All Forum Posts by: Sean Sullivan

While heat pumps are expensive upfront, they are within 25% total cost of a hydronic oil furnace + system install, and the benefit of heat pumps is that (as the one paying utilities) you do not have to worry about refilling the oil tank. Further, you avoid the potential of forgetting to refill it while tenants are away, having a single pipe freeze, and footing the bill for hydronic heat system busting open, flooding/ freezing the building (a not uncommon occurence). 

Heat pumps can be the primary heat source, and if your insurance agent or others want to see backup - I suggest electric baseboards that have built in thermostats. 

Lastly, heat pump installs in Maine can be eligible for substantial rebates (google Efficiency Maine rebates), and if your long term plan is solar, fit beautifully into the plan - being low energy use and able to be powered by solar.

 @Jeshua Patrick, I did talk to the lender, but it is a Fannie Mae requirement that it be listed as 12 months, so they won't budge, as it would eliminate their ability to sell loan into the secondary market if it did not include this doc. I did also talk to a rep at Fannie Mae today (who was very helpful, honestly) and they confirmed that it is their requirement. Thank you for the suggestion in any case.

@Jimmy Dudley - Thanks Jimmy, good insight. We do intend to occupy for 12 months, but we have had a family change which may have it make more sense for us to move, though we would have no intention of selling the property. In any case, I suppose if they call the loan, that is OK as we'll have solid equity in the house and could likely find another lender to offer a mortgage, assuming the lender didn't mind minimal 'seasoning' on the loan.

@Kerry Baird - Thanks, I understand owner-occupied properties are a lower risk proposition for lenders, and thus rates are lower. I simply did not know that applying for a primary residence loan, particularly on a multi-family in a re-fi scenario would require that we stay in the same residence for 12 months. I feel as if I've heard a number of BP folks who use cash-out to pull equity from a house hack to move on to the next deal, but perhaps they sought investment loans, so was surprised when I saw the doc at the closing table. 

I can understand the rationale of the lenders, it's the specific time period that's the sticking point for me, and more specifically - the confusion between two legal documents that contradict one another (ie. one says we'd have an out, one says we have no out). We have a very low-risk profile otherwise, are paying a premium on the rate due to cash out re-fi, and this loan is for 75% LTV, so not far off from a more traditional investment loan.

For the sake of group learning here - the rep with whom I spoke at Fannie Mae explained to me the process for receiving a waiver from the 12-month requirement:

• Send email to fanniemae_firstlookATfanniemaeDOTcom
• Offer explanation of extenuating circumstances that would show cause for waiver of owner occupancy agreement
• include any supporting documentation
• include confirmation of current occupancy (proof of residency at the current property)
• include a list of any improvements made on the home since purchase.

Hi All, I completed a cash-out refinance of my primary residence 2-unit on Friday, but may have to cancel it due to some specific language. I have until tomorrow night at midnight to cancel - so I am seeking your help.  Has anyone else heard of this? Thanks in advance for any advice or thoughts.

Briefly - this is my primary residence, and we are doing cash-out refi to remove PMI as the initial loan was FHA-backed. We landed at 75% LTV for this new loan - a traditional 30-yr fixed rate, cash out re-fi. The lender is United Wholesale Mortgage - which came through my mortgage broker. However, we are considering/ buying another property in the next 6 months due to some family changes, and so some language obligating us to occupy for 12 months worries me.

The issue is that while the mortgage container boilerplate language regarding occupancy, there is an additional single-page document which contradicts this language. Both of those sections are pasted below. 

My question is: Is the Loan Quality Initiative document MORE enforceable than they mortgage docs? If I decide to move before this term is over, due to job change, family change...etc. will the Loan Quality Initiative language be enforceable over Mortgage sect. 6? 

Mortgage Section 6, "Occupancy, I will occupy the property and use the property within 60 days after I sign this Security Instrument. I will continue to occupy the property and use the property as my principal residence for at least one year. The one year period will begin when I first occupy the property. However, I will not have to occupy the property and use the property as my principal residence within the time frames set forth above if Lender agrees in writing that I do not have to do so. Lender may not refuse to agree unless the refusal is reasonable. I also will not have to occupy the property and use the property as my principal residence within the time frames set forth above if extenuating circumstances exist which are beyond my control."

VS.

Loan Quality Initiative Disclosure "Primary Residence - I understand that I must occupy the property within the 60 days of closing and maintain said occupancy for a minimum of 12 months."

I purchased and sold a SF in the past year in Auburn.  @James C. is pretty much spot on in his analysis. There are definitely some decent spots and good people there, but the quality of tenants is lower and you should not bank on appreciation. Right now, the economy at large is enjoying a time of low unemployment and increased housing values, which may make places like Auburn look better than it is, but I would guess when/if there is a downturn, the types of tenants you would get would be some of the first on the chopping block when companies look to 'cut costs'. The other challenge, in my experience, is that a lot of the properties are ~80-100 years old and are suffering from deferred maintenance. While this could also represent an opportunity - be realistic in how much more in rent the market can stomach (after fixing up, if you go that route), and review the school district boundaries to identify the best schools in Auburn. 

Also, note that Lewiston and Auburn (known locally as L-A) are about to vote (on Nov 7) on whether or not to combine their cities, in which case things may change for better or worse. 

Bottom line, be sure when you analyze the properties in Auburn you are not just considering cash flow, but also the resale value (assuming depreciation) after your holding period, and expect high maintenance/ CapEx expenses to include covering the costs of heat for the tenants (as many can't afford $100+ swings in monthly expenses, so you are better off paying for it yourself and keeping the rent coming in).

I just paid $775 this week for a duplex appraisal in Maine. 

@Shawn Ackerman got it. Thanks to you and @Jeff Keller and @Ryan Murdock and @Emily Lopez for the info. I feel more comfortable now - and will plan to ask the title company for the HUD, then just show up (it is a local closing) to sign the paperwork and grab the check. I appreciate the help - this is the first cash - cash deal that I've done and it's helpful to understand the process.

Thanks Emily. I am not using a real estate agent, and I am working through the buyer's chosen title company and the buyer's realtor. So it sounds like I should simply ask the title company directly as to what sort of funds I need to bring to the close - would I also see a HUD statement in this case? Safe to assume simply bringing my personal checkbook will suffice to make these payments?

Good to know that the title company will issue certified funds in one form or another. 

Hey folks - I'm selling a property that I own outright, and I have a couple of questions:

1. Should I request the funds via a cashier's check or wire transfer? The seller is purchasing with private money/ cash.

2. How do I know how much money I have to bring to the closing as seller? (I am thinking this is just transfer tax, but also may be pro-rated property taxes, though I'm not sure if I am responsible for knowing this).  

I realize these are pretty basic questions - and I did have my lawyer review the P&S, for the record. Thanks in advance for any advice!

@Samia Bingham and @Oliver Sanchez - I know this is an old thread, but opening a coworking space is something I am exploring as well. 

Are you both still involved in owning/ operating a coworking space? I'd love an update, if so. I am specifically curious about how intense the day-to-day management aspects are (or if you have hired someone to manage this), any issues with internet connectivity based on specific professions (I have been warned off photographers and folks who regularly video-conference), along with any revenue-generating value-adds you have employed and rough profitability vs. any other commercial or residential investment properties you have.

@Russell Brazil and @Kevin Siedlecki You guys really know how to rain on a guy's parade, eh!? 
Seriously though, thanks for the feedback - I'll plan to contact the title company tomorrow and let the forum know if anything other than a correction form comes out of this.