All Forum Posts by: Andrew S.

@Jennifer McPherson We used HELOCs on 2 of our properties to buy the third. The banks will limit you to 75% LTV on the non-owner occupied property, but on your primary you could go higher. Of course, I would recommend caution in going above the 75% figure in either case. The HELOC funds are available for the downpayment on your next acquisition but at no cost until you use them. Showing proof of funds is easy, as is drawing a check when it is time to close. The interest rate on the HELOC may be higher than refinancing, but if you do a cashout refinance, you're paying interest on money you don't need until you find the right property. Again, a word of caution, when you finance the downpayment with a HELOC, you are putting yourself in a highly leveraged position that may exceed the risk threshold for some people. The intent of this method is to use the funds to quickly secure the property and then pay off the HELOC to take an equity position and reduce your overall risk.

Tammy, I see several disadvantages to combining the properties into a single tax parcel. 1) if held in separate entities, your liability is limited and you have significant asset protection. 2) individually, you can borrow against the properties either through refinancing or Heloc. If you combine them into a commercial property, the lending rules change and financing becomes more complicated and more expensive. 3) the economies of scale are the same for 3 duplexes or a 6-unit parcel. 4) insurance is likely less expensive on 3 duplexes 5) a valuation based on NOI may or may not be greater than 3 residential buildings. And even if it is, until you're ready to sell, the value is essentially immaterial (eventhough we all love the wealth that is generated by real estate). Just a few thoughts. I'd love to hear what you decide and why. Cheers, Andrew

@Ben Payano It seems like you want to keep the place. Emotions and investing don't go hand in hand, but facing an expat situation is different from what most people ever experience. If possible, try to get compensation as part of your expat package. Ypur $800/mo loss is a direct result of your employer's decision to relocate you. Assuming you are not military, you're in a good position to negotiate. Second, try to have them include it in your foreign housing reimbursement instead of your salary. There is an additional tax exempt portion of your foreign earned income for housing so the money may help you break even or get ahead and be partially tax free. Third, if you decide to sell and you've been there less than two years, you do have the foreign earned income exclusion and most of the taxable gain would be cancelled out. Check with an accountant familiar with expat taxes. S/he can provide suggestions and advice on how to proceed and key points to negotiate that we typically overlook (unless you've done multiple assignments overseas). We just returned from 2 years overseas so I am happy to discuss. Feel free to drop me a line. (If it's not obvious, I am not an accountant nor an attorney and am sharing based on my own personal experience.)

We just signed a 12 month lease on a 2/1 in Kent West Hill at $1,350/month. $1,500 seems aggressive unless you're higher end with amenities, w/d in unit, etc.

I am happy to share experiences as an owner/manager in Kent. Feel free to PM me.

I've been very happy over the last 3 years with with Sterling and Kuder on Mercer Island. Kelly Sterling is well versed in RE tax issues and is very helpful and accessible when questions arise. www.sterlingkuder.com

It refers to monthly rents as 1% of the purchase price or total cost to get the unit rent ready. If you buy turn key or currently occupied, it's just the purchase price. If you buy and put in some cash to get the place up to par, go with the all-in amount. And to clarify, the downpayment has nothing to do with the 1% rule, sorry if I wasn't clear. What I meant was that the 1% rule may not give you enough gross revenue to cashflow if you have a hefty interest payment every month. As a conservative estimate, I like to do the quick math like this when evaluating a property: 1 Gross Revenue minus 10% for vacancy, minus 10% for repairs, minus 2% for credit loss gives you a rough estimate of gross operating income. Subtract your monthly expenses and mortgage payments and if there is $$ left over, the property deserves further attention. If (Gross Revenue X 78%) - operating costs - mortgage payments is > $0, it looks good. Again, it's quick math (my accountant would not approve) but it gives me a good idea of what we are looking at and if it makes sense to invest the time, energy, and money into writing a contract and going through the due dilligence. I haven't used the calculators on BP (I joined after my last acquisition) but I hear they are quite good. Just don't get caught in analysis paralysis and spreadsheet yourself to death! Cheers!

Hi Juan, Our 4-plexes cash flow very well 1%. That said: Financing requirements make a big difference. If I finance 100% of the purchase price, the interest on the HELOC used for the down payment will likely eat up my cash flow, even at 1%. Taxes can also get you. A disregarded entity pays far less in taxes than you would in another structure that incurs double taxation. Insurance costs, special assessments, sufficient provisions for capital expenditures, property tax increases, legal bills, etc can all pop up and force you into the red. Moral of the story, do your due diligence properly. A simple rule can guide you but it can also get you in a lot of trouble. Feel free to PM me to discuss further.

Dear Carmen, I found considerable value in the FB 3-day course but would HIGHLY recommend you use the $30k to actually invest in a property instead of giving it to someone else. My humble suggestion, go back through your notes from the seminar. If you look carefully, you'll find a few dozen items that you need to learn about before investing. Take each item and go through the free resources on BP, You Tube, and your local library. You'll find everything you need to know to get started and to build your team. FYI, a business coach, RE agent, RE attorney, mortgage lender, and a friend with positive experiences in RE will cost a lot less than a $30k mentor program and provide a lot more benefit! Feel free to reach out...

Jared, Robert, I am based in Bothell. Let me know if you plan to meet up. I'd be glad to join you.