Offering 1st Lien Position at less than 65% LTV on House in Round Rock
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Matt Viebrock
Feb 12, 2020, 6:09:16 PM2/12/20
to InvestorUndergroundAustin
Good afternoon!
It was built in 1998, and it's a single story, slab-on-grade 1,434 square foot, 3 bedroom, 2 bathroom, 2 car garage on 0.15 acres. Foundation is solid, and the house is structurally sound. Livable as-is now, but really needs a complete interior renovation of all rooms + new paint and flooring, remove cigarette smoke smell, replace HVAC system and clean the ducts, some minor siding repairs, and exterior paint. I have not received contractor bids yet, but estimate that the repairs will be between $35-45k depending on level of finish out.
Comparable homes in the last 270 days in that neighborhood have sold for $233,900 to $238,000. See attached for the comps I had my agent pull for me. The house has nearly an identical layout to that of 1402 Thibodeaux DR. Our best estimate of the ARV for this house is about $235,000, and it should rent for $1,525 to $1,600/mo. depending on the finish out of the renovation.
I plan to sell the house as-is at a discounted price of $195k with owner financing in place to a deserving end-buyer that has a large down payment and can get qualified with my RMLO. I will be wrapping the underlying note from the private money lender I'm seeking, and I'll stay in the 2nd lien position. Will let the end-buyer fix the house up to their liking.
I'm seeking the following terms from a private money lender:
- Will give 1st Lien Position
- $130,000 loan amount
- 6.00% interest
- Fully amortizing 30 year term
- P&I payments of $779.42/mo.
- 10 year balloon
- No personal guarantee, as my LLC is the one that's buying the house
- Ability to wrap the underlying debt when selling to an end-buyer
- Ability to prepay the unpaid principal balance of the note in full or in part at any time without penalty
- First right of refusal to buy the underlying note if you need to get cashed out early
- The note shall be fully assumable upon sale, transfer, or conveyance of the property
- Ability to sell / assign the end-buyer's note at any time, without permission
- No other covenants - the only way to get the house is if my company stops making payments.
Who do you know that may be interested? I'd be happy to share the property address to interested parties that email or call me directly.
Thank you for your time and consideration!
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Bill Crider
Feb 12, 2020, 8:16:56 PM2/12/20
to Matt Viebrock, InvestorUndergroundAustin
I am not an attorney. But I suggest you (and any potential lender) should consult an attorney to ensure this creative idea does not run afoul of the mortgage provisions of the Dodd-Frank act, or of the other various laws regarding lending to people for their homesteads. If this idea is OK, good for you! But private lenders need to be very careful about specifically lending to someone for their primary residence.
Bill Crider
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Matt Viebrock
Feb 12, 2020, 8:54:02 PM2/12/20
to InvestorUndergroundAustin
Thanks for the advice Bill,
Dan Castro's actually the attorney I learned how to do this strategy from, at his Investor Underground bootcamp that I've taken a couple times. I'm also a student of guys like Eddie Speed and Grant Kemp, and I've got a handful of other real estate attorneys I've consulted with on this as well.
They've all said that so long as I put an RMLO in between myself and the end-buyer, and make sure the RMLO qualifies them to the same standards as any other loan officer would a normal retail buyer, then my chances of running afoul of the Dodd-Frank Act and the SAFE Act are low. With the caveat that I don't do more than 3 of these types of transactions per year without having an RMLO license myself. But I'm going to be getting that license myself soon so I can do more than 3 a year.
I have a fantastic RMLO that does these types of transactions all the time and knows how to structure the loans well within the confines of the the Dodd-Frank Act and the SAFE Act, so I feel confident that we've got this covered.
Always appreciate your insights though!
p | (512) 757-7467 (Cell)
(888) 970-9805 (Office)w | MoontowerPropertySolvers.com
a | 2028 East Ben White Blvd. Suite #240-6774
Austin, TX 78741
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Bill Crider
Feb 12, 2020, 9:10:39 PM2/12/20
to Matt Viebrock, InvestorUndergroundAustin
Great, Matt! I am glad you have done your homework and are going about it the right way.
Bill
p | (512) 757-7467 (Cell)
(888) 970-9805 (Office)w | MoontowerPropertySolvers.com
a | 2028 East Ben White Blvd. Suite #240-6774
Austin, TX 78741
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Matt Viebrock
Feb 12, 2020, 10:31:53 PM2/12/20
to Bill Crider, InvestorUndergroundAustin
Thanks Bill!
(Sent from my iPhone. Please excuse the brevity and any typos)
Texas law requires all licensees to provide the information in these links:
• Texas Real Estate Commission Information About Brokerage Services:
https://drive.google.com/open?id=1rOsTI-mWLyK4Kq1xLaD4z6iwfLEe0T1t
• Texas Real Estate Commission Consumer Protection Notice:
https://www.trec.state.tx.us/pdf/forms/Miscellaneous/CN1-2.pdf
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Owner of Moontower Transaction Solutions, LLC
“If you don’t have an assistant, you are one."
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E | Ma...@MoontowerTS.com
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