All Forum Posts by: Jason Minnich

Wanted to update everyone. Got a rebuild letter that is technically accurate but questionable at best. I'm open to thoughts or interpretations. The seller is getting fed up with everything but might be open to seller financing but I want to understand if this is a long term defect or if this is actually stating that it could be rebuilt as is. Frankly, it's seems like it's still a good deal and they are talking about carrying it as a 15 year 3% interest with only 10% down. Open to opinions. The 15 year means not great cash flow as is but since I'll be owner occupied I believe I'll be able to AirBNB the cottage which should help for the cashflow too.

Thanks again for looking!

Link to the rebuild letter. https://drive.google.com/file/...

Agreed, I thought it was creative, but frankly depressing. I'm uncertain how likely these letters are to get but I feel like I've submitted a fairly solid justification. I managed to find documentation going back to 1955 showing 4 families at the property, annexation was in 1952 so I'm getting closer to proving this has always been what it is. Right now I'm happy fighting for the letter, I'll ask for a variance if I get the letter and can close.

Jason

I really appreciate the feedback. Thus far I've been getting a lot of optimistic statements from people, but the more research I've done the more I've come to accept this is a defect in the property that needs a very specific solution in order to secure a loan.

It annoys me that the listing agent went through all of this a year ago and didn't disclose the defect only saying that it wouldn't go VA. It seems like most of the realtors I've been dealing with in the springs from the sellers side have been very overly optimistic compared to the reality of their product. Hopefully the research I did will encourage them to write a rebuild letter, but if they only write that the house and cottage could be rebuilt but not the basement apartments, is there any way to get it appraised not considering them as additional dwellings or does it really have to be whatever that point in time looks?

It's been suggested to removed the kitchen appliances and board off the exterior access in order to not consider them units for the purpose of the appraisal, but that seems really dumb to me. Especially given my intention is to use the units for income even if I won't need that income to qualify for the loan.

Thanks again for the advice and input.

Jason

Tldr- Looking for advice or expertise on getting a 90/10 loan on legal non conforming owner occupied property. Bonus points if you know solutions in Colorado Springs.

Long story - under contract on a legal non conforming 4 unit in Colorado springs. Built in 1947, main house has 2 basement apartments, and a cottage. We were trying to get it appraised as a SFH with an ADU but the appraiser said they would only do it as a 4 unit. Problem there is zoning doesn't allow for 4 units on this property. The seller had a VA deal fall through last year that I just learned about today where they tried to get a rebuild letter from the city and the city refused. We are (somewhat) confident we could get a rebuild letter for the cottage and the house, because those existed prior to annexation, but there isn't any historical documentation (we've found) showing that this has always been a four unit. The oldest I've got is the assessor's card from 1966 saying it had 4 dwellings but darn if those 14 years don't make a difference.

So I'm in this strange catch-22 where I can't borrow on it as a single family with an ADU because of Fannie Freddie guidelines requiring the appraiser to determine what the highest and best use of the property is (it exists as a 4 unit today, so it's that), but I also can't lend on it as a four unit because it would be legal nonconforming and in the event of a total loss the collateral could not be rebuilt as is.

The listing agent was against VA (I now know why) but thought this would go through as conventional. I've only got 15% down, 20 if I'm really pushing but was trying to do this as an owner occupied 90/10. I'm locked at a killer rate for a SFH, but my bank can't do 90/10 on a 4 unit and doesn't do portfolio. My contract is for 90/10 and there are other issues that buy me time (closing was expected 30 June but likely could slip if needed). The seller is motivated and looking to 1031 this. I'd like to have my cake and eat it too, but I'm not sure if I can make this work.

One Commercial bank I've talked to won't lend on owner occupied and I was using this deal to bring me back to Colorado. I'm talking to some portfolio lenders tomorrow, but no one has committed to anything yet. My debt to income is no problem. I'm open to creative, legal, solutions, but want to minimize risk and cost.

Just signed up, looking forward to meeting @Brian Burke and seeing @Ben Leybovich again!

Thanks for the inputs thus far! As I mentioned I was going to protect my equipment and my family, and to that end I purchased some gfci outlets for anything that might be potentially hazardous and isolation transformers for the equipment so as to separate them from the rest of the ungrounded house.

I'm also investigating possibly using other means to create an isolated, protected circuit, but thus far that is proving fruitless.

If nothing else I hope this serves as a warning to others that just because someone is licensed and insured, they might not always do the right or safe thing.

Hi everyone, So you might know me from my antics in California and Ohio where I own two long term buy and hold rentals. I live in the houses, I fix up what problems I see and generally try to make them tenant resistant. My father is an electrician with a municipality in Pennsylvania and so he has taught me a lot about that trade as well as picking up plumbing as a home owner and a landlord, so I have some decent background and knowledge. I am active duty military and as such move around a lot, and where it makes sense I buy my properties.

So I have most recently moved to Albuquerque, New Mexico, and due to the flux that is going on in the military I decided it wouldn't make sense to buy another house here but rather rent. I met a great landlord, my wife fell in love with the house, we put a deposit down sight unseen with just a video walk through and moved in a few weeks ago.

Things were looking up but when I plugged my computer equipment into the office they triggered that the outlet while 3 prong wasn't grounded. I looked and sure enough someone had put a 3 prong receptacle where there was 2 wire in the box, no ground. As my house in Ohio is old I knew how to deal with this there are three legal solutions, change the outlets back to 2 prong, replace them with GFCI outlets and then mark them as "no equipment ground", or rewire the entire thing (or if you can just run a ground wire). I called the landlord up and told her what I found and what I recommended, as well as how the current setup isn't legal but is safe.

Fast forward to today. My landlord hired a licensed electrician to come out and look at the possibility of fixing the problem. The electrician tells her its a common problem in older houses (this one was built in the 1940s) and the way to get around it is put a copper wire between the ground terminal and the neutral terminal in the outlet. My Alarm Bells were going off in my head because I knew that wasn't one of the legal fixes but I let him explain the situation to her. He recommended doing that on all the outlets and then at my insistence he would install GFCI outlets where my wife's computer would be so she would be protected.

While he was working I called my father, who upon hearing the situation, questioned what New Mexico's laws were as "That would never pass inspection today in PA". I got more worried and found a blog post of a very similar situation where people were VERY against this practice and that it was more dangerous than even the previous wiring methods. I then spoke to the chief electrical inspector for the city without giving him the location or landlords name and asked what I should do. He reassured me the only 3 ways of properly dealing with the situation, and asked if I wanted him to send an inspector out to chase off the electrician.

This electrician has been working with my landlord for 7+ years. They have a history and she trusts his judgement. I asked if he would tell my landlord what he told me and he gave me his direct line and said he would happily do it as its a matter of safety.

I ran back to the house just in time to catch my landlord (a practicing attorney) returning and told her all the information I learned. I explained how what he was doing was more dangerous than actually leaving it or changing it back to 2 prong. I explained how it was illegal. I asked her to talk to the chief inspector.

She said she trusted the electricians judgement and that she can't imagine how the situation is more dangerous now than it was before. I wasn't able to give a good enough reason so we left it at "You are the landlord, I am the tenant, I informed you what I knew but you are in your right to take the electrician's expert opinion over mine." I didn't want to burn this new bridge as she has otherwise been very good, and I didn't want to get the electrician in trouble as their relationship is stronger that mine and I could see my lease being terminated at a year because "it didn't fit". I told her I was protecting my family and my equipment by using the safeties available to me and that everything else is on her as she knows how I stand. The way the electrician explained it to her it would be similar odds to winning a lottery in this system failing, and that is what she said right back to me.

So if it were you, what would you do? She already went out of her way to hire an electrician to look at the problem, what would you do if you knew that electrician wasn't following code, law, or safety standards? She told me I shouldn't try to rewire the stuff myself as I'm not a licensed or insured electrician so what would you do now beyond protecting yourself and your family?

Long post but I needed someone in the world to dummy check me and I figure other landlords and tenants are a great first step. Thanks in advance!

Jason Minnich

I would recommend www.sparkrent.com it's main stream, costs you only a dollar, and it doesn't involve any interaction by you. Further, amazon payments has a monthly limit of 1k send and receive free per month, so unless you rent each unit for 250 it won't work as planned.

I'm not sold on hiring a PM unless you need one. If you have leases coming up and expect churn over the year, yeah you need someone, however if these are all locked in for a while and stable your handyman might be enough. But it really depends on the situation.

Good luck and thank you for your service!

This is a bit late but still good information. I had some tenants in my property in Ohio that wanted my house but wouldn't move in for a month. Instead of a holding fee, I signed a lease prorating the rent for half the month and then had the normal rent continue for the following months.

At the same time I was moving with the military and didn't feel comfortable signing a lease until after I arrived at my new duty station because as a military person you never know what can happen until you are there. The landlord took the property off the market and I paid the security deposit up front 2 weeks early as a non-refundable hold until I moved in at which point it converts to a normal security deposit. Essentially my landlord held the house a couple weeks off market so they could get it rent ready and the deposit was used to assure I didn't skip out, then when I arrived I signed the lease.

So either way works, but as was mentioned above, I highly recommend you put in a line about abiding by the Soldiers and Sailors Civil Relief Act as far as early broken leases so you understand what you are getting into and in writing.

@Chris Pastrana, sounds like you got a good deal or the area you are in has cheap multiplexes, either way good on you! The main issue is the amount of money you spend does not equate to your remaining eligibility since your eligibility is guaranteed on a sliding scale and then banks back the loan up to a multiplier. This is why with a VA loan banks often require minimum loan amounts for second and third properties. I almost used my eligibility for a second VA loan here but the minimum home cost was to high for my local market so finding a good deal would have been less beneficial. I ended up going conventional and it works great.