All Forum Posts by: Victor Menasce

A lease option and a mortgage assignment are not the same thing. A mortgage assignment can violate the change of control terms of a loan agreement or a mortgage. A lease option on the other hand consists of two separate agreements, a lease (no problem), and an option to purchase at some point in the future (no problem). A lease option can be done on many types of properties. I've just recently negotiated a deal like this on a large commercial property that will be a development site for a mid-rise to high-rise building. We don't want to take ownership until we know what the city will allow us to build in terms of height and buildable area. In the meantime, we want control over the property and the ability to manage things. One such mechanism is to take a minority position in the entity that holds the property (say 15%). That's not enough to trigger a change of control. You can then ensure that any decision of consequence such as sale, refinance, issuance of shares, mortgaging requires a super-majority vote of 90% of the shares which effectively gives the minority shareholder a veto over any decision. That's not the same as full control, but it's the next best thing. 

Hope that helps.

I've done a lot of townhouse designs. It's unusual to have such a square aspect ratio in a townhouse. I don't think you will realistically get two cars in the garage, especially with the door swings as drawn. The dimensions don't work in my opinion. I have a lot of questions. What drove the width of the units? I believe you could get 6 units in the same width if you're willing to go a little deeper, but that depends on your lot depth and your zoning rules. You're consuming a lot of width which means perimeter space us being used for bathrooms and stairs which can be placed on the interior. Bedrooms require windows and need to be at the perimeter. Perimeter space is the most valuable and it's being used for lower value features.

The party walls can be insulated with either cement block or staggered studs with double drywall and resilient channel. This does an effective job of eliminating noise transfer. I have an acoustic noise and vibration engineer on my team who specializes in these designs. 

I'm also concerned that the building code will interpret the roof deck as a 4th floor and will include that space in the travel distance calculation for fire exit. I know you're on the outside of the building, but the code may treat it as interior space which would force you to provide a second means of egress with a shorter travel distance. The cost and space of a second stair tower could break the design. I'm happy to share some ideas with you if you're interested.

Check out Ventana Asheville. This area is just on the boundary of Asheville and Woodfin. It has beautiful amphitheatre mountain topography. There is also a new development along Riverside Drive that should be opening up soon. I don't know if they have started advertising yet. 

The solution varies by legal jurisdiction. In many places, this information is public and you can look it up on the county tax assessor's website. Some states and provinces have greater privacy and keep the information in a private database. Some places require you to pay a fee to get access to the data. In areas with greater privacy, a lawyer or title company who have a subscription to the title records can often look it up for a fee. What state are you looking for? 

Quit Claim Deeds do not carry title insurance. Title insurance protects the owner from defects in title. This defect could be something as simple as a measurement error in the survey, to a more serious claim (ancient native burial ground). Some title insurers won't insure if there is a break in the chain of title insurance. A warrantee deed is the more common form of sale and the seller warrants that the buyer is getting good and marketable title as evidenced by the title insurance policy and title report that are delivered as part of the purchase. A Quit Claim Deed makes no such warrantee. Most banks will not lend against a property that doesn't carry title insurance.

We recommend purchasing land with cash (equity) rather than debt. This is because delays can happen and bridge financing is short term. Land doesn't cash flow and lenders will give you a very low loan to value ratio. If you can raise half the money, you might as well raise all the money. You then can put the land up for collateral as you get the construction loans for the horizontal and vertical construction. 

I have several partners in both Dallas and Tyler. We also have development projects in Houston and surrounding areas. I've been to Tokyo over 20 times. What are your goals? Message me directly and I may be able to point you in a helpful direction.

Why would you want a C or D property? Do you want to spend your time chasing rent payments, dealing with unexpected repairs, managing the eviction process? These properties look good in a spreadsheet, but terrible in reality. I've never lost money on an A-Class or B-Class property. I've only lost money in C-class.

Think about it this way. The agent has off-market properties. The seller has entrusted the agent to sell these exclusively without listing them on the MLS. The agent is trying to qualify who the buyer is before spending a lot of time and effort with the buyer. Any smart agent would do that. They may ask for proof of funds, or pre-approval from a lender before even agreeing to show the property. No sense wasting time with a buyer who could never purchase the property. Does that make sense from the agent's point of view? While an assignment of contract is legal, some lenders won't fund a loan for an assigned contract, and some title insurance companies may not insure title. There was so much wholesaling activity in the past decade, that some members of the "old guard" industry have tried to implement procedures to make wholesaling more difficult.

There are two flaws in the model. The first flaw in your analysis is in properly modelling the expenses for a short term rental. Short term rentals are very management intensive. The cost for professional management is usually in the range of 25%-35% of gross income. There are daily costs for supplies which are not included in your estimate. The second flaw is that Palm Beach County is still in the process of implementing regulations governing short term rentals. This includes the payment of hotel bed tax, and the registration (licensing) of units with the county. Until the rules are tested in the courts (currently there is a law suit), you don't know what the rules will be. Some communities have outlawed "ghost hotels" in areas that are zoned residential, since this is really a commercial business in an area that is not zoned for that purpose. While there are other properties operating in the legal grey zone, I'd be very cautious about investing a large sum of money on the assumption that the rules won't change against you.