BUYING RE IN WHAT ENTITY??

Financing, Hard Money Lenders, Private Money
1

Hi Guys,
I am trying to get financing on a pre-construction property I signed on for in Nov 05 (in my own name)…I am afraid if I buy thru LLC or trust it will be more expensive. If I transfer later, there is due on sale clause, but if I keep payments current should not matter, right? I don’t want to keep the property, want to sell as soon as possible, but must close to save my deposit. I originally wanted it for buy/hold, but I now have another property where a tenant just bolted 7 mos early. Any advice??
Thanks so much in advance! :help

2

You are closing on a property priced at Nov '05 levels? Do you have a good feel for what the property is worth now? Perhaps you would be better off walking away from your deposit?

3

71 is correct. I am going to assume you are talking about a condo because of the time it took to get the project finished. Closing on a property just to avoid losing a deposit can cost you much more in the long run. Closing costs, carrying costs, property dropping in value, etc…

4

Thanks for your replies. Yes, I absolutely did figure holding costs, etc. and based on if the property was not sold and stood vacant for two years, that would be the equivalent of me walking away today. So, if I walked out today, I lose deposit and risk additional law suit from developer, vs. reselling or renting before I lose the equivalent of the deposit. Plus, even tho the mkt stinks, I bought pretty low, so worse case if I sell close to what I paid, will still recover my deposit. Also, I haven’t had the advantage of using the MLS to presell, so it’s a little hard to tell if I price it low it still might move. The property is great, and if I sell the other one, I will keep this for 3-5, but lots of if’s…

5

BTW—I convinced myself to be at peace with walking away from my deposit thru last weekend. I talked to my atty today to review contract, etc…told him I was going to walk…and he thought I was absolutely nuts to walk away from the deposit and such gorgeous property, (after I showed him website and pics) and he is also an investor, and familiar with that area too.

6

How much was the deposit? Will you be using this property as a second home during the holding period? If so that will help you tremendously with rate.

7

Thanks Christopher for your reply. It must be considered an investment property, I was told by lender, since I have other property. The deposit is $46K. If it was 10K, I would walk away.

8

You may want to read this article before you decide to close on that property.

http://www.orlandosentinel.com/business/orl-condobust2707aug27,0,2001796.story

9

As someone who lives in south FL, I can tell you that article is not an exaggeration by any means. The market here is awful. But the condo market, especially, is remarkably bad. Not a week passes where I don’t receive an email or a phone call from a desperate “investor”, (they’re speculators, actually), who bought into the whole preconstruction craze and who is now crying in their beer. The value of their prized investment is down 25%, and rents are down to where they must eat $1,500/mo in negative cash flow. I don’t want to tell them that at this time next year they’ll be referring to today as “the good ol’ days”.