All Forum Posts by: Andrew Kiel

We prefer to do these types of transactions by forming a manager-managed LLC. We will then do a joint venture agreement and set up the operating agreement for the LLC. The tricky part will be how the lender will want the ownership structured, best to go into detail with the lender on what they expect.

I guess I'm confused on how you could be buying a house subject to for less than what is owed; unless of course the owner is paying you cash to take over payments.  My feeling is you're thinking about this the wrong way.  Try this:

Purchase price = 37k - you're taking over payments subject to existing financing.

Owner signs over the deed right away, you record it.  Get a power of attorney and fax it to Shellpoint and add yourself as a 3rd party representative (and yes, I said fax it - most lenders are still archaic that way).  Now, you have control.  If something happens to the sickly owner, you're covered.  You have a deed and control of the property.  No need to think about refinancing in a year, unless you want to.

Rental comps are tricky in most markets. Zillow and even MLS does a poor job of reporting and tracking what things rent for, and in my market, are usually off a fair amount (low). Try to look at your duplex through the eyes of a current renter in todays market. What is available right now for around the price you're thinking. You're probably worth more than a 2/2 apartment but less than a 2/2 single family home. Sometimes you have to make an educated guess; guess a bit high when you do your advertising and you may get lucky - guess low when you run your numbers. If you're a bit high on the rent when you start to market, don't be afraid to admit you're wrong and lower the price fairly quickly.

Try using the rental property calculator:

https://www.biggerpockets.com/...

On the surface - it sounds like a great deal; getting $2200 of cash flow per month on a 70k investment seems fantastic.  To really dig into this more information would be needed though.  What are the expenses?  IE - do you need to pay some/all of the utilities? Is everyone current with rent?  Try plugging the numbers into the calculator and see what you get for monthly cash flow and rate of return.

We have that scenario come up frequently. We choose to run all the accounting as if the property is already in the LLC from day one. Best to check with your accountant for specific advice. One note - I would strongly recommend that you use a warranty deed to transfer ownership from you/your partner to the LLC and NOT a quit claim; use of a quit claim could invalidate any future title insurance claims.

We've used Mike Boreale and Samit Bhalala with Boreale Law Group at (520) 334-2069 for the last several years and have been very happy with them.  

@Daniel Villanueva - Hi Daniel, my team and I are always willing to chat with newer investors and see if there is any help or guidance that we can provide.  I'll send you my contact information in a private message.

Well, yes and no.  It will almost certainly not appear on your credit report, so in that regard, no.  If you fill out a full loan application, you likely should disclose.  The other question that comes to my mind, is this a personal residence or an income property?  If it's an income property, the DTI should be somewhat or fully offset by the income the property provides.

@Daniel Siapin - Said pretty much what I was thinking as I read back through the post. You need to figure out what the seller needs/wants and fix his problem, while also making sure your needs are met (keeping the payment below 3k).  Some of the best deal makers I know simply use a "how can I help you" approach.  Alternatively, negotiating a deal can be much easier if you're transparent as well. "Mr. Seller, I really love your house and I want to buy it.  My budget allows for $3000 a month.  I'd love to figure out a way to make this work with you."  You may get laughed out of the room, or you may get a willing participant helping you figure out a way to make it work.

@Jack McWatters - correct $650000 at 8% for 30 years is $4769.47 per month - and as @Matt Hurley mentions, that's not including taxes and insurance.