All Forum Posts by: Steve Wilcox

Zoning???

absolutely can be done. However they generally will not recognize your "equity" if you are not doing any major improvements. Your purchase price will be their established market value, and they will also do an appraisal and then work off whichever number is lower to establish ltv.

However if you have poor credit score, and are trying to use an OO loan and not OO it might be a challenge. Also if you get caught buying hud houses as an OO and are not there are some big penalties if you get caught.

Most hmls will not lend (and probably should not) if your exit strategy is a refi and you do not already have some sort of approvals from your end lender.

Try calling a few good mortgage brokers and be straight up about your situation. You can not build a business using shiesty maneuvers, and one deal is not worth damaging your rep with local HMLs, ect. Also if HUD gets wind of your plan you will have the wrath of the federal govt coming down on you,

Also only certain lenders will lend with less then 6 months seasoning, but they are out there

Depends on how much you value your time

After going back and forth with title co and my attorney and finally geting everyone together for a little conference this was what we came up with:

1. Liens CAN be attached after close of property right up until the deed is filled with the county clerks office- in some areas near me this is about 1 week, in others it is as long as 1 month
2. There is a GAP insurance available from title companies to protect you during this period, however they will only sell this gap coverage to mortgage companies.

Whether or not you would be able to get the lien removed is another issue, however that takes time and a considerable amount of effort

Thanks @Steve babiak
When did you actually run title search? Did it uncover the lien?

Thanks for the responses.

The challenge with going after the seller is he may well not have any money, assets, ect to go after to make it right.

I have a property in a tough area under contract, and my attorney has told me that occasionally liens on the property may not show up for 3-6 months after the close of the property, which would leave me (or my llc) responsible for said lien.

I would think that this would be the purpose of title insurance and that this would be covered in the title policy, however my attorney is unsure that they can guarantee things after we have closed

I am waiting on the title co to confirm that any liens that pop up would in fact be covered by their title insurance, but I wanted to hear if any other investors have heard of this or had any experience with these issues

I am planning on buying, rehabbing, renting out, and refinancing. I need to be able to refi to pull cash out for the deal to be worth while. Also do not want to get stuck with someone else debts

Some contractors (ESPECIALLY if you go for the cheapest price) are always disappearing, late, dodging calls, and otherwise unprofessional.

Keep in mind that if they were organized, professional, and timely they probably wouldn't be cheap. (However this does not mean that just because someone is expensive they are necessarily going to be better).

Unfortunately dealing with this stuff is part of rehabbing to an extent. Try to set clear expectations as J Scott mentioned through using a contract that clearly spells out everything including time to complete work, payment schedule, ect. Having all this clearly defined up front can remove alot of head ache later. If someone is not willing to sign this type of contract they have basically declared that they will not be responsible for working in a timely manor.

As you build your business try to build your network and when you get someone who is good pay them a fair rate, in a timely fashion and keep them in your Rolodex

IF you live in an area with lots of other investors one of the reasons prices in this town might be low on investment caliber property is the city is a PIA to work in. I am in the midst of my first rehab in a new town, and when i started looking it seemed like there were lots of deals, and now I realize that the cost of doing business there is higher than neighboring towns.
I had to have full architect drawings of the entire property, provide a copy of my survey, ect all to change a header that had rotted out on a back porch. When I asked why this was needed the inspector replied- 'if you don't like it why don't you call your attorney and sue the town?'
I am sure that wouldn't drag on forever, and be a total waste of time. So a few thousand bucks and a week later we got back to work.

Seems like it might be the cost of doing business, and you need to factor that in to make a profit.

Also if you are moving from place to place to claim you are the OO this does not seem like a very scale-able business model if you plan on growing. What if you have two rehabs going on simultaneously? At some point you will need to build up a reliable crew, why not start when you are small and have the time to build a team you trust?

The problem is that sometimes you can not build them into the rent if you have a mortgage based on what the going rent price is. Some people have owned rentals for years and are free and clear, some people are willing to accept low cash flows, and some markets just don't work.

The problem with high taxs is that you will never pay them off.