All Forum Posts by: Allen Hayes

Any suggestions for finding a general contractor or service that offers apartment turn services, preferably in Louisville, KY? I'm not sure what that type of service would even be called so I haven't had much luck searching for it online.  I've been DIY on the turns to control costs but it's also costing me time and stress so I was interested to see what outsourcing that would cost.

Hmm, honestly a lot of this sounds like your accountants are asking for you to put data in a format they can import to their accounting software during returns preparation. Some of the depreciation and amortization features sound nice I guess but probably takes as much to set up as a simple schedule on Excel. If it works for you great, but I'd hesitate to recommend it to newbies with smaller portfolios. I've got 27 units in 2 apartments and three SFH properties and I couldn't imagine dealing with QB for it. I don't think QB sounds like a necessary package for this until I get an office worker to help with the day to day rent receipts and taking/making calls and even then it's mostly just to get some internal controls and "idiot proof" my processes. Just for the record I am a corporate accountant and my wife is a CPA so it might just be my comfort with accounting.

wow, just so we are clear my phone isnt letting me see what i type until i post so im not normally this bad

correct, but you will need to be losted as also insired on his. You can get personal property and professional insurance though. I also habe an umbrella policy just in case. And ours is worded something like that too. We added that we can review and submit changes just in case we find better insurance elsewhere or identify a gap or over coverage.

@Wendy Li It's still against federal law and all it'll take is a new president to start enforcing it and seizing grow ops and depending how they view your letting them run a grow up I could see the property and your personal property being caught up in it.  I'd move them out ASAP

@David S. Yep.  Remember that everything you'd normally do as an operator has to be thought of at this stage. Insurance is another biggie to agree on.  You aren't the owner so you need to be the also insured on the owners insurance. Who covers what repairs? We assumed liability for all repairs unless they were insurable losses, and if those happened we pay the deductible and she has to file the claim.  Insurance is a pass through expense to us (part of our monthly lease payment) so if we screw around filing claims and our rates go up that passes to us to.  Also, what's the process for structural changes?

Another big thing is exit clause.  Mine is 3 months notice and we're out.  I love that part because frankly, it's only getting exercised if Armageddon happens and it'd be impossible to sell it but with just three months notice, we're out free and clear of everything.

@David S.  I just did an MLO with similar circumstances, seller didn't want to trigger taxes and she had an amazing fixed rate mortgage for 12 more years that I wanted to leverage. 

For my MLO I just had to have my real estate attourney email the lender and ask if they had any issues with me leasing the property (there was a weird clause in the mortgage that she couldn't lease the property to anyone even though it was an apartment).

With an MLO make sure the lease never mentions the option.  If they cross reference, it could be considered by the IRS a sale and all taxes come due immediately.  Also, both the lease and option have to have seperate non cross referenced consideration.  While the deal was 10K at signing, 5K per month, 10K on 1st anniversary the formal payments were 9.5K for ML at signing,  5K per month for lease, 500 at signing for option,10K for option at first anniversary. 

And make sure you get right to assign the option part at a minimum. It'd be nice to be able to assign the lease but most sellers want to vet who is running their collateral so they won't go for that. By assigning the option you can still sell it down the road without having to hold it for a year to get capital gains vs income tax treatment.

Sorry I talked to my realtor and she asked me not to share on the forums. If there's anything else I can do please let me know!

@polly gage, can I private message you my agents contact info? She has helped us on several houses and been amazing on everyone. She's looking for business too so its good timing.

Can I ask why you guys need this software?  I've done a few fixer uppers and now have 2 different apartment buildings and just use Excel with each building getting it's own tab.  It sounds like you're using accrual accounting instead of simpler cash, is there a reason? For my personal reporting I will do an "all in" and a modified view with large one off expenses backed off just to see normal operation trends vs actual incurred.