All Forum Posts by: Beka Shea

I just sat down with The Victory Bank in Limerick about doing rehab lending.  They are doing a $500k line of credit with sub-notes.  Each sub-note is at 1 pt and prime plus 1%, with a floor of 4.75%.  Way cheaper than my hard money options!

Thanks Bill.  I'll keep researching and let you know if any more specific questions come up.  I've reached out to an investor minded attorney in the area as well to see if this is something he can handle.  I appreciate the great advice.

@Brian Gibbons I'd never heard of a TIC agreement before but I think that may be just the thing I'm looking for. It seems like the right vehicle for laying out maintenance, payments, rent collection, and inheritance issues as well. Will keep researching. Looking forward to hearing what Bill Gulley has to say.

@Jerry W. I think the avenue I'm looking for is that I take over his mortgage payments - that's the price of the lease.

Here's the situation:

Friend's dad, nearing retirement, owns the property next door to his house as a rental. He is losing money on it each year and owes back taxes. Current mortgage is $88k, $1280 PITI/month. 1 tenant in place paying $900/month. Second unit needs about $8k of work to be rentable, will bring in about $800/month. Third space is his office which he wants to rent back for 3-5 years for $500/month. So total income could be $2,200/month. He does not want to sell outright at the moment and really wants to get a chunk of cash out but keep his office. A medical situation has caused him to eat up his savings and go into debt, and his credit is shot so a traditional refinance is out for him.

The house is zoned as single family, and the rentals are not "legal".  Transferring the deed will incur a use and occupancy inspection, and I don't really want the rentals.  What I want is access to this property when he retires and moves on.  At that point, it's a great single family flip candidate, but even more, it's on a 1 acre lot with subdivision potential.  The current tenant has been there for 10 years and wants to stay as long as possible.  If I fixed up the second unit, the current owner says he has a tenant who would also want to live there.  He would stay in place and take care of property management.  He initially wanted $185k for it, I've talked him down to $135k, but I'm trying to figure out how to structure this.  Here is my current thought, but I'd love to hear other opinions:

Legally - lease option.  I give him the $47k ($135k-$88k) as a downpayment with the option to buy the property in 3-5 years for the balance on his mortgage.  He uses the downpayment to pay back taxes and medical bills.  If I can structure it so that I capture rental income, even with vacancy/repairs allowance each month, I'd cashflow (although how much depends on the answers to my questions below).

Questions: How do I protect my $47k downpayment? 

I am a rehabber and don't want to tie up $55k for 3-5 years ($47k down plus $8k in repairs).  How could I finance out that money so that the cashflow from the rental pays some sort of note?

I don't want to have to pay him a monthly lease amount, so I'm not sure if this is the way to go.  And that's my brain dump.  OK, BP community, tell me what you think of my brain teaser! :)

Give Tom Beerley at Homevestors a call.  He's good people.  @TomBeerley.  (Not sure if the linky thing worked or not, but I gave it a shot!)

Did either of you move forward with your tiny home dreams?  I've been enamored with the concept for years, and I'm just starting to think about how to make it a reality.  Portland and Seattle are incredibly friendly toward it, but over here in PA, I'm not so sure.  Ross Chapin is my idol, and I see a lot of potential for empty-nester communities.  Just thought I'd check and see what you found!

Good buyers will drop what they're doing to check out the deal - if they know you're a reliable source.  I'm not on your side of things, but what I have experienced as an investor working with a few top-notch wholesalers is that they have A-Lists, B-Lists, and mass-distros.  They send out to their A-list (more than one person, but not too many), and will know within an hour or 2 if they want it.  Again it goes back to relationships.  I want to be at the top of their lists, so I get back to them ASAP, even if it's to say that I'm going to pass.

Hopefully some wholesalers will chime in with what they do, though!

I found this thread while searching for DLP, just to see if other people had experience with them.  I'm an experienced enough investor that I'm looking to leverage my existing capital to ratchet up my ongoing flips - similar to what @Jay Hinrichs mentioned about closing every 90-120 days. I'm using a Line of Credit with them, which could be up to a million dollars - I'm using $500k to start and see how a few deals go. The fees are 1 point for the total LOC amount, then 2 pts on each project and 13.2% APR. No profit split. It'll roughly equate, in this market, to about 1/3 of my profit, and my profit target is $30k (obviously $50k would be awesome!). I reached out to a few HMLs in the area, and they are generally charging 12-14% and 2-4 points. Add in DLPs misc fees (which I understand, but also get annoyed with), and the reality is more like 3 pts and 13.2% on each transaction.

I met a serial entrepreneur at some networking event and we were talking about HML and he made a most excellent point - in what other business can you put out $30k and make $20k in 4-6 months? Yes, you have to work. But you get to do it on your terms, and if you do it right, you get handsomely rewarded. Since it's a few months later, I really hope you nailed that JV deal and you're kicking a$$ @Jim Stoffey!

I'm still looking for a good scratch and dent appliance place if anyone has a recommendation!