All Forum Posts by: Brian Gibbons

C1A Traditional: Bank loans

C1A 20% down, appraisals, max # of loans with conventional lenders through major banks

C1B FHA

FHA loans have been helping people become homeowners since 1934. How do we do it? The Federal Housing Administration (FHA) - which is part of HUD - insures the loan, so your lender can offer you a better deal.

• Low down payments
• Low closing costs
• Easy credit qualifying

What does FHA have for you?

Buying your first home?
FHA might be just what you need. Your down payment can be as low as 3.5% of the purchase price. Available on 1-4 unit properties.

Financial help for seniors
Are you 62 or older? Do you live in your home? Do you own it outright or have a low loan balance? If you can answer "yes" to all of these questions, then the FHA Reverse Mortgage might be right for you. It lets you convert a portion of your equity into cash.

Want to make your home more energy efficient?
You can include the costs of energy improvements into an FHA Energy-Efficient Mortgage.

How about manufactured housing and mobile homes?
Yes, FHA has financing for mobile homes and factory-built housing. We have two loan products - one for those who own the land that the home is on and another for mobile homes that are - or will be - located in mobile home parks.

How about a duplex loan?  See link.

And a good article for Multi Unit Financing here
Find an FHA lender

Need advice? Contact a HUD-approved housing counselor

Need help with your downpayment? 

State and local governments offer programs that can help. Find a program near you.

C1C Portfolio Lenders

See @Brandon Turner s article

https://www.biggerpockets.com/renewsblog/2015/04/0...

I Used Portfolio Lending to Transform My Business. Here’s How You Can, Too.

Wow!   We are now on to traditional and hard money and OPM!

C1: Traditional: Bank loans

C2: Hard Money

C3: OPM - Private Lenders and JV Partners

@Chuck Heck

sale and purchase agreement and once signed record a memorandum of contract at recorders office

B6. Fractional Ownership

The phrase “fractional ownership” is typically used to describe shared ownership of a vacation or resort property by people in an arrangement which allocates usage rights based on time. In other words, only one owner will be allowed to use a particular home or apartment at a particular time. The terms, private residence club (or “PRC”), destination club, vacation club, quartershare, timeshare, and vacation home partnership are also used to describe variations on these arrangements, and there are no consistent distinctions in the use of these descriptions. Fractional ownership arrangements should not be confused with condohotels or condotels, in which each participant has whole ownership of a particular hotel room or suite.

Fractional ownership arrangements can be applied to a single home or apartment (typically referred to as a “one-off fractional”) or to a multi-unit building or resort development. In multi-unit developments, each co-owner may have ownership rights to all the units, some of the units, or only one unit, and his/her usage rights, and cost obligations, may or may not correspond to his/her ownership rights. Groups can be assembled by a real estate development or hotel company, an individual builder, Realtor or seller, one or more of the prospective buyers/users, or groups of friends or family members.

Please see this link for more info on fractional ownership.

B5. Equity Sharing Agreement

Co-ownership of a single residential dwelling (which could be a detached home, townhouse, or condominium), where one owner or family (the “Occupant”) will occupy the house as a primary residence, and another owner or family (the “Investor”) will provide some or all of the down payment. In exchange for his/her investment, the Investor will get a fixed percentage of the appreciation of the home. After a predetermined period of time, the Occupant will buy out the Investor or, if the Occupant does not want or cannot afford the buyout, the house will be sold.

This strategy can help young millennials who have good income but can not get a mortgage.

B4. TIC or Tenants In Common Agreement

A Tenants in Common Agreement allows for multiple people to share interest in real property while retaining a lot of the freedoms that can be restricted in a joint tenancy. When you went in with someone to purchase property you likely had plans for it.  Improve it and resell.  Buy and hold.

This is a way to get on title and resell and do a bit of a JV with the original owner.

Say you want to get on title in FLA, an anti flipping state unless you are on title.

You could get on title with a TIC agreement and legal state you are an owner. And resell.

Some good contract language.

I. RECITALS
A. The Co-owners desire to acquire, hold, maintain, keep in repair, rent and/or sell or exchange, as tenants-in-common (co-owners), that certain real property more fully described in Exhibit "A" attached hereto and incorporated herein by this reference (the "Property").

B. The Co-owners have discussed the co-ownership of the Property and have concluded that to avoid conveyance and ownership problems created by death, bankruptcy or insolvency, disputes and the like, it is in the best interest of each Co-owner that the holding of the Property be governed by an agreement which defines the rights and obligations of each Co-owner in the form of this Agreement and in compliance with IRS Revenue Procedure 2002-22. see link to IRS site.

B2. Wrap Around Mortgage or All Inclusive Trust Deed

There is a strategy where folks are buying houses with Private 1st Mortgages (I will talk about Private Money and JV Partners later in OPM Section) (that is Other People's Money!)

Now they are on title.

And they sell on a "wrap around mortgage" for a cash flow of the difference of the Private 1st Mortgage and the Wrap.

Example:

100K house FMV, bought at a discount all cash for $80K,

payment outgoing $613.98 6.5% PITI

Payment incoming $100K note 30 years $949.18 9,5% PITI

You make the difference in cashflow.  No Toilets or Tenants.  You hold the "paper"!

No Due on Sale Clause in the Private 1st Mortgage so you can wrap it.

AITD is used mostly in California.  Same as a wrap.

Notes: Follow Dodd Frank and the CFPBs Ability to Repay Rules.

Use a RMLO.  Registered Mortgage Loan Originator.

See this download CFPB Ability to Repay

B3. Sub2

Loan is taken "subject to existing financing".  Wow!  lots of words.

Say you have a $100K FMV, loan is good fixed rate, balance is $90K fixed, 3 months behind, no good solution to cure the note (make up back payments.

You come in and they agree you take over payments and make up back 3 mo.  Nothing down besides the back payments.

I have talked alot about quickly getting the original ($90K) loan paid off and not doing a buy and hold or a lease option exit or a wrap exit.  Improve the value, and resell it.  Make a small profit and move on!

@Jay Hinrichs and I agree with this: use Sub2 cautiously.  Quickly pay it off.

B1. Contract for Deed - Agreement for Deed - Land Contract - Contract for Sale - Bond for Deed (LA)

Lets call it Contract for Deed.  It is known by many names. But it is like a car loan.  You drive your car that has a bank loan, that bank doesn't drive it, you do.  But the bank can TAKE it if you default on the loan.  REPO!

So, contract for deed, you live in it, you can improve it, paint it, etc.  but if you DEFAULT, the original vendor - seller can foreclose or repossess.

Every state is different.

Brian's Rules on CFDs:

1. Study repossessing in your state.  Be prepared.

2. For the most part, only buy on CFD.  Do not sell on CFDs.

3. Buy on CFD and then rent out or lease with rofr or lease w option.

Notes: LA has Bond for Deed.  CA has Contract for Sale.  Midwest has Land Contracts.  OH has an awesome law on Land Contracts for Owners-vendors to repossess.

A Deferred Sales Trust (DST) is a tax deferral and asset diversification strategy that can be a compelling alternative to a 1031 Exchange for appropriate clientèle owning highly appreciated real and personal property, and businesses.

Taxpayers and consulting professionals should consider this strategy if they or their clients want to defer federal and state capital gain and recaptured depreciation taxes, prefer a more diversified asset portfolio and/or more predictable income stream, and choose not to acquire like-kind replacement property. 

See article