All Forum Posts by: Jonathan Holmes

As far as I know there is no way to structure a subject to with violating the due on sale clause. Unless you assume the actual loan but that’s a different concept. The bank does not have to activate the due on sale clause. Many people swear they never do. Anytime ownership is changed without the loan being paid in full the due on sale clause can be triggered. If you buy a sub to property and the loan is called due you need to have cash on hand or financing available to pay the loan off. Otherwise the seller can take a hit to their credit and the house will be foreclosed on. It would be immoral for an investor to allow that to happen.

A few thoughts: 1. Most larger banks will not do residential loans to and LLC. They can not be sold on the secondary market. (Noncomforming) 2. It shouldn’t matter if you have only one person on the mortgage but there will be additional documents to sign for the none mortgage holding owner. Basically giving permission for the lien to be placed. Might have to shop around a bit to get this done. 3. I’m not sure what you mean by handle the property owned jointly with one person on the mortgage. Keep both on title and write up a contract for who is in charge of what aspects of the business. Both of you sign and when some one forgets smack them in the head with the contract.

1. Market dependent. I would be surprised if there was any House in the city I live in that rents for over a thousand. Not a war zone just rust belt. A better way to put it in my opinion is the lower the rent the better you have to manage. 2. Again market dependent. However a good deal would look “too cheap” by this reasoning. We all want good deals. You need to know the neighborhood. Is it working class? That can be fine with proper screening and management. Is it worse than working class? Then you are looking at a management intensive situation requiring a high quality specialized manager. Make sure your rehab is appropriate to the level of rent you are receiving and in line with your market. 3. 2.5-3x rent in monthly income. Run a credit check I think above 600 is acceptable but it’s more important to have good payment history over the last few years. No evictions, felonies or any kind of possession charge on the background check.

Firstly you need to identify your goals more clearly. All of the options you put out are valid but without knowing your goals it’s impossible to decide. If this property is cash flowing and you want to be a buy and hold investor then why sell it? If you want capital for a new project then as long as this property still cash flows (including expenses) after then a HELOC is a fine strategy. 10-31’s are complicated strategy and you should make sure to have an experienced person walk you through it. Hard money lenders are usually experienced investors who have more money than time but know how to spot a deal and know people they can trust to lend to. Does that sound like you? Personally I would work to pay the 7k off out of pocket, then when I had identified exactly what I wanted to go after and being sure I would cash flow with the HELOC, I would pull the equity and make another purchase.

This is an odd set up which I assume may be common in other areas. In my area I have an owners account which the property defaults into when the tenant shuts off service. In this way I could look up online and see whether they switched service and when. If it was my unit I would pay the bill and not worry about it. Compared to what you have already lost and the negative of having prospective tenants walk in to a unit with no electricity it’s really your o line option. Also as a side not I am curious if you have ever had success when suing a tenant. I always hear it’s a dead end street. I’m sorry for your troubles and I hope your next tenant is a good sort.

Check your agreement first off. Second I would request some kind of copy of receipts and pictures of the damage before and after. They could send that all via email should be an issue.

I am not sure if this is an option for your situation but in my area the county will make a deal where you pay 10% up front and have a scheduled payment plan for the rest.

In general your national banks will have a 50k limit. Look for local banks and credit unions to go under that. I talked to a local bank not so long ago and asked if they had a minimum loan amount and the lady on the phone seemed like she had never even heard of the idea. Just because there is no ground does not mean it has knob and tube but it is a real good indicator. You should be able to look in the basement or attic and see. I own a property that does not have the ground in every outlet but isn’t knob and tube. I hand out converter plugs. As long as you have a decent amp service at the main (100 to 150 is common in my area) it’s no big deal. That’s all depending on whether it is knob and tube which is ancient or just older wire that didn’t have a ground. I would look at the fuse box to see if it has modern breakers and what the main service is. Then I would look around for any knob and tube. (Sometimes people wire it right to new romex) If you find switch operated breakers and no knob and tube go ahead and complete normal due diligence. As for being a deal that is up to you. Does it meet you criteria for an investment property? Is the CoC return inside you acceptable range?

I would say it is probably just not a deal. However, if you could offer all cash, wave all contingencies and a quick close they may decide to take a lower offer. In order for me to get excited I need three things from a seller. Motivation to sell (taxes, inheriting the property etc), close to correct pricing ( if they value the property at 100k more than I do we can’t deal), and a reason that the owner occupant market is uninterested (needs work, to many units). For every one of these that are missing it’s hard to make a deal. Working with this criteria I would say your suspect property is not a deal. There is little to no motivation. They value the property higher than you do and being a SFH with a mother in law suite the owner occupants will consider bidding on it.

I have used first class for mailings but I mail residential. Occasionally I will have a letter returned as undeliverable This is included in the first class price. This allows me to either stop mailing that owner saving me some cash and look for alternative methods of contact. You don't get that service with standard mail.