All Forum Posts by: Aksel A.

Thanks @Daria B.

My OA has the following sections:

1. Preliminary Provisions

2. Membership Provisions

3. Tax & Financial Provisions

4. Capital Provisions

5. Membership Withdrawal & Transfer Provisions

6. Dissolution Provisions

7. General Provisions

8. Signature Of Members

From your response, it seems that I should introduce a new brief Management Provisions section. Is there a such standard provision template I can use for my closing? Again, this is the simplest possible incorporation LLC layout, with 1 owner-member-operator me and not subject to change anytime soon.

Greetings,

I got the following feedback from underwriting:

DOCUMENTS DUE AT CLOSING AND FOR SIGNING:

- *Amended Operating Agreement to reflect Member-Managed signature block is needed. There has to be an area regarding the authority for you to give you the right to enter into a loan 

My operating agreement is quite standard, so I am not sure what exact verbiage the above requires. Is that a 1 line quick sentence, or a full broken down chapter to be added in the operating agreement (I guess in the General Provisions section)?

Greetings fellas,

I just got off the phone with GeoStellar, and it appears that owner occupiers of small residential multi-family investment properties cannot easily get an in-house financing (as opposed to traditional single family homes).

If you have recommendations for local/large banks or independent lenders that can assist in providing financing for properties which electric utilities are solar powered, I'm all ears.

Thanks in advance

Thanks all, I appreciate the kind words.

Yes @Jeffrey R. FHA 203K was by far the way to go on this one. If the property doesn't need much renovation, the key is low down-payment. Plz PM me for more info.

A few gotchas from this process:

- On the good side: rubber roofs rock!

- On the unfortunate but expected side: PMI! In addition to the monthly payments, the upfront PMI charge can be quite heavy and discouraging. It's the price to pay to benefit from this program. The later refinance should largely help curbing the monthly charges.

- On the unexpected bummer: I had the misfortune of inheriting Boston flood zone updated maps, causing the entire Port Norfolk area to be at "risk". I invested in producing an "Elevation Certificate" that didn't help at all. Some people may have different opinions on this, but it's obvious the ground for flood risk is unfounded and borderline lunatic. The area has never been at risk anytime in its history, and where I am located, the sea isn't anywhere close. The authorities are using the Peabody floods a few years ago as an excuse to hit the residents, and the FHA program will force that onto you.

We have a great chorus for this: "It's the cost of doing business". Gotta keep the bigger picture in mind.

I will likely join as well.

Agreed with the responses here, lack of knowledge, fear, lack of drive, and various deterring factors.

I'll add a small nuance to the "lack of knowledge" argument. It's not only that the majority of people don't know how to invest in RE, but also that they don't even know they can do it.

As far as my entourage is concerned, for a majority of folks, investing in RE is synonymous to stock speculation. Given that the difference between investing in the paper exchange market and investing in RE is of orders of magnitude, such speculation based investing is exponentially perceived as more risky. If we add to the fact that the majority of big players in the industry appear to be long standing multi-billion shops who "apparently" scoop up the competition without a breath, then this entire industry appears totally out of reach.

It is very common for me to have a conversations with non-real estate professionals who never heard of basic concepts such as "cashflow" or "leverage" specially applied to real estate. Let alone "no money down", "house hacking", etc. Hence, although this falls under the "lack of knowledge" bucket, the related element is the "lack of drive" that would eventually lead to that knowledge, which a few posters already dissected in the posts above.

In the beginning it started with the "why", crystallized by some flavor of a life changing paradigm shift, fueled by the drive. one needs that to act into knowing what one can and cannot do.

Done deal! I am sharing my experience here with the rest of the community. After over a year of tenacious searches, analyses, and offers, yesterday August 1st 2017 turned out to be the closing day on my 1st owner occupied 3 unit small multi. And this using a 203K FHA loan in the brutal market of Boston, on the east side of the Port Norfolk bay area.

Facts & Numbers:

• 2 beds & 2 baths on each of the 3 units
• Purchased for $655K @ 5% down-payment and a generous dose of 203K closing fees
• Taken a 30K cushion for the 203K streamlined rehab
• Locked in 4.25% @ 30 year interest rate
• Appraised at 750K

The numbers are certainly not the exquisite definition of what a ground-breaking deal stands for, but they certainly fare decently well in this seller's market where cash investors rule, the inventory is constantly challenged and most properties are getting sold for over asking price, taking advantage of the current interest rates, the Everett Casino construction, and a few other speculative but pragmatic plays.

Just like most everyone else that was not raised or surrounded by real estate professionals from a young age, this deal was pretty much riddled with small mistakes here and there, from neglecting the fire department smoke and carbon detector regulations, being over-optimistic on the underwriting guidelines, underestimating the cost opportunity due to all sorts of processing delays, and you name it.

Currently free from tenants, the expectation is to add value by rehabilitating the under-developed basement, adding 2nd and 3rd floor balcony decks, and a variety of practical and aesthetic fixes. From there, we are looking into breaking even while living for free.

Whenever the opportunity presents, I will later be updating this thread with pictures pre and post rehab, rental cash-flowing numbers, and any relevant crunchy details.

When in doubt, leave emotions aside and go back to fundamentals. Just like Scott elegantly presents it in his reference article, the house hacking rehab loan for owner occupants is an expressway to get in the game by seriously limiting your risk and exposure while providing you the opportunity to learn all the ropes of the game hands-on. These low down-payment owner occupant loans are very forgiving once you get to do your financial, physical and legal due diligence in order.

I wanted to express my thanks for all the support provided by the various professionals I have been meeting in the real estate investor associations, meetups and casual one-offs, and of course, the BP community.

Finally, for all the newcomers in the arena struggling to get your first deal under the belt, just be assured that with knowledge, patience, and positive entrepreneurship skills, be confident that you will ultimately do it.

Zillow is merely the tip of the iceberg. Maybe a good tip for sure, but still, you'd be severely limiting yourself if only considering Zillow or any other website for that matter.

It sure depends on what your goals are, but in general, building long term privileged face to face relationships with agents of trust working in your market of choice can pay off just as much if not much more, and these can be found in your local area, meetup, or just about anywhere else.

Greetings @Eric Stafford , the Boston market can be challenging but quite interesting, plenty of opportunity for growth as the demand isn't anywhere close from running out of steam.

I think this is the crux of the issue: "if the tenants have their own meters"

They do have their own meters, both gas and electrics. However, the previous owner was basically paying for everything for some reason.

Due to the nature of the deal, the specific details have been waived in order to speed things up and make things easier. A few people may frown on this, but there are very valid reasons for this course of actions, and it's ultimately a win-win.

It appears that the next steps for me, after the closing, would be to hire the right technicians, probably from the same utility company, to check things deeper and analyze what source is connected to what meter (including common areas). That will provide me a much cleaner picture. From there, there may be some minor refinement work or cable adjustment needed to clearly separate the concerns.

So we agree that having the tenant own this piece is not only desired from a financial perspective, but also a must have for risk protection.

Thanks