All Forum Posts by: Art P.

@Fili Aguirre

Of the options I have seen that might be related to paying rent with CC, you get charged an additional 3% (may have additional fees involved) of the total amount as a "convenience fee". You end up paying more than what you would have if you just payed via ACH or check, in addition, points earned will not make up the deficit. 

You can take a cash advance (highly discourage) at the going advance rate on your CC, typically 19-29% upfront, which makes absolutely no sense to do.

If you are in a dire situation, I would attempt any other solution if you are well inclined to pay back the amount such as HELOC (if you have enough equity to access this with your lending institution), a personal loan (5.99-14.99% APR), or borrowing from family or friends for the short term.

@Aaron C.

You have a few options, you can do either of the two options you mentioned such as discounting the existing price, or raising rents if you believe the market will tolerate the increase. I generally stay at or just below market to try to lock in quality tenants for longer periods of time. 

If you find a property that takes FHA, but is distressed, you do have an option with the FHA 203k loan that you can use to purchase and fix it up, this does require using certified contractors pre-approved by the lending bank (generally more expensive than contracting out yourself or DIY).

If you do happen to find a deal and negotiate it to take FHA with 203k repairs, the numbers may still be able to work in your favor. You do have the other option of a hard money lender once you find a deal and then conventional refinance upon completion of repairs and seasoning requirements.

Finding partners to get in on the deal (remember you can receive a gift to help with down payment with an FHA loan from immediate family) is another option. I don't recommend trying to circumvent any FHA underwriting rules, but if you can get creative with financing while making your initial or subsequent primary residence house hacking investments work for you, more power to you!

There are some fixed operating costs associated with filing and annual operating costs of a LLC that you need to consider. Virginia appears to be $100 filing and $50 annual.

The greatest factor to make note of is to properly operate as an LLC. Reimburse yourself for purchases made outside your LLC business credit cards, do not commingle personal and business funds, keep separate bank accounts. If this isn't performed then the LLC is meaningless in terms of protection.

An LLC gives you flexibility in how the entity is taxed (corporate, partnership, or sole proprietor). Typically the election for LLC primarily stems from the "protection" feature and lowering taxes where applicable.

@Claudia Jurado

@Michael Ealy correct me if I am wrong on my explanation on your suggestion of 1031 exchange below:

"If you're not in a great financial situation, maybe 1031 exchange the equity in your 2-family rental house into a 10-unit or 20-unit apartment building. "

I believe what Michael alludes to is electing a 1031 exchange on your two properties to pull the full $250k minus costs of a qualified intermediary and traditional selling costs on both, to identify a new deal (45 days from sale of first residence) for a larger commercial multifamily residence that is greater than 95% of the sale value of the two relinquished properties, but does not exceed 200% of the Total Sale value of the two properties. You have up to 180 days, or end of the tax year (unless filing an extension) whichever is sooner to close on the identified property. 

To give you a scenario, your two properties sell for $350k and $400k, respectively. You have ~$250k in equity you can use to fund your next deal within the 1031 exchange parameters. The identified property would need to be at least $712,500 (95%) and no more than $1,500,000 (200%) to qualify. If you can secure a commercial multifamily residence within that range within 180 days, you carry over the basis of the two sold properties into the new one and defer any gains recognized to the newly acquired property to be recognized upon the future sale of the property or further deferred with a subsequent 1031 exchange.

@Bryce Kammerzell seems like a win-win scenario if you were to purchase it. Do the number's make sense if you were to use a conservative rent rate to get your target CoC return?

@Joel Owens 

As an experienced Commercial RE investor, when @Bryce Kammerzell suggests a BRRRR strategy on the property itself to make it appealing to a potential Lessee, can you please tell us a little about how you would approach this scenario with the assumption the space is zoned industrial?

Would you broker out the commercial property or self-advertise? Would you make any improvements prior to advertising it? Would you leave as is and negotiate on improvements with a future Lessee? 

@Anthony W. : 

To add/clarify all the points @Jaysen Medhurst mentioned above, based on this report, given your estimates in the report, both Interest rate on the loan and down payment will be higher for an investment property. I would use the figures @Jaysen Medhurst provided as a starting point. Cash to close and repairs will most likely be upwards of $36,500. 

With the following assumptions, 5% interest, $116k mortgage, insurance $450 a year, everything else equal. You are still looking to cash flow ~$525. CoC ROI is still 17.2% which is great.

Items to consider:

• Yard maintenance - I normally have a clause in my lease that the tenant is responsible for yard maintenance on their respective plots.
• Water/sewer cost - Identify who is responsible and add/remove expense as needed.
• Owner occupied route - add in PMI (0.85% of loan amount per year if under 90% LTV) if paying less than 20% down and adjust interest rate as needed.
• Near Future capital expenditures - have inspections been performed? Things you may not see can hit your bottom line like damaged sewer lines, and pests. Walk through with a trusted contractor/plumber.

Hello Wes and Chris, 

I have been working with an agent that is sending me property listings on the MLS. I've increased my county searches. I've been looking almost exclusively for fourplexes.

Wes, I've sent you a request, I would love to get more information and learn more. 

Thank you both for the input. 

Hello BP community, I noticed there aren't too many forum posts regarding foreclosures and wanted to pick your brain a little regarding financial analysis for a first time investor. I'm currently searching my home county of Sacramento for potential Duplex/Triplex/Fourplex investments, but the current expensive market price and potentially reasonable offer will not create significant cash flows with residences available at this time. I can wait for a better time if needed. Any potential suggestions on being able to get over 1-1.5% Rent/Purchase Price? 

The other option I'm looking into are foreclosure properties. I plan on performing my due diligence on any potential property, but many appear to be condo's or single family residences and not too many 2-4 units. I understand some of the risk of going this route and would plan to use a hard money lender for initial financing then refinancing with a traditional residential mortgage or FHA if I qualify after bringing it up to livable conditions. The question is, without being able to physically inspect the property, what suggestions would you give me to look into or work on to land a good deal and not "get caught with my pants down"?

Background, I've gone through the starter videos through BP, am eager to jump in and begin figuring real estate out hands on, know how to perform financial analysis, but am inexperienced with Real Estate as a whole.