All Forum Posts by: Christopher Telles

Form a JV with the sellers where her contribution to the JV is the unencumbered land. You will also want to address in the JV agreement that the land will be used as collateral to secure construction financing to complete the project contemplated by the JV partnership.

In addition, you'll want to carefully describe your own contributions to the JV along with each parties responsibilities, and for prudence what each party would gain through the projects success and alternatively lose should the project fail.

Congrats on losing that time constraining high taxed income thing, and starting down a path of many rewards.

Best of luck to you!

 The best way around the fence issue is to simply disclose this information when marketing the property. If you hire a real estate agent insert the disclosure in the listing agreement and make them aware of it, and then when negotiating the sale insert a paragraph in your response or if you accept; write an acceptance letter with a paragraph identifying the encroachment of the fence into neighboring land.

@Rick H.  is right these fence issue arise often in residential real estate. The time and effort some put into attempting to figure out how to "own" the land is silly. Adverse possession laws differ by state, but there are some commonalities in AP in that they take years, and typically have a requirement of prescriptive use and payment of property taxes over whatever number of years. In a fixNflip it hardly worth thinking about except to disclose and CYA.

Personally, it's impacted three of my own personal primary residences over the years. It's never become an issue, but I acknowledged the issues with benefiting/detriment party in a friendly manner. In all my cases the OP, or at least that properties owner, had been the installer of the fence. 

You have a problem. It's a good problem to have though. I don't know if there are HELOC lenders that'll lend on non owner occupied properties.

I'm sure if you look hard enough your bound to find a lender that'll do a 2nd, but it's highly likely the rate they'll charge will make a refi look much more attractive.

But that's not why I posted in this thread. I'd offer that you should consider looking at your "problem" through a different perspective.

I'm going to assume your whole reason for wanting to buy yet another property is part of a larger plan to own a portfolio of rental properties. As an investor looking at growing a portfolio you want to be able to look at your assets, remember this is no longer your home, from an unbiased 3rd party perspective.

Now, I'd recommend you do a complete analysis of your investment property. What are the metrics? What are you earning on investment? Specifically what is your ROE (return on equity)?

Can you do better in that equity in another investment? If so what are your costs to gain access to that equity? Then with what equity is remaining will that invested in a different deal become a better investment?

If it would then I think you'll at least know what would be a better decision as to what to do with your existing investment. If it's not then perhaps you continue on your current course and maybe look at pulling out some equity after inputting those costs and reduced income and assessing those results.

Two additional thoughts. You're not losing anything if your increasing your return by redeploying equity into another larger property. Likewise, you will also not be losing if you recapitalize the current investment property by stretching the term at a higher interest rate so long as you leverage that equity into another deal that increases the overall ROE. Lastly, don't fall in love with real estate. To many investors get attached to their investments emotionally. 

Look at your investments objectively and make decisions accordingly.

 I generally agree with your assessment. I would add though what he did do that separates him from the vast majority of others is he actually took action.

He obviously spent time learning what he needed to know, assembled a meager amount of capital (for real estate) and then went out and started taking numbers and kicking butt.

And then he repeated that over and over. 

The majority of people fail simply because they never begin.

 I had a chance to meet coach Wooden in a private setting. At 93 years of age he excused himself to go get a pad of paper so he could take notes of our conversation. When I asked him out of curiosity why, he replied 

"one can never stop learning new skills".

When writing your offer, regardless of how much you are asking the seller to carryback, and assuming you're getting 1st TD financing, the way to write the offer is the ask the seller  in a separate addendum paragraph to cary X$ @ Y% interest for a term (pick the number of years with our without a ballon) which is "Subordinate to buyers other financing at the close of escrow".

I structure it that way so I have flexibility in how the senior debt is stacked e.g. bank 1st TD, HML 2nd TD (to improve and payback relatively quickly) and the sellers. Some sellers might balk at this structure, but since they've already agreed to my addendum paragraph they would risk being in default of the agreement if they didn't proceed to closing.

Many times the sellers, or the sellers agent, will insist that the financing is identified in the agreement. In those cases you can either propose the structure mentioned above if there is a need, or desire, for more than one loan, or simply just change the paragraph language to have the sellers carryback subordinate to a lenders 1st TD financing, and you my need to list the actual amount of the 1st TD note.

Yes, that particular structure works. The managing member(s) of each LLC is the S Corp.

The first order of business should be to assemble an investment plan. Why do you want to invest in real estate? Is because you want a continual stream of cash flow? Or are you looking for immediate short term gains?

Once you have thought about your why, you'll then have an idea of how to proceed. short term gains might come from a buy and flip or a fix and flip, cash flow might come from a creative financing distressed sale; or from an REO you buy and then rent:

Ask the seller if they'll consider approaching their lender to complete a short sale. Asking doesn't cost you a thing.

If they're not willing you walk. If the lender won't, you walk. If they accept then you get the deal.

You're in the drivers seat here. If none of the terms are acceptable to you, you walk.