I want to purchase a duplex. I’ve been preapproved for 100% financing on the property that is selling for $80,000. I would like to have $10,000 as start up capital in order to manage the property and there is NO WAY that i can get it on my own right now. I have two other investors that want to put up the $10,000. What i’m considering is creating an LLC with the other two investors. After i close on the duplex myself, i will go to the title company and add the LLC on to the title as joint owner. In turn the other two investors will put $10,000 into the LLC’s bank account. So the duplex will be co-owned by myself and the LLC. The LLC will be owned by myself and two others. The duplex is rented out fully on both sides and the total gross income is $1100 per month. Minus the PITI and Mortgage Ins. which comes to a total of about $700. Net income is $400. This $400 is split two ways between myself and the LLC. Please anyone give me some feedback and let me know if this sounds like a good deal.
You have already posted regarding this purchase. I think the fact that you are asking for advice on a property that you are committing fraud to acquire is just plain wrong. What it sounds like is that you want to go to jail. This forum is for real investors looking for advice on how to be successful in real estate. NOT for people who are looking for advice on how to cheat the system. Go get your fraudelent advice somewhere else. I would like to believe that none of the gurus on this site are going to give you advice on your bad karma purchase.
Why is this fraud?
Because he is buying it using a loan for owner-occupied low income borrowers. His intention is not to move into it, but to keep it as a rental property.
Here is the original posting that I was referencing.
http://www.reiclub.com/forums/index.php/topic,27601.msg128885.html#msg128885
Although the people who are getting really screwed are the other two investors that are planning to give this guy 10K for part ownership in a property that is financed to 100% LTV. At $100.00 a month per person it will take them each at least 50 months to earn back their 5K a piece. That is counting on 100% occupancy and ZERO out of pocket costs for repairs and upkeep over that span of time. I think anyone on this board who owns at least one rental property (myself included) knows what the chances of that happening are. Somewhere between zero and none.
I see now, thanks.
Levans…
This deal stinks. Even if you post it some where else you are just looking for a blessing from some one.
It appears you just want to buy SOMETHING. Go back and find a deal that really works financially and legally. There are enough deals that pencil with proper paper work, you don’t need "gray " area transactions. Our job as investors is NOT to throw ANY of our team members under the bus. Do not bring harm to your team members you will need them when you find a great deal,
Let it go, walk away,
8 days since you posted this and with proper advertizing you should have had many other deals come across your desk to choose from. Sounds like you know two people with 20k total !!! You should be able to do something great with that…
Enjoy , Darin
Lenders are really cracking down on the owner-occupancy clause. They’re having staff drive to properties here and they ARE putting people in jail. I’m not one to raise panic alarms, but it’s a silly move.
christopher w
I am shocked you failed to read all of my post. You’re making me out to be a criminal. I stated in my earlier posts that i decided to wait to do this deal b/c of the advice that i got from you all. But just b/c i decided to wait on this deal does not mean i’m going to throw the plan away. I can’t believe you came at me this way. I am really shocked! I feel like i can’t even ask questions and learn from this site. I really thought i could get the kinks worked out for my plan on this site. This is crazy!
Levans,
You made it very clear in your original posting what your intentions were. So you make up some excuse that you are going to wait. Then a few days later you miraculously have another duplex and another loan that you still can’t afford and to make matters worse you are bringing in two investors who I am sure you have not made aware of your nefarious plan. Plus you here at this website looking to get the experts here to help you find a way to break the law. You are more than welcome to ask questions and learn from this site. However don’t come here looking for people to explain to you how to break the law. You can deny it all you want, but with the scores you posted in your previous posting there is absolutely no way you were able to secure 100% financing unless you lied about occupancy. I think there were several other posters in your previous posting that expressed their distaste with your scenario as well. There are many other ways for you to get into real estate investing other than lieing on a 1003. I don’t think you really understand the depth of what you are considering doing. Once you start down that path of fraud and deceit it is a long road back. What happens if your lender just happens to do a quality control check and has a local loan officer stop by the house to check up on you. Or if a piece of mail from the bank gets returned because you don’t live there. Is all the risk you are taking really worth $100.00 per month?