All Forum Posts by: Joe Norman

 This is gold!

Thank you for pouring so much time, energy, and knowledge into the BP Forums @Russell Brazil! Your posts are always insightful and informative.

It depends the ARV and the cost to renovate, but on the surface I would say take the gift!

Good morning! Is this a rent-by-the-room situation or a true 4-unit?

Unfortunately you're not going to find a "chill underwriter" to get you around FHA guidelines, unless by "chill" you actually mean "commit mortgage fraud" which I'm sure you don't. FHA's underwriting rules are concrete and all banks have to follow them. If FHA is your only option, then you have to play by their rules.

You may have options, but as Devin points out it will likely involve a higher down payment and a different loan program. Good luck!

It doesn't matter what the MLS says, what matters is what your contract stated - was property to be conveyed in "Fee Simple" or "Subject to an Annual Ground Rent" (Section 6 of the Maryland Realtors' Residential Contract of Sale, if you used that contract).

If you signed a contract to purchase "Subject to an Annual Ground Rent" then you're probably SOL (although, to Russell's point, ground rents are usually no big deal).

If you signed a contract to purchase "Fee Simple" then I think your beef is with the Title Company. Sure, the Realtors could have/should have done more research to determine the current state of the title and to review the closing documents (some of that burden is on you, as well), however ultimately I think its the lawyer at the title company who had the responsibility to catch this.

A lot of people are assuming that the "seller will pay the buyer's agent" but that isn't always the case, ESPECIALLY when the seller is unrepresented (and therefore the property isn't listed on the MLS with a clear, publicly stated co-op agent commission). Another factor is that you've already gone way down the path of viewing theme and negotiating numbers, and so if you brought an agent on now they may not be considered the Procuring Cause.

As for whether or not you should bring on an agent to represent you, I would say that depends on how much experience you have doing deals. If you're comfortable with doing it yourself go for it, however if you have any uncertainty (and it sounds like you do) then I'd get representation (but, again, don't assume the seller is paying for it).

Good luck!

Keep in mind that subsidized tenants can use their voucher in any neighborhood (especially in states like MD where "source of income" is a protected class). In my experience they don't want to be in "rougher" neighborhoods anymore than a quality market rate tenant does. If you're buying in cheap/rough areas then you're likely going to be getting market rate tenants who, for whatever reason (but usually something in their criminal or rental background) can't rent in better areas and can't qualify for vouchers.

Nothing wrong with being a low-income housing provider as an RE strategy, just don't assume that subsidized tenants will be flocking to your units.

Good luck!

I'm not sure about what state you're in, but in Maryland agents have an obligation to present all communications from buyer to seller (or, if represented, the seller's agent). If your agent's broker is wary of seller financing then thats understandable since its their job to be cautious, but that doesn't mean that the agent shouldn't at least present your question to the seller/seller's agent.

My suggestion is to reiterate to your agent that you want to know if the SELLER is open to creative financing, not if her broker is.

I second Jay - I would look at the median home value in the neighborhood vs. the median home value in the city as a whole. If the neighborhood median is lower then the city median then there is a reason for it.

And, as many others have said, I would be very hesitant to invest out of state without making a visit to my target market AND having the ability to get out to the target market quickly if things come up that your team can't/won't handle.