All Forum Posts by: Kevin Yeats

Karin, bankers worry every day until the loan is repaid. Generally speaking, lenders want to see a clear path to repayment of the outstanding loan.

Your partner's credit score certainly is high enough. The next issue is collateral. Bankers will also look at how long it will take for you/your partner to repay the loan. This is not only how long it will take to perform the rehab but how "hot" your market is. The big what if question is "what if you find more problems with the property and it does not sell very quickly?"

The good news is that there are plenty of very experienced people here on BP that you can turn to for help.

Did your parents have any life insurance on which you can collect? Any other assets - bank accounts, stocks, bonds, or mutual funds that you can sell quickly? Such funds can be used to make up any deficiency in mortgage payments that occurred over the past few months.

I would make VERY careful consideration as to whether you and/or your partner want to put the equity in your personal residence at risk to fund your investment property.

This strategy is doable but certainly contains risks.

I'm sure there is a story there ... and not a happy one from your perspective (the property owner).

I know if you want to share the details, you will.

I just ponder if this had happened to a relatively inexperienced property owner on perhaps his/her third or fourth deal, that this experience would have bankrupted the property owner.

Yes, there is risk in every type of investment.

Justin, this is the week to be thankful. I know that is a very difficult task right now but think about what you DO have. You have your mother and your sisters and they have you. You have the ability to pursue other options and to try again when something that you tried did not work. You have the ability to ask for help just as you did by posting this message. Be thankful. Believe it or not, lots of people would be thankful to have a mother and siblings around.

As for going into real estate, Jon Holdman gives great advice as he does for you here. You and your family need some certainty and that cannot be found by a newbie in real estate.

Look for anything and everything that you can do to make money. ASK ... ASK ... ASK. Expect a lot of "no's." Grow some extra thick skin.

If you are a person of faith, turn to that faith. If not, that door is always open.

I will say a prayer for you and your family.

Steve Babiak, thanks for the clarification. All the more reason to consult an attorney rather than relay on lay people for guidance.

Ibrahim S, I stated that I was NOT an attorney and I only stated my understanding.

From reading your post, it really sounds like we are saying the same thing.

I'm no lawyer and clearly some of your questions are legal questions.

What follows is my layperson's understanding If you purchased a second position note you have very little autonomy to take action. Hence the term second position.

If you wanted to take action such as foreclosure or leasing the property, YOU would have to satisfy the first position noteholder first. If you wanted to foreclose, you would first have to compensate (fully of partially) the first position noteholder before taking action.

The first position noteholder however could foreclose on the property, sell the property and if there are any monies remaining after completely paying off the first note, you would have first claim on the remaining funds.

Many times, second position noteholders get NOTHING.

Talk to someone experienced in second position notes (I am not) AND talk to a lawyer.

NONE OF THE ABOVE CONSTITUTES LEGAL ADVICE.

Jeremy, I have to wonder what documents you signed in regards to all of these properties and partnerships.

Did you read them before signing? If you didn't understand any of all of those documents, did you meet with a lawyer who represents you and your interests to have the documents explained to you? Did you think through all of the possible scenarios ... falling home values, insufficient cash flow, breakup with partner, rising taxes and other expenses ... and determine that the future rewards (operating profits and capital gains) were worth the risks?

I also read in your messages that you seek to claim the part of the victim and are therefore not responsible for your current situation.

To answer your question, I suggest that you gather every document in your possession regarding these properties and your partnership and meet with an attorney. Expect to pay a large retainer.

@Jeff S you have hit Step 3 & 4 as I outlined above ... Planning for the distribution of wealth during one's life time and Planning for the distribution of wealth after one's life time. Both have lots of "moving parts".

The effect of income on Social Security payments ... prior planning may reduce the amount of income during one's working life and thus reduce the amount of taxes paid on Social Security earnings during retirement.

As for leaving "cash in the bank," is that the best route if there is a desire to leave a legacy? Do estate taxes as well as income taxes come into play after death? What is the best way to transfer accumulated wealth to desired recipients (spouse, children, family and charities) to maximize the amount transferred, minimize the cost of that transfer (and planning) and perhaps minimizing taxes.

Lots of people make no plans and Uncle Sam (and sometimes the state) end up being a major beneficiary of this wealth.