All Forum Posts by: Kaiser J.

Thanks @Chris Seveney, that insight is very helpful. I expected this to be tough but 25% is even more steep than I anticipated. We will just use our own cash.

I am under contract to purchase a 12 acre parcel of land in Kings Mountain, NC that is zoned mobile home park. It currently has one very nice manufactured home on it.

My plan is to subdivide the land to create somewhere between 14-20 parcels. The existing nice home will be one of those. I will clear and grade the remainder of the land, run a road, water lines, and install septic tanks on each lot. We have already met with the zoning department and they have provided verbal support for our plan.

For exit strategy I will either sell the individual parcels to a manufactured home dealer, or install manufactured (such as modular) homes on each lot and sell them individually to owner-occupants. The latter is quite capital intensive.

An alternative exit strategy is to install manufactured homes on each lot, rent those out, and then sell as a mobile home park. This is not my preferred route because I already own some other parks and try to diversify my investments.

We have the cash to close and do this deal, but would prefer to explore financing options. A traditional bank is not the best fit for this type of project. Has anyone worked with a specialty lender that is established and that may be interested in exploring?

Thanks!

I use TransUnion Smart Move for background checks. It's very easy to use. You simply send the applicant a link and they authorize the check and pay for it directly to TransUnion. The results are sent to you once they are complete.

Your lease should be state-specific.

Is the home in your personal name? If so you won't need a business banking account, since it will be your personal name on the lease as the lessor. Just make sure to update your insurance company to let them know it will be a rental property, so you can make sure to have the right coverage going forward.

Generally OK at $50k (as long as it's less than a certain percentage of account assets) if it's for a primary residence, and often repaid on a 20yr amortization schedule. Biggest potential risk is that the loan may become due if he leaves the job, whether voluntarily or involuntarily. So, if your friend does not have enough other liquid assets then it creates a situation wherein he could be laid off, the loan comes due, and he cannot obtain a mortgage to source funds because of a lack of employment.

Agree that people should not be asked to work for free, but if you make that connection they may very well realize (independently of you) that they have undervalued their home and may be better served by using a realtor.  

Does your state have a Realtor standard Offer to Purchase and Contract, or comparable?  I am currently under contract to purchase my next door neighbor's house and we did not need a realtor involved.  The closing attorney sent me all of the Realtor standard forms and we filled them out together - these forms are readily available and you do not need to be a realtor to use the template.  The neighbor and I are both comfortable enough to do this without a realtor involved so it was fairly straightforward.  Not sure what an attorney would add that is not already (or cannot easily) be included in the standard template that all closing attorneys will expect to see.     

If it were my parents I would ask them to at least suffer through a pitch from one realtor before they decide to list on their own.  No downside to them.

If you don't plan to pursue the lost rent then you can sign a lease termination agreement.  You and the tenants will each sign.  That way, you will have properly documented that the tenant voluntarily vacated and you will ensure that they don't come back later with a claim that they are still entitled to live in the property.  You should be able to relist once that is signed. 

I do not think you need to be worried about Venezuela/Zimbabwe-type situations.  Hyperinflation tends to come as a result of a collapse in the local currency which causes obligations (e.g., debt or imported goods denominated in a foreign currency such as US Dollar) to grow when expressed in the local currency.  That's a common challenge for emerging market economies, not developed market economies.

Also, there is no money printing anymore.  The Fed is actively shrinking its balance sheet by selling assets, which reduces the money supply.  This is part of the effort to get inflation under control but the impacts are often observed on a lagged basis.

Based on your description of the situation she will not likely need a down payment. If it appraises for the market value you describe then she can apply for the $120k loan, with proceeds distributed to her siblings. The siblings can then remove themselves from the deed. All of this can be done at once, with the attorney that closes the loan. 

This will leave her with a monthly mortgage to pay, but it sounds like she is comfortable with that from your other scenarios. 

 I see.  Thanks for the explanation, and makes total sense.

Both of these are viable alternatives. Selling the owned property first is a regular 1031 exchange, whereas buying the new property first is a reverse 1031 exchange. Just make sure you work with a qualified intermediary and CPA and you should be fine.