All Forum Posts by: Jesse T.

If you are in the "expansion phase" the flexibility of the 30 year mortgage is generally worth the interest higher rate.  If paying off early is a goal, you can always increase the payments.  Even if you start out with properties in good shape, you will need reserves for repairs/capital expenses.  The smaller payment will make it easier to maintain/build those reserves.

 I agree that he is trying to take advantage of the situation.  I think he sees it as his only chance to get paid by you.  I think with you being a remote investor he is more willing to risk his reputation for a quick buck.  He would have been reasonable if he stated up-front that he would need to charge based on the situation(no ownership and out of town investor).  However absent any advanced agreement, I wouldn't be inclined to pay.

Are you working with a local real estate agent?  If they can't point you in the right direction for contractors, it might be a good idea to find one that can.

You are probably better off using the money as a down payment for a Real Estate investment and/or reserves. While HELOC can be a great tool for financing real estate, they often are least likely to be available when you need them.

If this is separate from your real estate investments, in today's fixed interest rates I would be inclined to increase a stock portfolio rather than paying down mortgage debt.  Assuming you have a reasonably long investment time-frame.

I would be inclined to focus on the 5 townhouse property.  One caution is a property that size will have a limited market since it won't be able to get residential financing.

The quadraplexes look to me like a pure appreciation/speculation play - I wouldn't want to be highly leveraged on those. He probably would do better to sell them on the MLS and re-deploying the proceeds. He is at 60% equity on those with his loan being paid, so he is in a less risky situation.

Do you know investors who might be interested in the deal you backed out of closing?

I wouldn't expect any money back, but it could help your reputation.

I think this situation will give you an interesting test of the agent/broker.  It shouldn't be enough to make/break the deal for any one involved.  If you get the impression they feel entitled to the full commission on the houses you will be buying AND they aren't inclined to help you close on the property with issues - you probably want to take your business elsewhere in the future.  

Given your time frame, I would keep money separate until you are married.  Flips actually would be pretty easy to do separately(all though at a lower price point), just have one of you handle the finances on a project.  There is nothing to say you can't work together on it - especially since ultimately you will share the benefit.  There are a couple ways to do it - have the partner with the deeper pockets finance, alternate between projects or pick the partner with the lower tax bracket.

If you can acquire buy and hold properties in the short-term, you might be able to use your separate finances as an advantage.  You could each separately acquire the max number of properties via conventional investor financing.  That is a pretty aggressive expansion, so just because you could do this doesn't mean that you should do this.

I would hold off on Multi-Family properties until your finances have been joined.

What are your costs related to the property that fell through?  How much commission is your broker getting on the total deal?  They might be able to offset some of those costs with a reduction in their commission.

I think your best approach would not to blame and feel like you expect a full refund, but to present it as a problem(this money I am putting in to the deal that isn't getting me anything in return) and ask if your agent can address it by talking to his broker.

You should also offer to tack whatever amount they offer onto the standard commission if they are able to get you the house.

I think you will need a better loan for the numbers to work.  Your projected time frame seems optimistic even for the "worst case".

Are you going to do a 1031 with the proceeds?  Usually that isn't an option with a flip, but since you improved it after it was established as a rental/investment property it might be an option.