All Forum Posts by: Pete Harper

As others have said don't jump the gun.  If you are using the standard Texas lease they have until the 5th to pay rent.  If they don't pay by the 5th you now have grounds to start with the eviction process.  Give them a 3-day notice to pay or quit.  The TX form is down loadable from the web. To serve notice you need to either hand it to them in person or send via certified mail.  I like to post a copy on their door too.  That usually gets their attention.  If they don't respond in 3-days your next step is eviction.

Assuming they start paying rent you really don't want to keep them as a tenant.  Pay attention to the end date in their lease.  You can give them a 30 day notice of non-renewal.  I usually like to wait until after they have paid the final months rent before serving notice.  That way they can screw you on the final month's rent.  What ever you do, do not give a reason for non-renewal.  Just state their lease has expired and you do not with to renew.  Saves a battle over "why".  Get them out and move on.

Quote from @Reese Nichols:

I'm new into real estate currently seeking my first real estate property where I live over in east Texas. Im interested in house hacking and I'm trying to pull together as many leads/ways to find on-market/off-market deals. I came across HUD properties and am wanting some advice on them. Are they good? Pros/cons? Financing? Any advice possible would be great!

 Additionally you may want to consider your county tax auction.  Go to your county web site and they should have a link to the monthly tax auction on the courthouse steps.  These are properties usually with over three years back taxes owed.  In many cases the original owner is deceased.  Many of the properties are in very rough condition having sat vacant.  Bidding starts at the amount owed on taxes.  Be prepared to pay cash on the day of the sale.   

I don't follow you. Assume I use $100k from LOC to purchase a duplex. I put another $20k LOC funds into renovations. Three months later the ARV is $180k rented with long term tenants paying $900 each. If I do cash out refi I can pull 75% of appraised value or $135k. Payback the $120k LOC and still have $15k cash. No seasoning period on the duplex.

Quote from @Erik Estrada:

Quote from @Pete Harper:

I wanted to see what line of credit loan products that are available for commercial. I own several properties 100% that are held within an LLC that I would like to be able to tap the equity without taking out a conventional loan. I know that HELOC loans are not available to commercial investors but looking for something similar. I had planned on doing a BRRRR but with interest rates so high I can't see taking out a 30 year fixed interest loan. It would be nice to have a line of credit that I could quickly tap should a good deal come along.

Property #1 is a duplex that I own outright. It was purchased and renovated as the second property in a BRRRR chain. Funding for purchase and renovations came from cash-out refi on another 4-plex (not property #3) Gross rents $2400.

Property #2 is a 12 unit apartment complex that we paid cash for.  We've owned it two years now and have it stabilized, fully rented and with higher rents.  Gross Rents $8400

Property #3 is a 4-plex that we paid cash for and renovated.  We've owned it three years now having it stabilized and fully rented. Gross Rents $3200

For any 1-4 unit, You can do a second mortgage on non owner occupied properties. Max CLTV is 85% and the max cash out is $475,000 per property.

Maybe I wasn't clear, none of the three properties have first mortgages.  Properties are held by LLC so I need to go commercial.  I'm not looking to do conventional mortgage with interest rates so high.  With LOC I only need to tap what I need.  I don't have capital sitting around paying high interest.  LOC would be ideal. I just need to find a lender.

Quote from @Jay Hurst:

Quote from @Pete Harper:

I wanted to see what line of credit loan products that are available for commercial. I own several properties 100% that are held within an LLC that I would like to be able to tap the equity without taking out a conventional loan. I know that HELOC loans are not available to commercial investors but looking for something similar. I had planned on doing a BRRRR but with interest rates so high I can't see taking out a 30 year fixed interest loan. It would be nice to have a line of credit that I could quickly tap should a good deal come along.

Property #1 is a duplex that I own outright. It was purchased and renovated as the second property in a BRRRR chain. Funding for purchase and renovations came from cash-out refi on another 4-plex (not property #3) Gross rents $2400.

Property #2 is a 12 unit apartment complex that we paid cash for.  We've owned it two years now and have it stabilized, fully rented and with higher rents.  Gross Rents $8400

Property #3 is a 4-plex that we paid cash for and renovated.  We've owned it three years now having it stabilized and fully rented. Gross Rents $3200

 @Pete Harper    What are you looking to do with the equity?  Are you looking to buy properties distressed with cash (from the line of credit) and then put permanent long term financing on the properties paying back the line of credit? 

On a recent episode of BP they talked about the change in loan seasoning time from six to twelve months.  David Greene said he was using a LOC to get around the seasoning period.  Buy using the LOC then refinance into a conventional loan.  Since the property is not held as collateral for LOC the seasoning period doesn't apply.  

Personally I have two things in mind. First I purchased an off-market duplex that needs work.  Normally I self fund renovations from income on other properties but if I had a LOC I could complete work faster. I'm always looking for off-market deals.  If I had LOC I could be in a position to pay cash for faster closing.  Maybe use David G's LOC strategy.  

Quote from @Joshua Franklin:

Hey Pete, have you looked into a private money loan?

I'm trying to stay away from private money and hard money lenders. Their rates and fees are exorbitant. The LLC has excellent credit history, 25% debt to equity, and FICO over 800. I should be able to find a more traditional lower cost option. We are in Texas if that makes a difference.

I wanted to see what line of credit loan products that are available for commercial. I own several properties 100% that are held within an LLC that I would like to be able to tap the equity without taking out a conventional loan. I know that HELOC loans are not available to commercial investors but looking for something similar. I had planned on doing a BRRRR but with interest rates so high I can't see taking out a 30 year fixed interest loan. It would be nice to have a line of credit that I could quickly tap should a good deal come along.

Property #1 is a duplex that I own outright. It was purchased and renovated as the second property in a BRRRR chain. Funding for purchase and renovations came from cash-out refi on another 4-plex (not property #3) Gross rents $2400.

Property #2 is a 12 unit apartment complex that we paid cash for.  We've owned it two years now and have it stabilized, fully rented and with higher rents.  Gross Rents $8400

Property #3 is a 4-plex that we paid cash for and renovated.  We've owned it three years now having it stabilized and fully rented. Gross Rents $3200

I would start with the title company.  Situations like this are exactly why you buy title insurance.  Besides they have deeper pockets.  Title company will go after the seller if he did anything wrong.  

Don't give up on the city so easily.  Keep calling until you get a live person.  If they will not help ask to talk to supervisor.  The city will have a copy of the original permit and what inspections have been done.  Again it might be something as simple as someone forgot to file a final inspection.  The guy on the phone might just be trying to cover their mistake.

Since you have a loan you can also get your bank involved.  The bank has better lawyers and deeper pockets than you do.  The bank has a vested interest in proving you and they having clear title.  

Don't underestimate the cost of a lawyer.  Most charge about $400/hr.  Adds up quickly. Best to let the big dogs take the lead.

How the heck did this get through the title company?  All-Cash sale?  The lack of building permits should have been flagged by the title search.  If you go in the county website do you see your property listed along with the home?  You likely have recourse through the title company and the title insurance.  I would start there.  Seller sounds like a dead-beat.

The other option is to go to the city and request a copy of the old building permit.  You might get lucky and find out the final inspection wasn't done or it was not properly recorded.  You might have the option to pick up on the old building permit and finish final inspections.  The more information you have the better you'll be able to figure out the best path forward.

Download your state real estate contract form.  It should be readily available from your board of realtors or use a previous contract as a template.  If you are comfortable I would negotiate the deal directly with the seller.  You can have a lawyer review before you finalize.  Personally I would not involve an agent.  You've already done the hard part finding the deal.  Set up the closing at your preferred title company. We just did an off-market closing last week.  It was a trustee sale.  We ended up working with a sellers agent but I never got my own agent. The deal was straight forward, no need to complicate things with another agent.  I was able to negotiate a price $20k below asking and the seller paid for half a new roof.

Avoid wholesalers.