All Forum Posts by: Roy N.

Matt, I was leaning along the same lines as Michael.

I would not go longer than 3-5 yrs with a private lender, especially family.

Is there other, more traditional, financing planned for this property? If so, you should be able to pay it down sufficiently in 3-5 years, along with improving the performance of the property, to be able to refinance and pay the private note.

You indicate you have a 5.5% note for 30years. Is your term actually 30yrs, or just the amortization? {this is where my lack of intimacy with mortgages in the U.S.A shows}

Are you able to pull equity out of other properties in your portfolio and approach BoA, or another mortgagee, with a lump-sum pay down and refinance?

Is this property non-performing? Does it cashflow and it is simply a matter that you want out?

This will depend very much on where you are borrowing :) I just had a conventional mortgagee quote me 2.9% on a quad this week, but I'm looking for a private funding opportunity (at a higher rate) as I would prefer not to tie-up as much cash in a down payment.

Matt Liu:

The question is, will you have built enough equity in 3-5 years to enable you to refinance to repay the family member w/o having to put any other monies forward. I would perform that analysis and, it possible, put such a plan in-place.

Matt Liu:

It's a private loan, you can set whatever terms are comfortable for both parties. Is the family member insisting on principal repayment during the term or would they be content with interest payments and a return of principal at the end?

Christine Kwasny:

I must have misread your original post as I had the impression you were not certain whether extensive repair is necessary. In your later posts it would appear that a certain degree of replacement will be undertaken either by requirement of the local authority or for your own piece of mind.

You also indicated the Vendor is unwilling to entertain any repair prior to sale. Has she investigated the required repairs on her own? What is the possibility you will be able to use your {worst case} estimates to secure a price <=400K to provide you with a "what have we found now" buffer?

Jeff Cook

I'm with Paul, I do not see how the amount of depreciation taken by the current owner affects the deal ... other than the tax impact to the vendor.

Steve Might: Check your local laws. Here in NB, if I were to accept rent from a Tenant after their lease had terminated, the "default" month-to-month lease under the Residential Tenancies Act would be deemed to be in effect.

If there is a similar statute in your jurisdiction, you do not want to accept any further payment from them, but rather treat them as squatters and have them removed.

Christine Kwasny:

Bill is correct, a little charring on beams and framing does not necessarily mean they are not doing their job.

I have a victorian aged building - though it is not "Victorian" in style - which had suffered a chimney fire that travelled down the ballon framed walls to the first floor. I knew of the evidence of a past fire in the attic when I bought the place, but did not discover the extent of the damage until a later renovation. I too called in an engineer, my carpenter, etc. The two of them looked at the damage, pointed out the repairs that had been taken at the time and indicated the materials (rough sawn lumber, lath and plaster, square nails) used in the repair indicated the fire happened long ago (i.e. before the 1930s) and the building has been standing just fine since.

We did replace one header and a couple of studs - this was mostly for my benefit - and closed things back up again.

You may not need to replace all the charred structure.