All Forum Posts by: Beth Johnson

@Thor Fink

In my experience, properties with redemption rights don't actually transfer title from the original owner until the day redemption expires. At that time if the owner didn't redeem, the winning bidder gets the property and all the additional encumbrances on title as well.

I've bought two properties like this from owners prior to redemption (one was minutes before the Civil unit of the sheriff's dept closed on the final day of redemption). On both instances, the winning bidder only got the right to use they property during this period and essentially gets first right to purchase after redemption. The last one I bought, the bidder went in and made improvements that he didn't get reimbursed for because the courts didn't approve it. He wasn't aware of how this process works. He was paid back his winning bid amount plus interest owed to him for that period of time.

Not sure how it works in other states but this is why most lenders can't lend on properties that went through foreclosure with redemption periods.

@Jared Jackson

Is this OPM from truly private people you know already or is it from an actual lender?

Some private lenders are willing to do unsecured loans (though I don't recommend it) to people in their personal network so the funds can be used for earnest money deposits, down payment and/or rehab. The reason this is taken care of in advance is so that the money can be in your personal account and the lender helping to fund the remaining balance doesn't have issues with the source of your DP. Lenders want to see you have skin in the game and borrowed money for the down payment generally don't suffice making it challenging for they privater money loan to be sent directly to escrow on your behalf. So if a lender has capital requirements, you'd need to show proof of funds in your account before they proceed with funding your purchase.

@Tiffani T.  It's Hunt Jackson PLLC in West Seattle off of California Ave. That's the name of his CPA firm. 

@Blaine Vollenweider

Use leverage so your money is working for you. I prefer lower loan to values myself, to be more conservative in case of vacancies but I have around 55-65% LTV on all my properties. On the one I recently bought with cash, we got a 1st position heloc on it so that we can loan it out in private loans and arbitrage the interest income. We only have to pay what we draw on so when we don't have a private loan Auth someone, our heloc doesn't cost us anything. You could use the 200k to buy a couple properties and then get a commercial line against all your rentals to buy more or lend out as a private lender as well. This strategy helped us keep our second home to ourselves and still cash flow to cover our expenses without the hassle of turning it into a short term rental.

@Edwin Wong

Heloc all day, every day. You won't pay if you don't take a draw where a DSCR loan you will pay every month because it's a loan with a monthly mortgage payment. Most DSCR loans have a 5-yr step down prepayment penalties which I don't like personally and the rates have skyrocketed in the last few months making them a poor choice for most situations.

@James Park

I have a friend from Sacramento who lens on Indiana and he says it can get pretty complicated depending on the county. Apparently each county has different requirements but he didn't elaborate much. Finding a local attorney in IN who does real estate private lending is a smart idea. If you can't find one, Geraci LLP in Irvine sorts private lending businesses all over the country and could provide some helpful support and answers.

@Denise Holder

Your friend should pay the back taxes, keep receipt so it can be added in to the final payoff and talk to an attorney in real estate litigation about moving forward with foreclosure notices/filings depending on the promissory note and if it's secured against the park or not. If the loan is unsecured, he won't be able to foreclose so he'd have to do some sort of civil action.

@Tiffani T.

Reach out to Mark Canyon with Hunt Jackson in West Seattle. He's a real estate investor himself and supports a ton of clients in real estate as well.

@Nick Militello

Personally, I think money and family can get complicated but I've also done the same thing when I got started. A few things you should do to prepare yourself is learn about how to set up and safeguard a private money loan from a lender perspective. If your family sees that you are both knowledgeable and interested in protecting their capital investment, they will believe in you and your intentions more.

Secondly, do the proper paperwork /presentation about your investing strategy and potential project /property so that you can go into the discussions prepared. We often make more assumptions when it comes to personal relationships but business is business so go into it that way. Documentation is critical to cover any of the what-ifs scenarios that could happen and strain relationships, if not discussed and written down in advance.

Find an attorney to help draw up paperwork so that it's done the right way for both parties involved. I have a few blog posts on BP about the subject and what to do that may be helpful.

@Richard Phillip Lewis

It's going to be better rates when it's a primary home so being viewed as a single property with rental income could be to your benefit.

Just did a heloc on our second home and lend that out in private money loans (arbitrage as the other commenter mentioned) so that we can create a positive cashflow and allow us to pull funds if we find another property to purchase. We got our heloc through East West Bank which is strictly asset based and not DTI restricted but it only went up to 60% LTV which we liked since we don't need or want high leverage. So call around to local banks and credit unions to find this option. 2nd position helocs are a little more in interest rate but still very worth looking into.

Hope this helps!