All Forum Posts by: Jerry W.

I am also blessed to live in a small conservative town.  I am showing a property tomorrow to prospective tenants and I am just leaving the door unlocked.  It is right next door to my personal residence.  There is nothing but appliances to steal, but we have not had 5 house burglaries in the last 5 years.  Most of the breakins we have had were things like liquor stores, and they were wild kids out for the booze.  I prefer to be present for showings, but have never had a problem with unlocked doors or unescorted showings and have done them for at least 12 years maybe more.  A lot will depend on your crime level, tenant base, and how well you know the prospective tenants.

Well you mentioned several options. One option is the relative buys the property and sells it to you on a contract for deed, another is the relative loans you the 20% down and is a co-signer on the mortgage so the bank lends you the other 80%, another option is you partner on the deal and make arrangements for the relative to get paid back over time, another is your relative buys it and you buy an option to purchase from him, another is that your relative buys it, he sales it to you and takes a second behind the banks mortgage when you get financing for the 80%, you can do a master lease agreement, you can form a an LLC or a corporation and have him buy it and guarantee the loan and you buy the company from him, you can do combinations of all of the aboce. Hope that helps.

@Jacob Henderson, one thing you need to keep in mind if you only paid 3.5% down you are a type of loan that requires you live in the property for at least 1 year.  There are some exceptions but I see none in your case.  So if you move in less than a year bad things could happen.  

As to financing the next duplex, nearly all of the scenarios you mentioned will work in some fashion.  Now with a $100K purchase price and $1,300 per month in rent you should cash flow.  The problem is that you need at least 20% down and maybe 25% in order to get conventional financing and pay the loan money back.  Do you have a source of income to save from or do you need to generate it only from the property?  I have found that when you use a 15 year amortization you will pay the property down about 20% in 5 years.  So if you only use the property income you will be looking at 5 years minimum  If you are currently living free hopefully yopu can save up some serious bucks to put toward buying it.  once we have those figures we can better advise you.

@Patricia Luna, just out of curiosity have you tried buying your neighbor's half of the property?  If she doesn't have money for repair maybe she would be willing to take some money and turn it over to you.

@Taylor Smith, there is a lot we don't know about your potential deal.  Is the negative cash flow figured with you living there free?  Is there a potential to increase rents and become positive cash flow?  How fast are properties appreciating there?  What is the area?  What are the specifics on the deal, how much is asking price, how much is rent for each unit, are utilities included, how much work does it need, what is the local rental demand, ?  Where are you financially?

Unless specifically prohibited you can pay off the land early by a refinance.  The big problem with these were huge balloon payments coming due that buyers caould not pay.  That is a big Dodd/Frank issue.  Usually these are done with low money down deals and the buyer has a balloon payment in 5 years, but not always.

I like purchase contracts.  It can help the buyer too.  If you default they just get the property back, no default judgement from a low auction sale like banks can have.  Getting the property back is much cheaper for the seller.  There is something for both parties.  The fear is Dodd / Frank issues now, but they can still work.

OK, I hae done over a 100 of these, but your state laws may differ.  Here is how it would work in my state.  First taxes are the same, it is my understsanding you do not get to subtract depreciation, but ask your accountant.  You do not own it, the other person does.  You sign the contract, their is often an escrow account set up to mintor payments,  The escrow holds a quitclaim deed from you to the sellers, and a Warranty deed from the Sellers to you.  If all payments are made they give the deeds to you to destroy the quitclaim deed and file your warranty deed.  If you default they give the deeds to the seller and he destroys the warranty deed and files the quitclaim deed.  A memoranum of sale is filed under the legal description at the courthouse showing you have entered into a buy sale agreement with the seller and lists both parties names.  This is to prohibit the seller from getting a mortgage or selling the home to someone else because the title is clouded by a prior filing.  The quitclaim deed or warranty deed filed later will clear this.

@James Wise, my dad always said never argue with a fool.  Someone passing by might not know which one is the fool.

@Stanley Bronstein, I understand completely. Educating stupid people with fines and jail has funded both of my kids through college and then some. It amazes me how many people believe that their opinions have any value when their entire basis is well I believe this. What is the basis of having attorneys and brokers if you disregard the advice of everyone posting. Why would you spend vast amounts of time and money to start a business that is illegal when you could do it legally? Anyway the original poster here is smart enough to know the difference between correct advice and completely baseless completely incorrect advice. While bad advice happens all the time this is dangerously bad advice.