Friendly advice?? - Posted by PJ

Posted by linda on July 20, 2001 at 07:13:55:

It sounds like you’re too quick to make your first purchase, and maybe too personally involved because you like the neighborhood.
Where did you get the info that the value of homes in the area are 20% higher than the comps? This sounds pretty shakey.
How do you intend to make money as an investor without creative financing or a great price on the home?
Once you’ve over mortgaged yourself and your fiance, how do intend to purchase more properties?
Since it’s a condo, does the association even allow you to rent it out and how much are the yearly dues? Association by-laws can be a real pain!
If you research diligently and constantly ask yourself what motivates you to purchase each property there are plenty of good deals out there. If it’s not a good deal - you need to walk away!

Friendly advice?? - Posted by PJ

Posted by PJ on July 20, 2001 at 01:35:15:


I have been wanting to invest in Real Estate for some time now but was always waiting for the “right time”. After being laid off from my J.O.B. I realise that there is no such thing and that I put to much faith in trading hours for dollars. Anyway, now for the deal…

I will be as detailed as possible in hopes that some of you will see opportunities that I would overlook due to inexperience.

We were shown 2 condos in the same exlusive community 4 miles from our current residence. 2b 2b 770sqft Asking 65,900 each. They are both owned by the same owner who is moving up north and is motivated. Seller financing is unlikely but we are inquiring. We are seriously thinking of buying one of them. One is empty and the other has just been rented with a 1 year lease $800/mo. Did some home work and comps have been selling in there for the past year for 49-54k in the same area. But there has been some new interest in the area and prices have gone up fast lately.

My question though is really about the mortgage. After loosing my job and already having a mortgage of $1000/mo no bank would give me a loan.

I live in a nice townhouse in a nice area in Northern Palm Beach, Florida. I live with my Girlfriend who is a single mom. We plan to get married. Talking with a friend who is a broker suggested having my girfriend who’s name isn’t on the current mortgage apply for the loan. He suggested trying to get a FHA for her to get the lowest rate possible and say it will be her primary residence. I was shocked that he would suggest this being we are buying specifically for an investment. Is this commonly done? I wouldn’t feel right if this is illegal.

One idea would be to get the FHA and move to the condo and rent out the townhouse where i could get around $1800/mo. But this would be a real step down in living conditions.

Any ideas on how to structure this deal for the best possible cashflow? Or perhaps in my particular situation I should be looking at other deals/methods.



Re: Friendly advice?? - Posted by JohnBoy

Posted by JohnBoy on July 20, 2001 at 02:07:06:

Comps are showing sales of $49k - $54k for the past year and the owner is asking $65,900. Seller financing is unlikely. Where is the motivation at? This would show no motivation from the seller.

If the seller is MOTIVATED, then they would either take an offer way below market value to get rid of it or they would be willing to sell on some type of terms. Without either, there’s no motivation from the seller.

As far as telling the bank you plan to live in the property when you don’t, yeah, there are people that do it, but it’s LOAN FRAUD! YOU are the one that will be signing the papers stating you will be living in the property, not your broker! It’s YOU that will face criminal charges if you were caught and the lender wanted to prosecute, not your broker! Get another broker because this one isn’t honest and is willing to have you commit fraud just so he can make some money from doing your loan!

Does the seller owe anything on the properties or are they owned free and clear?

If he owes anything on them, how much?

How old are the loans? What is his balance owed?

You could take over his loans subject to or do a lease option. If his has a decent amount of equity see if he’ll carry that back as a second or maybe some of it.

Is this listed with a realtor? Based on your statement about seller financing is unlikely, but you are inquiring, it sounds like you’re talking to a realtor. That’s pretty typical. You need to get face to face with the seller or if he’s out of the area at least a phone conversation with him. I can’t tell you how many times an investor present an offer to a seller directly while the agent is present and the seller says yes, that the agent ends up saying, “If I knew they would have accepted that, I would have bought the property!” That’s because agents don’t know what the seller will take and they just assume they wouldn’t accept anything like that! NEVER go by what the agent says and talk to the seller yourself. Make any offer requiring the buyer to be present when offer is presented to seller and meet with the seller when the agent goes to present the offer. Then see what you can work out with them.