All Forum Posts by: Cameron K.

 It is a 2BR, 1 Bath in Wheat Ridge renting for $1650 as is. With some attention to the kitchens we may be able to get a little more. It cash flows about $500 per month.

Good Afternoon!

I will be closing on a duplex this Friday. We opened a HELOC on another rental property (a 4-plex) with 800k in equity. The HELOC is for 190k. I will be using 90k from the HELOC to put down on the duplex. Duplex is in good shape, brick exterior, good location, and could use some attention on the inside. It's not what I would call a BRRRR, since it doesn't need a ton of rehabbing, mostly finishes inside.

Here's the question: How should I use this HELOC in the best way to acquire more rental properties? With this duplex, I don't know if there's enough rehabbing to bump the appraisal to get back our HELOC amount and cash out. Considering 3 options:

1) Turn around and put the duplex on the market for 100k (we got a good deal on it - and the Denver market is inflated. I think it will sell.)

2) Hold on to the property for a few months and use the other part of the HELOC to rehab it on the inside. Then try to sell at a premium.

3) Hold onto it long term and put a corporate renter in one side, and a long term tenant in the other to maximize cash flow.

I suppose there are two questions there.

What's the best way to use a HELOC in this situation?

What would you do with a duplex in a good area of Denver? 

Thanks!

@Matt M.

First Bank requires at least 20%. The duplex sides are each 2/1.

Thanks@Steve Vaughan for the input. Initially, my reasons for investing are for cash flow. But I am also looking for a retirement income that a tenant can help finance. I prefer cash flow but Denver has very few deals right now. 

The seller wants to sell for an estate sale. Another comp went on the market and went under contract in 29 hours at $415k with similar specs.

@Jon Holdman If you have any input on this deal I'd greatly appreciate it. 

Thanks!

Hi @Account Closed. I do agree that the cash flow isn't great. I am mostly a buy and hold investor (I own another multifamily 6 units) but this would be only the second building I own.

Hi! Thanks for the reply @Bryan Mitchell. I am going through a local bank and they require 20% down on investment properties. I know 74k isn't 20% but I may borrow a small amount from equity in another building. If you have ideas on how I can put down less, I'd love them.

After a year of trying to finding deals, I've finally found my first off market deal. It's a duplex in Wheat Ridge, Colorado. The owner would probably like to sell for between $410k and $425k. The place is a brick side-by-side duplex on .22 acre lot. The common wall is the garage, so it lives like a single family. It's one house off a busy street thoroughfare, but a Lucky's Market is slated to go in to the area as well. Cozy.com research thinks rents will be at $1500 but I know it rents for slightly more on one side. I have most of the cash to put down, but will have to borrow about 5%, and will probably do so with a heloc.

Also, the owner wants to use his realtor relative to do the transaction, at 1%. I am cautious about that part, but first want to determine if this is a good enough deal.

Thoughts? Is this a good deal?

The condo is in Lower Highlands just a few blocks from Linger restaurant. Long term rent is $1800. Not sure if it's going to make much more than that on corporate. I'm prepared for the upfront costs of setting it up. Do you think corporate requires updates like granite counters, and stainless? Also wondering if there is a need for 2 BR corporate rentals with most guests not willing to share space. I can see how the studio and 1BR would fly well!

Thanks again for the input! 

Hi!

I am wondering if we should switch a long term property to a corporate rental. I wouldn't call it luxury inside, but it could easily be reno-d to be higher end. We own the building and there are long term units inside. I know corporate rentals make more $$, but how vacant are they?

Has anyone done this in Denver? The place is a 2 BR and 1 bath condo, in a great walkable area.

Thanks!

I'm an owner of a 4-plex, I've had for 10 years now. It was a condo building, each unit having its own address and deed when we purchased. It's doing very well and one of the units is an Airbnb. My husband and I have just owned and managed the building for years now. However, we have heard dozens of times the advice that we should put the building into an LLC - with each unit in an LLC.

After researching..... I just cannot see the benefit of all these LLCs. If the issue is protecting our assets in case of a lawsuit, it seems like a good umbrella that covers our "net worth" will do the trick. I understand that if someone goes after us with a lawsuit, someone can get the equity of all the units if they win the lawsuit. With each unit in an LLC, supposedly it separates each entity and the person suing could only go after the equity of one condo. OK, I got that.

It has come to my understanding that if you don't account perfectly for expenses, a lawyer can argue that the LLC ultimately leads to me and my husband, and that our personal assets would get compromised anyway. Or, if I purchase another property under my own name and then transfer it to an LLC, the lines between personal finances and business finances wouldn't hold up in court anyway. It just seems that the LLC is a fragile line between personal and private monies, but that it can be easily argued against.

Overall, It seems like an LLC is fancier, more "clean" and official and separate. However, we would go from passive income as landlords to having to pay self-employment taxes, plus commercial insurance (which is double the cost), plus all of the costs of setting up these LLCs, plus added taxes, etc.

I manage the property and do basic repairs, but everything else is contracted.

So, for all you real estate gurus...

Can anyone explain why to do an LLC?

I am seriously leaning towards the insurance route.

Thanks!