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Duplex?

This topic contains 16 replies, has 0 voices, and was last updated by Avatar of red12 red12 14 years, 10 months ago.

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  • #2772
    Avatar of red12
    red12
    Member

    Got a call yesterday from a Duplex owner. Wants to sell. Owes 150k, asking 160k. FMV 160k. Rent 900/mo (ea) Both 3/2, 1200 sq. ft. Will hold paper (so would probably go for the EHT scenario), but wants 10k up front.

    5% down + 3 mos pymt is about $11800 (bumped equity to 170k raised rent to $1100/mo).

    I can’t/won’t pay her 10k out of my pocket so how can I structure this offer?

    Of course SW, SW, SW, SW is alway in play!

    #18281
    Avatar of anonymous
    anonymous
    Member

    why does the seller need the $10k for?
    what’s going to happen if the seller cant sell? possible foreclosure?
    how long has it been on the market and does the seller sound motivated?
    did you ask about the condition of the property and if anything needs to be updated?
    you might need that $10k to do repairs so ask if the seller can take it for what he/she owes @ 150k. maybe you can do an equity share at the end of the trust term.

    #18282
    Avatar of anonymous
    anonymous
    Member

    IF an owner owes 150k and FMV is 160

    he really doesnt have 10K profit does he.

    after comms. closing costs i would think hed
    be writing a check!

    Is that right?

    #18283
    Avatar of anonymous
    anonymous
    Member

    that is somewhat true if youre doing a traditional closing with agents involved.

    if the seller agrees to an EHT transaction, you completely avoid the commissions. closing costs are paid by the incoming RB.

    #18284
    Avatar of red12
    red12
    Member

    Thanks. It doesn’t need any repairs (yeah, right!) according to the owner. She doesn’t sound motivated at all to me, but you never know. I told her I’d call her back and she wanted to know “how long” till I can reach a decision so maybe she’s more motivated than I thought…

    We’ll see…

    #18285
    Avatar of bill_gatten
    bill_gatten
    Participant

    First off, PPLINC is correct you should be receiving a check on this one. If you sit with this person and go over the Benefits to Risk Chart, they would see clearly that paying you $5,000 to take the property off their hands would save them lots of money over any other option avaiallbe to them, including short sale, forcclosure, leasing or renting, Wrap, CFD., etc.. These people are “hurt” and have not been made to realize it and shown your cure…which you have, and for which you have a right to charge.

    However, if you really want to offer her money, but not pay it now, make it payable in one lump sum at the termintion of the Trust (perhaps $5K at term for 4 or 5 year doeal and $10K for a 7-10 year deal). That way it comes out of the proceeds on sale and/or from principal reduction in the loan.

    Bill.

    #18286
    Avatar of red12
    red12
    Member

    Thanks, Bill. Unfortunately, I find very few people who can see the “big picture” even when it’s spelled out for them. I suppose that’s why most of America doesn’t save enough for retirement!

    I’ll run it by the owner and see what they say. I suspect that they think they have 10k in equity when in reality, unless they do something with me, they’ll probably have to bring money to closing. I’ll present them an offer with deferred payment of their “perceived” equity and see if it flies.

    Doesn’t matter to me one way or the other. Too many real deals out there to worry about this type of stuff!

    #18287
    Avatar of red12
    red12
    Member

    I’ve searched the archives on duplexes and gathered a lot of info but I’m still confused on a couple of issues:

    a. If you separate the duplex into two units (condos?) and have two RBs how can they ever refinance and buy? Will mortgage companies loan money on 1/2 of a duplex?

    b. Assuming two RB’s paying rent and covering the underlying PITI, would they get to split the tax write-off (50/50 for simplicity)?

    c. I’ve seen references to C. Sheets “Master RB”. What is that? I’ve never even looked at his programs (I have all of R. LeGrand’s stuff)

    d. As was mentioned in one of the posts I read, unless they’re high-end duplexes, tax benefits may not mean a thing to the tenants and getting them to pay higher than market rents may be a challenge. One RB might go for it if the other unit was a rental for him, offsetting his higher payments, correct?

    TIA,

    #18288
    Avatar of scott_l._moyes
    scott_l._moyes
    Participant

    @Red12 wrote:

    Unfortunately, I find very few people who can see the “big picture” even when it’s spelled out for them. I suppose that’s why most of America doesn’t save enough for retirement!

    Then you need to learn how to paint a better picture or walk away.

    Some will, some won’t, so what, so long! NEXT

    #18289
    Avatar of red12
    red12
    Member

    @scott_l._moyes wrote:

    @Red12 wrote:
    Unfortunately, I find very few people who can see the “big picture” even when it’s spelled out for them. I suppose that’s why most of America doesn’t save enough for retirement!

    Then you need to learn how to paint a better picture or walk away.

    Some will, some won’t, so what, so long! NEXT

    Agreed!

    Can you shed any light on the questions in the previous post?

    Thanks,

    #18290
    Avatar of jim_pasquini
    jim_pasquini
    Member

    Can you shed any light on the questions in the previous post?

    Yes.

    #18291
    Avatar of scott_l._moyes
    scott_l._moyes
    Participant

    Well it was a Yes or No question. That’s really Keeping it Simple.

    #18292
    Avatar of corkhorner
    corkhorner
    Participant

    You guys joining the ‘bad boy’ club or what……otherwise known as ‘close to the vest’.

    Humorous, to say the least.

    Yes or No?

    Sometimes Yes, Sometimes No,
    cork h.

    san diego

    The Complete Cycle Guy

    Buy Low, Sell Dear.

    #18293
    Avatar of red12
    red12
    Member

    Ha, Ha, Ha! OK thanks for answering EXACTLY the question that I asked!

    Here’s another….

    WILL you shed any light on the questions in the previous post? If “YES”, please include the info in your post.

    If “NO”, Thanks anyway!

    #18294
    Avatar of jim_pasquini
    jim_pasquini
    Member

    a. If you separate the duplex into two units (condos?) and have two RBs how can they ever refinance and buy? Will mortgage companies loan money on 1/2 of a duplex?

    Yup. This can be a problem. Essentially you’ve created a co-op rather than a true condominium. One APN number for the parcel creates some difficulty. Just because you can do something doesn’t mean you should.

    b. Assuming two RB’s paying rent and covering the underlying PITI, would they get to split the tax write-off (50/50 for simplicity)?

    Yes.

    c. I’ve seen references to C. Sheets “Master RB”. What is that? I’ve never even looked at his programs (I have all of R. LeGrand’s stuff)

    I don’t know for sure, but whoever came up with this is an out and out genius.

    It doesn’t specifically refer to any Carleton Sheets program, but more to the generalities of the thinking of his program as well as all the other “No Money Down” programs including your library. A component of their plan is to get properties without new loans and rent them out. Well…there you go. Advertise for some wannabee slum lord and let them live in one half and rent out the other side.

    d. As was mentioned in one of the posts I read, unless they’re high-end duplexes, tax benefits may not mean a thing to the tenants and getting them to pay higher than market rents may be a challenge. One RB might go for it if the other unit was a rental for him, offsetting his higher payments, correct?

    This is really a corrollary to c.

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