All Forum Posts by: Michael Mies

Partnering is likely your best option... What part of NC is the property located?

@Luke W. The wholesaler’s original assignment fee is off the table… my maximum offer is well below contracted amount for any one particular property plus we've now added several more properties to the mix. At present, I am NOT dealing directly with the seller. The wholesaler has proposed that $15K would be reasonable for an assignment (of a new contract with the seller). The problem is that I’m all-in with my SDIRA available cash and can’t pay the assignment fee at closing. Most likely, I’ll give the wholesaler a note to pay the fee over three months (wholesaler would rather have cash ASAP than back-end opportunities).  I had entertained doing a partnership (87.5% & 12.5% - representing $105K and $15K down payment equity stakes).

A local wholesaler presented a few turn-key rental properties for assignment that eventually grew into an opportunity to purchase an entire portfolio (17 properties) directly from an investor. I want to reasonably compensate the wholesaler for delivering the deal, but there will be no cash left on the table at closing. I’m using my SDIRA (all-in) and seller financing to fund the deal. The wholesaler is willing to accept payment over time and/or interested in participating in some sort of partnership for a long-term hold. Any suggestions/ideas on what compensation is reasonable and what type of partnership we should entertain?

Here’s an overview of the deal:

• 17 SFR's originally marketed for $858K ($50.47K/unit average)
• $11.6K/Mo total income ($682/unit/month average)
• Agreed packaged price (as-is) = $632K
• ARV (based on BPOs) = $780K
• Repairs = $35K

While I don’t know how much the wholesaler had the initial properties under contract, I do know that the price we are now negotiating is well below whatever the numbers were. I suspect, however, that the wholesaler could have made $1-2K/property had they sold the properties one at a time. 

@Dev Horn Great points from a different angle (e.g., reimbursing versus initial funding).  @Loren Whitney Here's an interesting overview of several discussions I had last night at our local REIA meeting:

Assuming I fund the marketing campaign entirely with my SDIRA and then secure sufficient properties to exhaust the funds remaining in the SDIRA can I use the “spill-over” leads to profit outside my SDIRA? We identified two possible issues here… If I receive any form of cash or benefit from ANY deals derived from the marketing efforts this would appear to be a violation of the IRS rules. Likewise, if all of the “excess” deals were sold to others through the SDIRA (wholesaled, etc.), this may appear to the IRS as an “active” investment.  Thoughts?

Has anyone used their self-directed IRA to fund a marketing campaign? The campaign would be specifically designed to secure a property which would be purchased by the IRA.

I was driving for dollars and found a boarded-up house in a very desirable neighborhood in Charlotte NC. In researching the property I learned that the city had declared the property as deteriorated and issued an order to repair the property by August 20, 2014. The notice identified the interested parties as the property owners, Resmae Mortgage Corporation and GE Money bank.

I also found a “Corporate assignment of Deed of Trust” recorded in March (2014) noting assignor as “MERS” (nominee for Resmae) and assignee as U.S. Bank National Association (as trustee on behalf of the holders of the home equity asset trust 2007-2 home equity pass-through certificates…). The Deed appears to be executed by the owners and notes the original deed amount that was established in 2006 when the property was purchased. Property taxes have NOT been paid for the past two years.

I tracked down the owners, who now live in Savannah GA at a property they purchased in June of 2013. It appears that they rented the Charlotte house out for the past year (I found an individual that used the property address and is now serving time in jail). They have not responded to my attempts to contact them via mail. Any suggestions?

Although I'll share a few agent contacts with you, I can do something even better... I'm actively marketing and vetting off-market properties in the immediate Winthrop area and have run across a few opportunities that may interest you.  Accept the connect invite and contact me ASAP.

Regards,

Mike

Alternative option note – The current tenants I have interviewed may be interested in purchasing the mobile homes on contract and leasing the space. Comparable lots in the area go for $375-400/month. I could save approximately $800/year in estimated maintenance costs if I went this route.

@Andrew Warner

I too was apprehensive on owning a park that included the mobile homes… until I ran the numbers and interviewed a few of the existing tenants (very little turnover). Also, I’m using my SDIRA – which essentially forces me to take a pure passive route and engage a property manager.

You hit the nail on the head regarding the septic and well – these are my greatest concerns. I’m planning on having both systems checked during due-diligence.

Thanks for your input!