All Forum Posts by: Nick G.

@Scott T. Thanks for the link! Very helpful.

@Marc Scoleri

"...if we were to ever tear it down."

Then don't ever tear it down. Tear most of it down, but a leave a wall or two intact, so then it's a remodel, not a rebuild. Classic trick of the trade, at least in my area where we're dictated regulated by strict cities, on top of entities like the Coastal Commission.

Anyhow, yeah, it may be worth passing on if you aren't ready to dump money into it, good job vetting it out though!

@Debbie J. To answer the leading question, yes, you should 100% without a doubt ask for more rent, as well as additional security deposit too if applicable.

Or, just politely decline the addition of more tenants.

I agree, however, I think it's important to point out misleading information to others who may be trying to understand things like the OP was - when you say thing like "lenders don't accept it and will initiate foreclosure if it's not paid off once ownership changes, quickly," that's simply just not true, all you have to do is ask someone who invests heavily with subject-to purchases. I have listened to investors for a while now who have been successful with subject-to financing, and very few of them report frequent issues with big banks calling a note due - when it did rarely happen, it usually was due to nonpayment of the loan from somebody messing up their end of the bargain, and even in those cases, they were usually able to negotiate with the bank in order to save the deal.

Big banks will almost never initiate a foreclosure if they have the option to call the note due, simply due to the length and cost of the foreclosure process compared with the faster, easier, cheaper alternative of calling the note. So while the banks have the right to do everything you're saying - you're 100% right about those rights - the reality is that those rights are not exercised very often. Perhaps it differs between different regions, markets, types of banks, etc.

Bigger Pockets Podcast episode 70 (I think) from three or so years ago was my first glimpse at subject-to purchasing, the guy interviewed had done over 100 deals that way, it might be interesting to you.

@Ron S. I disagree, though that may be because we're on two different pages. What @John Payne was talking about is simply the timeframe of buying a property and closing escrow before the bank forecloses upon it. It is done every day in every town in the country. 

The part where it gets creative is when that is done with something like subject-to financing, whereby the seller's original loan is left in place, and the new buyer makes the payments on it with a power of attorney granted by the original beneficiary that lets them do so. In that situation, the transfer of ownership does give the lender the right to call the note due, but that is pretty rare, it generally only tends to happen in situations where the payments have stopped. 

While banks may have a right to foreclose in a situation like a subject-to purchase due to stopped payments, they do not like doing so if they can avoid it, which is why the first thing they'll do, if anything, is try to call the note due. Foreclosure is a long and expensive process, calling a note due is much easier. However, again, even calling a note due is pretty rare, since as long as their note is performing the way they need it to for their investors, they're not going to want to rock the boat.

Now, a smaller private equity banker is probably going to have a different attitude than your giant direct lenders like Wells Fargo. The lender attitudes I am speaking to are that of the bigger lenders - Wells, Chase, BofA, etc. You may be entirely correct as it pertains to smaller lenders that feel the pain much more if they get slapped by one of the regulators. Much larger banks though, I'm sure, just treat it as a cost of doing business.

@Lee Brewer

I'm not a seasoned landlord, but I am very seasoned with writing leases and dealing with tenant-landlord issues from my work as an agent. 

Does he have a history of being on-time? I might work with him a tad more if he does. Regardless, it's not your problem. The lease he has with you doesn't say that the tenant needs to make a good solid effort to send you rent - it says that the landlord needs to receive rent. Period. 

I would talk to him and say that you want to work with him in order to get the July rent and future rents to you safely, and express empathy and wish him well in recovering his lost rent payment. You might suggest to him to switch to a direct-deposit method of sending you rent in order to make sure he never has to worry about it again (you might even sort of insist on that.) 

I might offer to waive his late fee once you receive his July payment, and you might also make that contingent upon him setting up some sort of automatic electronic payment system in order to make sure he doesn't have to worry about it again.

Bottom line, he 100% still owes you July, and ASAP - but I wouldn't even make a point of calling him out on it, it should be such an obvious thing that you talk about it casually and matter-of-factly, and then go about it from the attitude of trying to protect his security so that it doesn't happen again for his sake. 

How you handle this situation will tell the tenant was is and is not acceptable for the remainder of their lease, so you want to make sure you are fair, but firm.

Edit: What JD said!

@Account Closed

First, I would also not be making any decision off of rough numbers, I think you should be dialing in the possible costs of each scenario as accurately as possible.

Unless you have experience in building, I'd go for the first option. Far less risk for a good reward in potentially half the time. Plus, you could always continue on with option 2 if circumstances change.

Just my opinion, good luck either way!

Thanks for your thoughts @Ali Boone, I really appreciate it!

Speaking of the man, it definitely sounds like a question for him if you haven't asked him already. @Jonathan Twombly

Is this an investment property? If so, then being in love with it is bad. Knock it off. *Slaps back of hand.*

It sounded like you said the offer was accepted? If it doesn't have signatures, then it's not accepted, though you probably know that. I'm not familiar with NJ practices, but 90 days to accept your offer sounds like a really, really long time. In my state, the default is 72 hours. Also in my state, the seller would typically have the agreement be contingent upon them finding a replacement property - or do a rent-back, which it sounds like they were asking for (though one year is an unheard-of rent back period for me, I too would have laughed and said no.)

Sellers in financial hardship don't always act rationally, especially if they have an agent who may be giving them lousy advice. Hard to say. I would just move on, but keep the lines of communication open for if/when the seller comes around.