All Forum Posts by: Kyle Deutschmann

If we buy a foreclosed house from the bank, but the house has a solar lease on it, do we have to take over the lease?

I was planning to buy the house to prevent it from foreclosure but decided to pass it after reading its solar lease term carefully.

The term says that the owner must pay for all the electricity the panel produces. This is an 1190 s.f. house. and the panels produce about 1000kwh a month. sell is paying $200 a month no matter whether he uses the power or not! I can't take over this lease as a rental. I will pass on the house and let it go foreclosure, but not sure what happen to the solar lease after it's foreclosed.

I hope the foreclosure will get rid of this solar lease, then I can contact the bank directly. I am usually for solar, but this one is excessive. If it produces 400kwh a month and I can pass it to my tenant, but 1000 kwh, no way, unless the tenant has an EV.

 I’ll 2nd @Kyle Deutschmann that in my personal opinion the actual risk adjusted return is much better in either canton, fells point, federal hill or Hamden or frankly Baltimore county, there are extremely cheap houses in Baltimore that look good on paper but pretty much everyone I know who has one has eventually sold it off, difficult tenants, high turnover and frankly even you have good coc return the actual dollar amount are pretty small. 

 Currently live and work in DC - was curious about Baltimore area since people are practically giving away properties there. Which side are you investing on and are you doing BRRRs, turnkey, or section 8? 

 Hi Kyle,

I'm looking for a DSCR loan. I just sent you my number via PM.

Thanks.

 4 months to start (CFPB 120 day rule), then state specific for sale so, in California, another 3 months for the publishing period, then 21 days for sale notice so, about 7 months once I catch you, best case, meaning, i probably wont' catch you right away and when i do,  i send a demand to the original borrower to tell them they have 30 days to put it back, then i start my 120 days acceleration period after that. If a person can't get a deal flipped in that time, probably should be in a different line of work.

Conventional lender.
The mortgagee clause and loan number don't hurt but, the "insured" changes. That's our "aha" moment.

 Hehe....long time Tom!

My two cents as a lender - I still call them every time I catch them. How do I catch them? I catch them when they change the name and/or mailing address on the property assessors tax role. Why? Because I (I, meaning as a lender) monitor the property for taxes to ensure they are being paid (Assuming I'm not paying them through impounds). I also catch them when they (The buyer) get insurance. Why? Because I also monitor the insurance to make sure I'm the mortgagee, and that there is adequate coverage acceptable to me, and that the deductible isn't too high. I catch them when the payment changes and the buyer isn't aware because they aren't the borrower. I catch them when the mailing address changes. I catch them when the buyer tries to set up automatic payments from an account that doesn't match borrower name. I catch them when i'm skiptracing and get in contact with the previous owner where they disclose they sold the property Subject to, in violation of the terms of my note.

Why do I care as a lender? Because the buyer isn't able to get any information on the loan and isn't compelled to comply with the covenants of the loan because they probably don't want to and because they don't know what those covenants are. Because I more than likely pledged that loan to FHLB and I can't pledge a loan where my owner is different than my borrower so it puts me out of compliance with them. Because many of my loans are sold to investors (Including Fannie/Freddie) that also have issues with owners not being the borrowers and by not enforcing my DOS, I'm out of compliance with my seller/servicer agreements. Because a Sub To is a violation of the note and DOT and I subject myself to fair lending and UDAAP scrutiny by not enforcing the note. Because @Corby Goade has some good points that people get involved with these deals and know just enough to get in to trouble and when there is trouble, they get to walk away from it with little exposure/liability and leave a path of destruction in their wake if it doesn't work.

 This question is asked and answered (incorrectly) IMHO on here daily. 

Every title company is happy to do creative deals, they just don't want to work with people who create problems for them. Here's how it normally works:

-New investor finds an assignment contract online, downloads it, has no idea how it works or what the terms of the contract are. 

-They find someone who agrees to sell them a property sub to or OWC, everyone signs the crappy contract, no one understands what they are doing. 

-Buyer sends the contract to their "investor friendly" title company.

-Seller's cousin, sister, neighbor, kids and their high school history teacher all find out that the seller is "being taken advantage of and having their property stolen by a sleazy real estate investor."

-They all start calling the title company, showing up, threatening legal action, etc. 

-Title company tells investor that they don't want to work with them any more. 

-Investor thinks the title company doesn't do "creative" deals. The reality is the investor is throwing a huge liability at the title company and the juice isn't worth the squeeze. 

If you are honest, knowledgeable and humble, any title company will work your contracts. Proactively reach out to escrow officers in your market, buy them lunch and ask them questions. That'll be the best up front investment you can make. 

Finally, people will tell you that loans NEVER get called. I've heard of a few happening recently and a friend of mine just had one called on a sub to deal last week. It can and does happen, so plan accordingly. Assumptions are infinitely better for everyone than sub to if you can make it happen. 

Best of luck!