All Forum Posts by: Nicholas Covington

 I would like to know if this truly still stands as the property is technically owner occupied. If no lease is drawn for the friend to "live" with the owner like the tenant above than this seems to be a home that is cohabited with the friend helping out with the mortgage.

Now I am by no means trying to spin the situation, but based on you saying that you have had investors get nailed for not disclosing rental income where they living in the home as well?

A gift situation? No not at all. But means of stated income?

Hello @Breton Van Syoc,

Seems like you are in a tough spot as it would be a little easier if you were still a wage earner in the same field. I am going to assume that you already tried to qualify for a lender and were turned down, if so did you by chance ask your LO for any advise? Potentially you could come back in 4 months and try again with some success as some lender will go with just 12-18 months of stable/increasing income.

I am having hard time picturing someone with these qualifications being denied by someone because of a small gap, but rules are rules I guess. Is this for your primary residence or investment with 20% down? Only other thing I could see helping is having a good chunk of money to be used as reserves... but that's up the discretion of the lender.

Best of Luck,

Nick

Hello Javier,

That is quite a situation you are in. In regards to having a exact answer for you, I don't know would be mine. But some advice would be to contact that police and ask for their advise because at this point you might be already in the mix for knowing house a criminal (if she is truly guilty). They would probably have the best advice for you. 

As far as the landlord side of things, she technically has not been found guilty of the crime and therefore being a tenant of 5 years I would like to give her the benefit of the doubt if you have not had any issues. Going through the eviction process could turn out to be costly from fees and any damage that might be caused from putting a tenant in distress. I would assume that it would be easier to deal with her belongings than going through the whole eviction process. Lesser of the two evils. Not sure if you can evict someone while they are in jail, which might be easier since they won't have the chance to do any damage. Depending on the rules for your state, you might not have grounds to evict her, but as a month to month lease term you will probably have grounds to just not renew her lease.

Best of Luck,

Nick

Hello @Michael Doll,

My question back to you would be what do you plan on wanting to use this "gift" for? Are you talking about for tax purposes? If so that would be a question for an accountant for sure as there would be different classifications based on your state.

I think I am slightly confused, as if your friend is "gifting" you money each month it would be a deduction on their end if anything. But I am fairly certain it doesn't work like that in any instance since they are not providing to a charity/non-profit.

Now if you are talking about funds to use on your next home purchase, then no it cannot be counted as a gift. Programs (generally) state that any gifts must be from a qualifying immediate family member. You are best off just putting the money in a savings account and letting it "season" for your next purchase.

Best of Luck,

Nick

Hey Jameson,

I'm sorry about the hassle it seems you have been put through, but I am sure you will take it as a lesson learned. Like everyone else has stated you are better off next time just saving the headache and chucking it as a loss. Without proper documentation that is very little that would hold up in court that would be worth the time or money. And honestly if you didn't want to go to small claims court, i doubt you would find someone willing to take your case.

People go to school for plumbing, HVAC, electrical, foundation, ect... these people should all be licensed when coming into your home. It's worth the price, as you can see, and insures the value of your home. There are plenty of stories where these contractors come and do work and end up not following code. The owners then have to come out with more money if they want their home to pass an inspection to sell later down the road.

I encourage you to see if its possible to report him to the IRS or at least give him a bad review so that others don't have to go through the same thing. But who knows maybe, that will be their learning lesson too. Better to only have paid 600 than the full 3k, right?

PS: "under the table" = red flag. Unless its your trusted friend, there is nothing professional about "under the table." I am even skeptical cutting a check with a personal name on it and not an actual company, especially for large amounts. Mario, my lawn care guy is the only name I will put on a check for a professional service.

Best of Luck,

Nick

Hello Kevin,

To start off I would say to go back to your realtor and ask them to pull more comps for you if you aren't satisfied or explain why they used them in the first place. That might give you a better idea of where they are coming from. They would be the best professionals to tell you, second to the appraiser of course. In regards to the "line item" adjustment for the difference in rooms, it would be taken from the $ per sqft. So if one of the bedrooms is a 12x12 (144sqft) and the market value of the home is roughly $60 per sqft, you would be taking $8640 off to bring it down to your subject property. This of course would be a very crude way to do it as there are many things that go into the appraisal. But the $ per sqft would take into account of the upgrades done and such, so you would just need the room sizes. 

To make this work both homes would need to be valued around the same $/sqft amount though (aka comparable) But if that's not the case then you can still use the same method just to get a rough estimate of the cost without the extra space.

I go back to stress the need to communicate with your realtor and pick their brain on value and comps in area. Because even a home across or down the road can have a significant impact on market value. They are getting paid for a service, use their tools and have faith in them. If you don't I suggest finding another one.

Another thing is the check the comps of the comps, it is ok to go back 12 months for other comps you would just have to do a little research to see how much they might be if they were to be sold now.

Best of Luck,

Nick 

Hello Troy,

Short: Yes as primary residence OOC property are separate from the rules of investments. You will just have some more hoops to jump through in regards to reserves and legitimacy of living in said property.

Long: Through basic FHA background there is no stipulation of you not being able to obtain a FHA loan due to already having another loan type on a NOO property. They specifically state that the FHA loan must and only be used for a primary residence that you will occupy for majority of the calendar year. As they do not offer loans for investment purposes, that does not show that they do not however ban those from the program who are investors.

I will say however they are very conservative and will leave no stone un-turned to make sure that you plan to actually live in the property within 60 days (generally) of the loan closing. They will go through your investment properties and gather any and all types of info on them to confirm.

Best of Luck,

Nick

 You would have to make sure that you fall into the 80% coverage of dwelling amount either way. If coverage is lower than 80% of the dwelling then coinsurance would be kicking in, partial or complete loss aside. Granted an insurance company shouldn't be under insuring your home, but this does become a problem when the replacement cost of your home rises and the company does not increase the coverage to match this.

Hello Matthew,

As I am not a real estate agent my answer would only be from my mortgage industry knowledge.

This all relies on permission from your broker FIRST and foremost as they are the one technically cutting you the check from commission earned. You are allowed to "rebate" or "credit" the buyer (based on lender and state laws) a certain amount towards their closing costs. Make sure that your state is one that allows this to be done (https://www.justice.gov/atr/rebates). Seems as though NY allows this to be done. The % of concessions allowed still applies based on loan program.

Next key thing would be to communicate communicate communicate with lender that you would like to do this. This will need to be placed on the HUD/CL and should ONLY be credited during time of closing. Even if stated on HUD to be POC there is a lot of grey area with RESPA and to be honest isn't worth the hassle. Just have title credit the $ amount that will be rebated by your agency and this will be taken from the commission split when the check is cut. I repeat, ONLY let closing handle this and make sure it is writing on the the CL/HUD. Do not pay your client outside of escrow. 

Best of Luck!

Nick

Hello Nate,

With having a great tenant I am sure you don't want to pry to hard to make the situation uncomfortable. Assuming that this is for "emotional support" the animal would be classified as an assistance animal rather than a service animal, difference would be that the assistance animal does not need to be trained to do a task.

Regarding your first question: No you do not need to verify that the animal is a "service/assistance" animal. As you have stated you received a letter from their licensed health care provider showing proof. Depending on how far you want to go, you can request that their provider confirm that the tenant does indeed have an emotional disability. These extra steps would be up to your discretion, so if you do question the legitimacy of the tenant's condition then request verification. Just make sure not to ask the tenant anything personal unless they tell you themselves. The letter from Doctor shows the animal as the "medicine," the verification request form confirms the need of the animal. In your case I think you have enough proof.

Second questions: If this is really a case by case basis an amended lease would only be to better protect yourself if something where to come up, it will never hurt to add it but in reality it doesn't need to be changed. If you have a "no pet" policy," you are welcome to change the wording to say things like service/assistance animals are permitted with supporting documentation. Since these animal are not counted as a "pet" a pet fee cannot be applied. But you are able to collect from deposit for any damage done to property from said animal, this can be reflected in lease terms as well. They are responsible for all damage caused to property within limits of lease, regardless of where it comes from.

My suggestion would request that they submit in writing for reasonable accommodation for an assistance animal, just a small request will do. That way you have something on file, and a copy of their doctor's letter. It seems they will probably not be giving you any trouble which would mean that you give them the benefit of the doubt. You are however allowed to legally remove animal or evict tenant based on extreme instances cause by said animal, going through proper channels of course. 

Sorry for the long winded text, best of luck

Nick