All Forum Posts by: Aaron Cervasio

I would consult your real estate attorney if you have one. Not sure of the laws in CA.

Anything 4 units and under count as a single family residence for the purposes of NOI/value/appraisal, so that's very good. If you live in one of the units and house hack, and get the other 3 rented out, you're going to do pretty well. Taxes for a multifamily like that will be higher than a single family, but I can't imagine that will mess with the cashflow too much. Just doublecheck the property tax assessment for the house in 2018 to gauge what your monthly tax burden would be. For a $190k 2-unit in New Jersey, I will theoretically cashflowing positive $250/unit at $1300/unit (typical rent for a 2 bedroom in NJ).

At $170k-$200k, with $500/$500/$750/$750, you'll be looking at similar return ($2500 cashflow minus mortgage/insurance/taxes/fees, etc. so net positive about $500 in total) but since you have fewer units, that will be about $125/unit net cashflow assuming taxes/expenses are similar. obviously if you self manage and it's a BRRRR/fixer upper that you totally reno first, assumption of repairs/capex/property management fees will shrink dramatically.

I highly recommend using the BP calculator to figure out if it's a good deal, but unless it's in total disrepair and can't be occupied, at $170k-$200k with minimal upfront reno costs, my gut feeling says it's not a bad deal.

AFAIK, you do NOT need to do anything other than prove, if the government looks into the details of why you moved, that the reason you're moving is because you "upgraded" in some way on the new property (more square footage, additional bedrooms, better school system/neighborhood, etc.)

If you're not moving for those reasons, then yeah, I would refi-out to a conventional loan. You can't cash-out refi with an FHA backed loan, but after refinancing into a conventional, you'll save some on mortgage insurance and if you have any equity in the property you may be able to get a HELOC and use that to fund other deals.

Hey everyone! First post here. I am interested in BRRRRing and have already purchased and completed the BP book on the subject, listened to the podcast episodes related to it, attended a seminar for this, etc. I am still in the "education" and "building capital/credit" phase of my journey, but am looking to get an action plan in motion as well to lay the groundwork for a series of tasks, goals, and milestones to eventually achieve financial independence using this method.

My girlfriend is also very interested in doing this. I have income potential and she has excellent credit but little income. We were thinking of partnering, but want to make sure we do it "the right way" to compartmentalize business vs. personal interests (we're both very capable of doing this emotionally and I trust her completely in that regard). From a business standpoint though, we're not sure the best way to go about this. 

I was thinking really there are 2 options... one, we form an LLC together in which we're both partners, she infuses the capital, and the 2 of us work together to get properties where, as managing partners, we split the profits in a very standard business way. Standard partnership legalese about splitting money, leaving/buyouts, etc. Option 2, we form separate LLCs and have a written contract between our LLCs that renews yearly in which we "leap frog" purchases using her personal capital, but we both fully assist the other as per the contract, lending our best efforts to help facilitate the entire process for each purchase, even though the purchases would be owned separately under independently owned/operated LLCs. Makes possible future breaks a lot easier to deal with, without dividing up or complicating things legally.

What have other partnerships done in similar situations? Any suggestions/recommendations? 

I understand about *actual legal advice* and needing to confirm with a lawyer, etc. but any input would be appreciated.

Best Regards,

Aaron