All Forum Posts by: Nicole S.

A friend of ours owns and operates a successful construction company and he also flips. He wants to borrow $30K from us and he would pay us back within 30 days once his other flip closes. He would use the money to start another flip he's working on. I don't know (yet) if the money is to help him purchase or fix it. 

I trust him but I don't trust circumstances. Is this too risky? Of course, I'd want to have him sign a promissory note but if something falls through what recourse do I really have without getting into a legal battle? Typically lenders like to ensure they have first lien position but what is my position or collateral if something goes haywire? I'm not sure I'm even asking the right questions. I also wonder why he doesn't get hard money - we'd likely offer similar terms otherwise, what's the point? Thanks in advance for any insight you may have. 

I think you got your answer but unequivocally NO-NO-NO - I'd rather accept less a month in rent than risk it. 

However, I was reading that at least in Washington, tenants can appeal to the court to remove evictions from their record. Don't quote me on that but I think that's coming down the pipe and I wouldn't be surprised if other states adopted it. 

I agree with some of the comments below, at least verify the landlord filed a claim and if so, you are very lucky s/he did. They could easily avoid filing a claim and require you to pay for all the damage out of pocket and not risk premiums going up. Regardless, this is why you have renter's insurance and at minimum, if all they are asking from you is the deductible (which should not be more than $500, I would take that offer and run). 

Don't get lawyer's involved, that will cost you more than $500.

I'm with David above, most lenders will require you to season that money. In my experience, most lenders won't allow you to borrow money for the down payment. They'll take your first born and your blood though! 

Hey BP, 

I'm managing my first build and I would love to hear from those that have gone before me! What are some things you wish you would've known or would do differently with hindsight? I welcome any and all topics related to new construction of a single-family dwelling. 

A couple facts: my family owns the land free and clear. There's a small rental on the property currently that will be demolished. We're building a  a three story home with a basement suite. It will be rental when done. No plans to sell at this time. We should have permits in 4-6 months. 

Thanks BP! 

Nicole 

@David Slovak

Tenant-landlord laws vary by state but sometimes a tenant that's on a month to month lease is harder to evict, you must have "just cause". With a term lease, you can choose not to renew their lease but once it goes month to month, many states have stricter guidelines. I know if a family member or owner wants to occupy a home that can be considered "just cause" but I'm not sure how that applies to a multi-plex. You also would want to be cautious of discrimination among the tenants - how do you decide which one to target for eviction? None of this may apply to you but you should seek counsel before you move forward with evicting someone. Cash for keys is usually the best way to get a tenant to mutually terminate their lease and move out willingly. Just make sure you have them sign a mutual termination agreement! 

No, No, No. 

They rented it that way. This is a cosmetic issue, not one of functionality. I might consider if they were willing to pay for it but these types of requests always stress me out because if you want to protect your property you'll need to oversee the project. That's the type of work you do when you own a home, not rent one. Once I allowed a tenant to construct raised beds in the backyard. She had to pay for everything. When I told her  several years later we *might* rehab the property she flew off the handle about all the time and money she invested in the yard. Drama you don't need later on. 

@Karla Talancon

I dig all the research you did! I live and invest in Seattle and we've been considering investing out of state because housing prices here are through the roof and while rent is still at an all time high, it many cases it's not enough to cover the mortgage. Uninhabitable tear downs are selling for $500K! No thanks. 

Anyway, please post where you end up making your first deal! 

@Mike Wood said it best - if you don't kick her out now it'll happen again and you'll be kicking yourself for not getting her out when you had the chance. It would be one thing had she not ignored you but that seals the deal for me. You ignore me, I don't have any sympathy for you later. One strike, you're out. 

@Bill Gulley

That's a great quote @Bill Gulley, "There are two things that can really mess up your life, taxes and laws,..."