All Forum Posts by: James Blakeley

Wow, Did ya'll read any of the comments below the article?

For the record, investors are hard working individuals in pursuit of the American dream of passive income. Bless them all, even the poor souls that hurt the reputation, because of the bad press.

Those investor rep's are killing us. We need to hire a new investor marketing group to work on our brand and logo?

We need us a lynch'n, somebody get a rope. Damn investors go in buy with cash, pay to improve a property so it will cash flow. How dare the investors have the nerve to allow a tenant to destroy a home with rentals. As if an owner wouldn't do the same thing in that home.

Because of course, everyone can and should buy a home. Damn employers are't hiring and not paying enough.

Gooberment should refund all taxes, and everything should be free. LMAO

This may be the wrong place but it needs to be on the forum someplace.

If you are trying to claim deductions for education expenses prior to actually placing offers on properties. The IRS may want to argue that your education expenses were pre-career change and thus not allowable. Make sure you keep a journal of everything you do in business. A journal showing you were looking for property, made offers, even if none were accepted would be more evidence in court (hopefully never needed) than hearsay or testimony.

Ask a real estate accountant for advise before you spend your money. Just good business.

http://www.groco.com/readingroom/tax_woody_realestate_business.aspx This is not an endorsement, but the orginal article that prompted my post reply.

In lieu of seller finance, what about placing property into entity, and selling the entity owning cashflowing property (leased out) to another business owner?

We got hammered with repeat foreclosures and evictions lately. We would buy cash, sell with financing if needed, and or hold and lease. We got burned in every position. Can't be all that nice as a landlord. Make sure you vet your tenants, and pay attention to HUD regarding seller finance.

Joe,

What happens to this deal, now with market valuations drastically reduced? If the contract closed, will you worry about the refi at the 5 yr mark, or just pray that the valuation comes in above your balloon long before the 5 year mark. Crystal balls are not included with REI.

Did you study the market trends for the area? Did you do the deal?

Blessings

The latest post I have found on here do not mention the 1 property can be sold using seller finance every 36 months, without becoming a mortgage broker, originator, etc...

It has even been modified to cover Trusts. I have heard that others are creating entities for each deal. This is extra cost and does offer an interesting question. Do you sell the home, or the entity owning the asset with seller financing. Person to person loan secured by remaining on the entity, or using a Trust to transfer the sale of the entity?

We have had a policy of just leasing the property and allowing the occupant to buy 13 months or later with a proven record of timely payments. However, we have experienced a dramatic increase in folks walking away from previous seller financed deals, and evictions are at an all time high for us.
If the mortgage industry were granting loans, we would not need to do seller finance. In Texas we are seeing almost every conventional closing delayed beyond 45 days, thanks HUD and RESPA for simplifying this for us all.

Still good time to buy with cash, but holding surplus inventory for more than 10 months and not being able to use seller financing is going to increase housing surplus.

Surprised that there are not more recent posts on this.

I apologize if I a late, and I am not just trying to revive old threads.

Using Subj To does not really hide the sale to prevent DOS maybe, unless possible insurance fraud is involved, the lender is expecting the security to have insurance for the property, and the owner occupant's debt. So unless you are releasing all claims of insurance when you purchase, the lender has a legal right to know the owner occupant is no longer insured on the property. I am not an insurance person. So please check legality in your area. It has been my understanding that as soon as the former owner moves out, they are no longer abiding to the terms of the previous or existing insurance on the property. Thus the need for investor / non-owner occupied property insurance.

There may be ways around this, but my insurance and title companies require full disclosure, and we ask for the lender to be involved and approve of the contract, Trust or not. Better to get a release from the DOC then be the one that proves the clause has merit in court. Lenders are much more likely to work with you on failing loans to date.
We used to just use cash to eliminate the issues on the purchase, but now we are mid solution with the new seller finance regulations of 1 per 36 months.
Not to mention Texas executory contracts if you try to buy and sell using Subj To.
CYA.

RE Agent, Title Company, and I found a page on Lender Processing Services' Web site that might interest you. It can be found at: http://www.lpsvcs.com/OriginationSolutions/Valuations/AppraisalServices/Pages/default.aspx

I would add that having a Title contact in each area you target is a great member of your team. Along with the RE Agent / Broker in that area. They will have detailed local knowledge. Additionally, if the properties were mortgaged, you can find a contact for LPS services, to see what value the mortgages are in the area. The Title company can usually help with this. Some charge about $2 per transaction.

Some Mtg Broker's will give you an estimate of what they might be able to loan on a subject property. This varies widely, and can require you have established accounts or excellent credit. The point is to valuate the subject property, not have a credit check everytime you ask. This will kill your credit score.

Great post. Thank you everyone for your input. It seems spot on.

Panel upgrade should be to 200A if you do it. If you go to the expense of an upgrade why skimp on the panel. Room to grow is always a good idea even if never used.

Copper in my opinion is best for this. Ask your lic and bonded electrician if they can have an apprentice do most of the install while the electrician reviews their work, and makes all final connections. Might save you money on the deal.

You might find a investor friendly electrician willing to do the work and take a note to be paid upon sales of the property. You mention limited cash, so unless a contractor will take a the job maybe be cost of materials and labor paid with promissary note, and or payments, get creative.

Might be stuck until you can sell. Also, this should to be disclosed if you sell. Best wishes.

I agree with Peter G. It is a strategy sometimes for short term solution. Make sure you have a long term solution when you go in. Determine your exit strategy for the room rentals, or from the property completely. Weekly rental recommended as mentioned above. Legally consult with your team to ensure eviction and occupancy rules. Plan on higher expenses, and higher tenant turn over.