All Forum Posts by: Oren K.

Paul,

For this size of loan (~$5M) you should be able to find regional / national US banks / lenders that will work with you assuming ~35% equity. Rates will be a bit higher, a bit more on the points but should be doable because you are not US residents.

As non-resident foreign nationals, it is always a challenge as the banks want to have recourse to more then just the property if things don't go as planed but aren't prepared to chase someone across 'a' border.

As @Omar Khan suggests, assuming the purchasing group / you have the balance sheet, experience, etc to do this deal, it may be worth finding an 'American' front person who is willing to put in  / gets some equity. Maybe even approach one of the syndicators  ( @Brian Burke or @Brian Adams any thoughts)  here on BP as you come with property & equity packaged and they have all the US contacts / resources.

Oren

I would ignore the county GIS map as it has no legal standing and as you can see, can be off quite a bit.

So you are looking at 2 'recent' (i.e. post GPS) surveys on each side of your lot that taken together leave you with a significantly narrower lot then you thought it was. On the other hand, the legal description directly says 50'. To state the obvious, both the two surveys taken together and the title description can not be true.

As @Eli Molloy says in his post, costly but probably necessary at this point, you should bring in your own surveyor and have him examine what is going on since there is a significant mistake somewhere by someone. The research docs from the other surveys would definitely be helpful.

Good luck with this,

Oren

Aaron,

On the assumption that the surveyors were 'professinals', the surveys should be extreamly accurate (that's the whole point!). Their reputation & license & insurance premiums are on the line if they regualarly provide inaccuate work.

I've seen situations where two surveys disagreed on lot lines but by inches at most, usually even less.

IF the surveys provided are 'old' (e.g. pre GPS), there 'may' be more room to question things but even then, they were very careful as so much can ride on where they set the lot line (e.g. fences, law suites, building permits, inheritances, etc.).

All this suggests that you may want to reexamine your property title description. Did you get the 50' width from the agents description which has no legal standing, from the title description, from ???

At the end of the day, if you feel strongly that the surveys provided are wrong, you can hire your own. IF they provide a survey that is meaningfully different from the others, you will either have to take it to court or come to an agreement with your neighbours t needs to be papered and registered with whoever is the local land registry authority is.

Oren

Ari,

In part it depends on the size of the loan you need. 

As you get under $2M, the, rates, points, recources requirements become much more stringent. As you approach $2M and more, there are many more options.

Even assuming that your investor group creates some kind of entity (C-Corp, LLC, Partnership), they are borowing as Non-Resident Foreign Nationals. There are programs out there below $2M but you will find that everything is 'more' (e.g. rates, downpayment, points, etc.).

Good luck,

Oren

Until last year, the rental permit in East Cleveland (EC) was ~$10 per unit and was paid by every multifamily property I am aware of. A nuisance fee for most landlords. It is also supposed to be charged to single family / duplex / smaller properties units but I believe that the city did not bother as the cost of printing and mailings alone would have wiped out any positive revenue generation (notification, followup, permit issuance, etc).

Last year EC jacked up the rate to $100 per unit and were challenged in court. A couple of months ago, this higher rate was found to be illegal and was thrown out. The rational stated by the judge was that the price of the permit had to be inline with the cost of providing the service. As no onsite inspections were being done, there was no justification for the higher cost of the permit.

It would not surprise me (not a lawyer) that in combination with the warrant-less search issue if there were further challenges to unit inspections / rental permits so that inspections become limited to exterior of properties or at most the publicly accessible spaces to get a rental permit.

Oren

Good day Morgan,

Many duplexes are built this way so not surprising. Ideally, there is an early point of separation with the each side having its own HW tank, etc so you can put in separate water meter (separate account or not) which can be read as needed.

With respect to rent; find out what your competition is doing. What is market rent? What utilities (if any) are included? Water is sometimes 'different' then other utilities so can it even be passed on the tenant, etc.

It is always better to pass on costs to tenants but you are generally limited to what the market practices are. If you try to charge the same rent as everyone else but then add other costs that other don't, it will make finding a good tenant difficult.

Oren

Marc & Jay have made some good point but I disagree about not being able to replace the return. It is not the % but the absolute number.

Using some made up numbers; Lets assume that the total purchase cost are $1,000,000 and the total return is $300,000 (30%).

So the questions become, how much equity will you have after the sale and what return can it generate. If it is now worth $3,000,000 and you can generate a real 10% ROI (with hopefully lower risk properties), you have replaced the income. As the real value of the portfolio increases, the ROI to generate the same income drops. Using leverage, 10% ROI on your equity is certainly not out of the question.

Figure out what the value of the portfolio is, what bundles might generate the highest interest / value, what returns you can reasonably expect for your new purchases (assuming you want to stay with real estate), etc. and see if the numbers work for you. 

Depending on your age / interests, as Jay suggested, perhaps you are willing to trade a lower income for less hands-on or you may want to take on a larger project or partner up with a syndication as a big partner or diversify away from real estate or whatever - It does open up possibilities.

Way to go and good luck,

Oren

Banks always give you a hard time ;).

But seriously - The bank as part of their DD will likely uncover this and ask you to fix it. If you don't, they will likely refuse the loan as it presents a 'risk' factor they don't want to deal with.

Your should inquire what it takes (time, cost, etc) to get an after-the-fact variance and possible consequences of not getting it (e.g. violation notice, not getting occupancy permit, ??). Build this into your pro-forma / plans.

IMO - Bad as any situation is, trying to cover it up virtually always makes it worse.

Oren

@Bob Prisco @Brian Stamm @Ned Carey @Tom Gimer .... Well maybe not so fast.

While it does not make sense to me, I provide for your reading enjoyment the following links /  Court Case;

https://www.gpo.gov/fdsys/pkg/USCOURTS-ohnd-1_08-c...

and

https://www.casemine.com/judgement/us/5914fbf2add7...

This property was recently listed and so I was doing some research, ran across the case and learned a thing or three.

The synopsis is (not a lawyer so maybe I haven't read it correctly) and leaving a side the fraud of one party (which he eventually was found guilty of), the eventual purchaser, purchased in good faith and was declared the 'owner' with good title. So despite the fact that various(?) parties s***ed up, I find a parallel here though the amounts are orders of magnitude different (i.e. not worth the legal costs).

I think the Land Bank buyer ends up with the property, the seller ends up with his funds and not sure where the title company (assuming they acted in good faith) ends up and the buyer from the seller may be left holding the bag of poop or it may be the buyer from the Land Bank that has the bag.

Can't say I agree with the outcome but if I apply this case.. that is what I get.

Oren

Sorry but I have no specific experience, just brought out a couple of point for you to consider. BTW - good catch on finding out that you need a lot more then 50% to have real control of the association.

To many moving parts for my liking - but Good Luck!

Oren