All Forum Posts by: Tom S.

@Account Closed I would step back and check that the total numbers work.  $230k to put into the deal, plus the assumable loan - is it worth it for a cabin?

 @Kelly Boulton I would assume she could put it in a trust at or after closing, but of course she would have to check with the lender.

@Ann Covey Not sure about the "closing in your company's name" part. Almost all assumable loans are FHA or VA loans, which I believe have to be closed in your own name.

Definitely check on that with the seller's bank and their process for assuming the loan.

@Devan Dorzok  Did you end up moving forward with this deal?  

@Devan Dorzok  Lots of potential items:

- How many units?  If it's 5 or more than it will be a commercial loan, so account for that in your calculator. Many commercial loans are 15 or 20 years.  

- Insurance is always higher with MF.  Taxes will most likely go up with the change of ownership.

- My experience with multi family is there are a lot of "extra" expenses. Someone damaging sheetrock in the hallway, damage to the outside, etc that can't be pinpointed to a specific tenant.  Also common areas that need maintenance, lighting, that will be on your bill.

- Inspectors: definitely make sure everything is to code. There usually will be new requirements with the change of ownership. Hard wired smoke detectors, egress windows or stairs to name a few.

@Brian Armstrong  Welcome to BP Brian!

It would be helpful to post some more details: your business plan, types of properties, price point and what you're looking for specifically from the investor.

@Atul Mohlajee  That's how I would interpret it too, it's in the lease and they would probably win in court.  Worse, they could put the collection on both of your credit reports, which could show for 7 years even if paid.  

I recall seeing a recent post from someone else in a situation like this, he even paid the collection but score is still too low to apply for a mortgage.

Certainly speak to an attorney to double check your options.

@Michelle Hardy Just adding, check your local city too for their requirements, many have specific requirements that the state may not have.

Here in VT in the towns my properties are in, there is not a requirement to keep them separate or pay interest.  As such, I keep them in one account and just track any deductions with a spreadsheet for each tenant.  At the end of the lease term, it's a simple as printing that spreadsheet so it shows all itemized deductions from the security deposit.

@Brandon Bell In general, yes if assumed the debt will be removed from the seller and transferred to you. But have a good real estate attorney review the mortgage. As mentioned earlier, only a few mortgage types can be truly assumed, mainly FHA and VA loans.

Yes, if you only are making over the payments then the debt stays with the seller and transferring the title to you is more complicated.

In the end, the starting point is making sure the numbers work. With what's posted above, they really don't.

@Brandon Bell Yes, definitely ask for the current mortgage statement which will show the escrow payments and calculations.  There should also be a annual escrow statement showing all disbursements and the calculation for the coming year.

Be careful with the term "assuming the loan".  Only a few loan types are truly assumable.  It sound like you're just taking over the payments, but correct me if I'm wrong.  In that case it may be hard to change the insurance and/or title.