All Forum Posts by: Elaine Hester

Ok, so it sounds like I need to instruct and verify with the title company before agreeing to lend. 

—And, if I did not do so initially, is calling the title company and asking the best way to confirm what position I am in? 

I am in California by the way if anyone happens to know if the laws are different here.

A second question is this: if a loan becomes due and the borrower is not ready to pay, but would like an extension, is there a recommended process for how to proceed (as opposed to foreclosure)? ...Is it recommended to put a clause into the contract accounting for this upfront, such as a penalty interest rate maybe—?

This sounds like a ridiculous question as I'm asking it, but I have heard of people thinking they are in 1st position when it turns out they're actually in 2nd ... since I am new to lending, I want to know what specific document or verbiage a lender would require to ensure they are in first lien position. Thanks for your help!

Lending ... and waiting for the next correction.

I use Zelle ... only problem is that $2,000 is the maximum per transaction, so two transactions need to be set up for each payment. @Mark Fries, does the Cash app have a transaction limit?

Hi BP—Since this is my first time doing a partnership, I need some advice on how to fairly structure the split....

I'm coming in with 100% of the required funds for down payment, rehab, and mortgage from my SD IRA and my partner is bringing the deal, his network of contractors and property managers, and his own time and labor to help with rehab basics.

In short, the property is a Florida duplex that we will likely lease as short-term vacation rentals. It will be rental ready after paint and staging, which I will pay for and my partner will provide the painting and staging services. Eventually we plan to expand the building to a 4-plex as there is plenty of room on the lot and it is zoned for multifamily. Although we will likely not use the property ourselves as we are in California, my partner, who lives on the east coast does plan to use it on occasion for vacation from time to time. 

We are planning to close next week (before Thanksgiving) and need to properly set up LLCs asap. My question is how to fairly split the partnership between the two of us given what each of us is bringing to the table. Any other advice/feedback is welcome!

Thanks in advance for your input!!

Awesome Travis! Thanks for getting this going. We are in Poway so the North County location is a bit closer. Looking forward to it once again!!

Hi @Jefferson Smith, I came across this post as I have essentially the same question and was hoping to find some recommendations for a SD IRA custodian from people who have actually done business with them.

I was in your position earlier this year and made a choice based on calling and speaking with a number of companies, as well as getting their rates. I found that what most offered in my area of need was pretty much the same across the board, but their rates varied quite significantly. I ended up going with what seemed to be one of the lower priced companies that is associated with one of the big real estate education companies, and came highly recommended by a large turnkey investment company that partners with them. We even met in person with the company's president and came to the conclusion that they seemed like a good choice.

What I found from actually working with them is that what they tell you and how they actually perform can vary quite a bit. The company I'm working with has missed stated turnaround times, failed to communicate on important matters, and let things fall through the cracks too many times already that I am tired of babysitting them and am now looking for a new custodian. 

Since the ultimate list of SDIRA custodians is so lengthy, and have proved that talking to them doesn't necessarily tell you how they will perform, I am still looking for recommendations from people who have actually done satisfactory business with the company.

Let me know if you find a company that works out and I will keep you posted as well if I find someone!

We'd like to connect with a real estate attorney here in San Diego who is also an investor, or has experience working with investors. ...For starters, I have a 23-page operating agreement for a land entitlement investment that I'd like to have someone look over to be sure it covers us as well as the company who is presenting it to us.

@Ronald Rohde, the reason I posted this was not to talk about a great no-risk deal, but to reach out for advice and help me to see the risks I may be overlooking, so for that I do appreciate your post. Because you mentioned my builder, I'm not sure you understand the investment opportunity ... selling to a builder is the exit strategy. The investors are putting up the money to buy the land, the PMs have already done the due diligence necessary to be sure the lots can be subdivided and are buildable and will take care of city approvals so the homebuilder, once he purchases can immediately break ground and get to work. They also have a list of interested buyers in place, some whom they have worked with in the past, so they are able to develop the land with their needs in mind.

Your suggestion that the CA housing shortage was fabricated is an interesting one that I have not yet heard of or considered. I certainly have a lot to learn, but my common sense tells me that just the fact that people are willing to pay such high rents is evidence enough of a housing shortage. ...For example, although still under-market because I want to keep my tenants, the rent on a little, nothing-special-about condo I own has increased by 56% just in the last 8 years. I know my tenants want to buy, but with rising interest rates and housing prices, that dream is getting harder to reach. I'm curious what you think the reason people will continue to pay those exorbitant rent increases is if not for a shortage of affordable housing.

@Ronald Rohde, you are also correct in stating that biggest risk is that the lots are not sold. An inevitable risk we all face as RE investors. Who knows what is going to be happening 18 months from now? 

The only holding costs I can think of would be property taxes. So, worst case scenario is a downturn in the market happens and we sit on the land for a few years. ...Of course it would suck if my money wasn't working for a few years, but it wouldn't be a total loss and I would just have to wait it out (as many of us have had to do before).

The upside is that this is southern California where we have a housing shortage, and the biggest demand in RE is affordable housing. By focusing on tract homes, this project meets that demand.