It seems very odd he wouldn't still want to play part time if he was so successful.
Also, it seems kind of shitty he wouldn't start playing again if this didn't work out and he owed you money.

They charged him for a class he never took? I highly doubt that. He probably dropped it after the date to get a refund. Regardless, it seems very irresponsible that he hasn't cleared up the issue.

11/8/2007 2:12:31 PM

seems like if it's in writing and all, he'll pay you back sooner or later.. he may not have another job now but he could/would get one if this doesn't work out. I still am not sure I'd lend him the money, though

11/8/2007 2:13:20 PM

well he still plays a little, but not to be his main source of income. He used to be real big into it, playing online 12-14hrs a day, frequent vegas trips and such. But he has a wife and 2 kids now and the time factor has cost him, plus when you get into big gambling like that, other bad habits come along...That's why he got out.

If things don't work out, I'm pretty sure I'll still get paid. It will all be in writing.

he's the type of guy that doesn't like giving up on things, so he's gonna work to make the business work. I just hope he doesn't run himself into the ground or get stalled trying to fix up the house.

11/8/2007 2:20:21 PM

Yeah, you don't want him to exhaust all his resources and then declare bankruptcy on ya.
Well, if you know he has other "bad habits" that's just another reason I wouldn't make the loan.

11/8/2007 2:24:52 PM

Quote :

"^ don't forget about the property tax knock that comes with that 'great' apprasial"

The appraisal will be between the home owner and the bank and does not involve the county/city. The tax man will cometh when the tax man cometh; you don't really have any influence over it.

11/8/2007 2:45:01 PM

^^^ This whole deal sounds pretty sketchy.

11/8/2007 9:34:25 PM

^^ yeah, it's a really basic calculator that they use and it's really easy to call and talk to the person who evaluated your house and get things adjusted down if need be - we have unfinished space that got counted in the tax value here and we called the day after it updated online and got it fixed and at the last place we got assessed on air above the garage because they measured the perimeter and just did a 2x calculation for two stories

11/8/2007 10:10:46 PM

So he paid 30k for it outright? If hes willing to put a deed of trust in your name, then I think in the end you would have the upper hand cause his 30k purchase would be yours as collateral.

Right?

11/8/2007 11:00:28 PM

dh

this is not financial advice or an implication about lending in any way, but these may be points to think about

you said first home...do you mean his primary residence?

on the one hand, it's a safe bet in that if he can't sell it, he can live in it, but investors probably wouldn't see their money back for a long time

and what if he does sell it - he has to find another place to live and can he get that loan (not likely from what you said or will he start renting) - again, the exit strategy seems like you might not get cashed out as promised

he needs to get a job and wait on this plan

i don't think he's going to find anybody who is going loan him money (not even a 100% collateral based lender) without an income other than friends, who may not be too happy with him as outlined above

it would only take like $200/month income above his current debt service coverage to have a reasonable shot at a business purpose loan (in his name, if he's not setting up a company) - line of credit on the property based on an as-improved appraisal

assuming he has $30M outstanding in debt on it now he'd only be at 66% LTV even with 100% financing if he could get in 20% on the project budget up front - he'd be looking at a whopping $150/month interest only payment

then if it didn't sell he could roll it into a retail mortgage at about $120/month for principal and interest

doesn't sound like the kind of dollar amounts that you need investors for (unless you're just looking to transfer all the risk to them)

additionally, do you want to own some house (if he deeds it to you as collateral) in SC that your gambling-addicted friend half tears apart and takes off on, leaving you with $50M in repairs you have to make in order to sell the thing for $60M to somebody who knows you're in a bad position?

[Edited on November 9, 2007 at 12:26 AM. Reason : fgxgd]

11/9/2007 12:22:41 AM

I think he's already got loans on the home for the purchase, and this is not his first home purchase, he has a home of his own for him and his family, this is his first investment property he's doing for his business.

He has already told me that I will have the house as collateral for the loan I'm giving him, so if for some reason he skips town or dies of AIDS or something, I can do the job myself, which starts to get into what you're saying dr.

He sent me a proposal last night. I read over it and things look like he's done his homework and trying to get this as cheaply as possible. I'll talk more about it to him today/this weekend.

It listed the cost of the house, repairs cost, and his estimated ARV, and he's looking at a profit of ~40k and hoping to get things done and sold within a 6 month window.

Right now I have the funds to invest. It's not like I'm dumping 100k into this company, it's 5k, so if I lose it all, I'll be pissed, but I have a secure contract so my money should be safe, and if for some reason I get completely fucked, Well then it's just 5k, which seems like a lot for me at the moment, but in reality its not that much, I can work it back through my job.

I also have a big itch to do something with my life business-wise. Im a grad student and it has great potential in the future, but I want to do something now. This is an opportunity to try something small I can potentially become a partner in, in the future if things go well. That's another good reason. For the immediate loan, being offered 20% annual gets me $500 in 6months, so it's not that much, but money is THE way to build trust in business, and down the road this could turn into much more than a supplemental income.


and I don't consider this guy a gambling addict. He and I became friends through poker because I was playing pretty hard at one time myself, and I've never bet on anything in my life. He's much much better than I ever was, and was pulling >20k a month doing this. Great way to make money, but for a 21 year old who has what seems like an unlimited income its a hard lesson learned when it comes to being responsible with your income, savings etc. I've always been more responsible, but I never made 1/10th of what he did.

I'm just saying there's more reasons than just a good initial return as to why I'm investing with him. And SC isn't a bad market. Like NC, a lot of northerners are flocking there to avoid higher taxes, home rates. I think there's great potential here.

Anybody think that this is a good idea? So far I've mainly just heard cons, with the exception of the value of a written contract.

thanks for the advice guys, i really do try to take everything into consideration

11/9/2007 11:36:05 AM

This guy was pulling >20k a month and he can't come up with a measly 5k?

11/9/2007 11:40:51 AM

i think he's kind of looking at this the same way I am, the potential of building a business.

Also, I'm pretty sure he took all his income in hand to pay for what he could to the property. Also, when he went to close on the property they tried to screw him and make him pay double down, which i believe he ended up having to do, so at the moment he's looking for investment

but ill be honest, that's a legit question i've asked myself.



[Edited on November 9, 2007 at 11:46 AM. Reason : forogt]

11/9/2007 11:45:51 AM

I did something similar and put way too much down on the condo I bought.. I'm kicking myself, not because it's a terrible place to put my money, but because I'm in a financial bind now and the equity isn't doing me any good. I should have put about $10K less and had the money for times like now..ah well, live and learn

[Edited on November 9, 2007 at 11:49 AM. Reason : asf]

11/9/2007 11:47:57 AM

Sounds like he seems to be getting screwed a lot. Are you sure none of these are his own fault? You're pretty stupid if you go to closing without looking over the papers beforehand.

11/9/2007 11:50:33 AM

he's new, it's his first time working wtih this company, and they're trying to give him some BS like they don't know him, he has no past history of this, so they're 'being cautious' by charging him more upfront. I see through, he sees it, but if he wants this he has little choice. So he had to agree. They just tried to pull a last minute change on him.

11/9/2007 12:06:59 PM

Did he not get the stuff in writing before closing?

11/9/2007 12:24:38 PM

not entirely certain about the details. Here's what he sent me


Had the closing yesterday. Everything went ~smooth. The underwriter tried to throw a monkey wrench in the deal 3 hours before we were supposed to close. He wanted me to double my (already ridiculous) down payment on the house. With this company, they charge the lowest rate Ive ever seen on loans like this and they like to have money down when u first start out with them so they can get "comfortable" with you. Fair enough, it saves me like 4% interest so I go with them. Anyways, I talked him down and bit and we came to an agreement. The job will start tomorrow and should be completed within 2 weeks.

11/9/2007 12:27:02 PM

I don't understand how anyone could show up at a closing and not know what the down payment is supposed to be.


Somebody's full of crap, its either him, or the mortgage person, maybe both. The down payment amount is printed clearly on the Good Faith Estimate.

11/9/2007 12:32:31 PM

Agreed. And since when do you talk people down at closing?

11/9/2007 1:37:33 PM

yeah, so I showed the proposal to my sister who's had a bit of experience with this stuff. She said run for the hills...

11/12/2007 10:51:37 AM

Heh, why is that?

11/12/2007 11:02:27 AM

Everything about this just reeks of stupidity.

Your buddy was clearing 20k a month but somehow was pissing it away...and you trust him with money?

Where did he get his knowledge to repair and flip houses in the first place - picked it up at the poker table?

And the return on your money isn't even all that great. You'd have as much risk with possibly greater reward by sticking it in the most aggressive international stock fund and letting it roll.

11/12/2007 11:05:03 AM

It just doesn't make sense that he can't come up with that relatively small amount of money given the kind of income he used to have... if he had any real assets (which he should) it should be easy for him to borrow the money

Quote :

"And the return on your money isn't even all that great."

exactly. you can make that return somewhere else with what seems like a lot less risk. sure you want to help your buddy out, but it's sounding more and more like a bad idea

edit: So the home will be in SC? The market isn't that great there either. I had to knock $30K off the price of the price of my condo down there before the real estate agent said I had a chance at selling it in a reasonable time frame... So my profit just got cut in half, at best. After closing costs and paying the real estate agents I'll be down to like 30-40% of what I was originally expecting, at best.

[Edited on November 12, 2007 at 11:17 AM. Reason : asdf]

11/12/2007 11:12:55 AM

reading the email about the closing this guy is not dealing with a traditional lender - i bet he has NO idea what he actually signed up for, but i'd bet everything that stands to be made on this thing it goes bad

11/12/2007 11:54:22 AM

11/15/2007 7:47:19 PM

i know someone who bought in the lower east side of manhattan in '96 and just sold for a 600% profit.

FUUUUUUUCKKKKKKKKKKKKKKKKKKKKKKKKKKK!!!!!!!

11/16/2007 8:19:01 AM

dont try that now...some home prices are projected to fall 25-30 percent over the next 5 years

11/16/2007 9:57:13 AM

^^ so would anybody who bought in Nov 2001

markets go up and down for reasons you can't be sure of, i bet that guy wasn't too happy the times the value tanked

[Edited on November 16, 2007 at 5:14 PM. Reason : asdfsa]

11/16/2007 5:13:17 PM

value really has tanked yet.

hopefully it will so I can buy something

11/17/2007 3:13:50 PM

anyone have any experience with condos?

it's not looking like i'll be able to afford a rowhome or split house in the neighborhood i want, and i dont want to move out to the burbs...

specifically, i was looking at one of the units here..

http://tinyurl.com/22ta9h

be sure to click the more photos.

i dont need much space, and am totally disillusioned with the absurd prices up here (ie, 225k for a rowhome puts you flat in the fucking hood.)

i just wondered about short term appreciation prospects (general principles) for a unit like this in a city... there's a chance i could be moving in 1-3 years


i figure most to none of you would have experience in this, since the market is so different than rdu, but what the hell

11/18/2007 8:35:53 PM

in the paper today there was a good article about home appreciation in raleigh. ill link it when im on a computer not a phone

11/18/2007 9:23:33 PM

^^ overall it looks nice - i don't think anyone on here could accurately begin to guess the house market up there just because nobody has done the research for the area

i assume you meant little to none - as long as it's a decent area and they aren't overbuilding them then unless something dramatic happens you probably won't lose a lot if any money on it - it is a 1br though and they are almost always the hardest to sell

11/18/2007 9:56:29 PM

haha yeah,

it was supposed to be along the lines of

i figure most of you have little to none experience...

thanks for the input though

11/19/2007 7:55:57 AM

Keep in mind that condo's involve a montly maintenance fee that is both not tax deductible and doesn't build equity.

The only other input I can add is that a similar place in Jersey City or Hoboken would be almost twice as much.

11/19/2007 2:21:27 PM

Quote :

"Average Wake home value rises 38% In the update of property values, some owners will see a big jump in value. That might mean higher taxes RALEIGH - When Joseph Huberman's county property tax revaluation comes in the mail this week, he will have only himself to blame for the escalating value of his 77-year-old Boylan Heights home. Huberman bought the house in 1978 for $24,000. As of Monday, revenue department assessors will appraise his home at $365,000 -- a 1,421 percent return on his original investment and a 65 percent jump since 2000, when Wake last had a countywide revaluation......"

http://www.newsobserver.com/front/story/777600.html

11/19/2007 2:54:02 PM

those aren't market values, they are tax values adjusted to the current market, right?

11/19/2007 3:03:17 PM

Yes.

11/19/2007 3:04:23 PM

Does anyone know what the cost would be to move a 1500 sqft house less than 5 miles?

I've got an awesome old house under contract, a friend has an empty lot in a much nicer historical neighborhood, and I could put an extremely lucrative rental property on the same spot.

11/19/2007 3:48:06 PM

texas$

11/19/2007 6:52:00 PM

Good news: My property taxes for 2007 are based on the market value of the land, since there was no house on this plot at the beginning of the year.

Bad news: The reassessed market value of the house is higher than it would be to buy the same house brand new. How hard is it to appeal to have the market value changed?

11/20/2007 12:50:17 AM

i dont know but its a good time to rent.

ZING!

11/20/2007 8:14:10 AM

^^
- it's easy it took me about 15 mins the day after my house was reassessed earlier this year, but tax value isn't related to market value as we've just seen. it's closer now, but unless they physically miscalculated something about your property they aren't changing the value. if market < tax value that would be a bad thing

- you have to make up the difference on the taxes, extra $150 a month on my mortgage for 12 months for me (or you can pay it all at once, but that's not really something i was interested in)

^
- what? rent is actually up for the first time in a while and with so many renters in the market nobody is concerned about losing a tenant. you're 100% right if you're saying it's a good time to rent to somebody else, but it's hard to tell what you meant

11/20/2007 8:44:15 AM

^^to rent out a place or to be a renter?

11/20/2007 8:45:12 AM

Quote :

"unless they physically miscalculated something about your property they aren't changing the value"

I'm confused. I thought you said that it was easy to get yours changed.

11/20/2007 10:22:56 AM

because they measured wrong and a large part of my second floor is unfinished, which you can't see from outside

11/20/2007 7:31:39 PM

Ok, let me try restating my problem. Lets say you buy a brand new house for 100K in a new development. For 2008, it gets accessed for a market value if 105K. Obviously if you can still buy the exact same brand new house for 100K it makes no sense to have your house valued at 105K. Hell, it doesn't even make sense to value it at 100K since it is now a used house. Right?

11/20/2007 7:43:36 PM

the tax value is based on whatever the county says an acre of land or a square foot of your house is worth - they adjust up on a cycle because it's the main source of revenue for the county and expenses generally increase

the tax value is not fair market value the government is opposite of a free market. you're confusing assessed and appraised (and accessed i guess, but that's not really relevant to figure out real estate value)

the sales price is based on whatever somebody wants to sell it for and what someone is willing to pay for it

as for the used part, real estate generally appreciates mostly due to the difficulty of producing more dirt and the fact there are more people

11/20/2007 7:58:49 PM

Quote :

"the tax value is based on whatever the county says an acre of land or a square foot of your house is worth"

Yeah, but aren't there other variables to consider?

Quote :

"the tax value is not fair market value "

Then what is the tax value? If it's not fair market value then why did the tax administration send me a document stating that the market value of my house has changed?

The document goes on to state the market value requires a willing buyer and willing seller with no advantage being taken by either buyer or seller. Obviously no one will buy the place in the example listed above for 100K when you could buy a brand spankin' new identical place for 100K.

11/20/2007 9:33:23 PM

you probably should take into account that current dips in the market will not be accounted for in those tax estimates, and sale within the past full year were probably considered when making those assessments.

I am buying my house for 322k, and the tax value, and appraised value, is 340k ... because SOME homes did sale at that rate per sqft/land in the same neighborhood during the past year.

11/21/2007 11:01:18 AM

So, why should you pay taxes on 340 when you can't sell it for 340?

11/21/2007 11:09:59 AM