How did you add value to the deal?

We are cleaning the parks up and rehabbing homes to rent to tenants. We will also be bringing in a large number of new homes.

What was the outcome?

We are still going through Phase 1, which is rehabbing the park owned homes. Phase 2 is next year. We hope to have the parks stabilized by the end of 2022. From there, we can keep them for cash flow, or sell them for millions more than we bought them for!!!

Lessons learned? Challenges?

It is certainly not easy to turn around a distressed park. We learned so much in the process, the most important one being to be properly capitalized (have enough money) before taking on a project like this. We've learned alot about how to hire the right people and how to deal with the city. We are just getting started in our journey and getting better every day!

Sorry it's 1420 and 1419 S Main St

Hi Joseph,

The address is actually 1420 S Main. I may have mistyped that.

I actually work with Chrissy Hitchcock, you may know her. She has that property listed currently. Yes it's on land contract.

Why do you think my homes aren't selling?

Hi all,

I have a conundrum and trying to figure out what to do, so figured I'd throw it up on BP and see if anyone else had any thoughts :)

I own 4 single family homes in Kokomo, IN.  They were all purchased with a land contract - that means the seller stays on title until they are paid off.  In other words, I'm not on title until I make my last payment.  That's how it works in the state of Indiana.

Each of the four homes are in varying conditions.  I've rehabbed two of the homes which are in good condition.  Two are not rehabbed and in decent condition. I'd like to sell them at this point instead of renting them out.  I own 4 mobile home parks and don't want the headache of owning these SFRs anymore. I'd like to focus on my parks.

I've put them on the market, but the market has slowed.

Long story short, I haven't been very happy with my results after putting them on the market.  So I've started to consider different options.

I want to pay them off and put them in my name.  Then sell them under land contract to someone else.  There is a huge demand for people with a strong income history that won't or can't use bank loans to buy property.  These people have very little money to put down, but can demonstrate the ability to easily pay a good amount each month ($850).

What I want to do is pay off the balances on each, take title to my name, then sell them each on land contract to a buyer.  I can easily fetch a 20% higher price (or more) this way and get 8-10% interest.  These buyers don't care what the price is as long as they are extended a loan (with very little down) and can afford the monthly payments.  So for instance, for a home that I can sell retail on the market, I can fetch $90K, but I can sell it on land contract to someone for $120K.

So the plan was to get a bank to refinance the homes and cash out what I've invested into them.  Then pay the bank roughly $350 per month and collect $850 per month from the tenant/buyer.  I'd pocket $500 per month for each home and I'm not responsible for the insurance, taxes, maintenance, etc.  Great deal right!?

Problem is, the bank won't provide me with financing.  I've been a full time real estate investor for only two years and they are not comfortable with my income history.  This is a bank that works with a lot of investors, so they were my best bet.  

So I looked at hard money lenders, but almost all have minimum requirements of a $75K loan per property.  That's too high for these homes. Many also won't work with land contracts.

So short story long, I'm looking for private lenders to assist in this scenario.  It can be either short term or long, up to you.  I should be able to refinance after a couple years pretty easily if needed.  Happy to keep the loan going for the long term too, if that's what you're looking for.  Can provide a good interest rate as well that's secured by a nice single family home in a growing area.

Here are the addresses of the homes in case anyone wants to look into them:

1) 1420 S Main St, Kokomo IN

2) 1429 S Main St, Kokomo IN

3) 711 S Wabash, Kokomo IN

4) 210 N Indiana, Kokomo IN

Hi Jason,

Thanks for your response.

The big problem is that the person on the mortgage simply won't cooperate.


If she was cooperative, this wouldn't be a problem. So unfortunately I'm having to find another solution. We've already provided the mortgage servicer the grant deed showing the property is in my name.

so not sure what to do at this point. Trying to find a workaround.

Does anyone know how to pay off a mortgage when you're not on the loan? I have a situation where I did a creative deal and bought a home and convinced the seller to leave the mortgage on the property until I was ready to sell it and get it paid off.

Now that I'm ready to pay off the mortgage, the bank won't talk to me or tell me anything so I can pay it. Normally the seller can just give the bank authorization but the seller is completely unresponsive and not cooperating. So I'm stuck.

Any suggestions or experience with something like this?

I’m familiar with 21st-century, but from what I understand about their program, it is pretty difficult to qualify for.

The bigger issue is that the parks that I own don’t support the cost of these new homes. Meaning, the monthly payment on these new homes would be too costly for most of the tenants living in my park. So unfortunately there is not a market for them here.

Curious, how are you planning to infill your parks? It's the biggest task I have on my plate for the upcoming years and I have somewhat of a plan, but still trying to figure out the best and most efficient way to get good used homes into m parks at an affordable price.  

I'm even thinking about buying the vehicles and equipment to move the homes, so all I would need is the personnel to do it.  The transportation companies in my area (in Indiana) are not very reliable and I'm not even sure they do good work.  

Good used homes are hard to come by in my area, so I'll need to go out at least an hour or so to other metro areas where there are more available good used homes for sale at an affordable price.

Would love to learn how other investors strategies are for infilling their parks!

Oh boy, so got some news today from the bank.  I was able to purchase a 41 space park - 27 occupied with 14 vacant lots.  I close next week. 

I had to pay for an appraisal where the bank chose the appraiser.  Good news - the appraisal came in at almost double the value of what I'm paying for the park!

I completely assumed the bank would provide me with a 75% LTV loan. That meant I could borrow enough to wipe out the seller's current loan, and get maybe $100K on top to improve the park - and create even more value.

But got news today that the bank does not want to increase their exposure to the park more than the amount of the seller's current loan.  Even though that amount is close to 50% of what appraised value!

What gives?  I was really banking on those funds to use for working capital and without it, I'm kind of stuck.  

Any advice here?  Will it help if I approached local banks instead of using the loan from this larger bank?  Any other sources of financing to help me improve the park and maximize it's value?