All Forum Posts by: Adrian Akerman

@Beary Bowles

The amount of layers (weight) on the roof and the issues with water making it to the roof drains sounds to justify a tear-off. If not, it may be very difficult to achieve proper drainage, and in some cases the weight can cause deflection in ways that cause it to pull away at the walls, which wouldn't help with the overall lifespan of the new roof. Additionally, the roof replacement is definitely the time to add insulation, and adding enough to meet local building codes is just as easy as having less, assuming a tear-off. Sometimes you can opt to hire an insulation contractor to blow R49 of cellulose insulation through holes in the roof while the roof is being torn off at a lower cost. This depends on if it's feasible and there is room between the ceiling and the roof. I'm on the east coast, you'll want to verify that either approach to adding insulation is conducive to your climate and the design of the building.

Originally posted by @Michael Noto:

If someone has a long track record of unstable financial history, them paying their rent for a year wouldn't really prove much for me. The very reason you are collecting 2 months security in the first place is because their track record is poor. 

For the most part these people will eventually revert back to previous financial habits and you will want that extra month of security to protect yourself for when things go off the rails. 

My main reason for requiring the 2 month's deposit is because they were living with family until now and don't have any rental history. One of them has a landlord reference but it's more than six years old.

@Mason Hickman

Thanks Mason, I can add the actual amount MINUS any required deductions. If they have good standing there shouldn't be any deductions, but I think I'll need to specify it so that I'm not obligated to return half and be left with less than a full month's rent at the time of renewal.

@John Underwood

Good point, I would be mad as well if I did my best to meet what I thought to be the goals but still didn’t get my deposit back. As with many landlords, I’d be understanding if the rent was late twice, but to be safe I’ll allow it once on the addendum.

My real concern is that they could maintain the property well and pay on time but some other factor that I didn't think about could suggest that it isn't wise to renew with a single deposit, such as: one occupant moves out, a new occupant moves in, change in employment, or any number of things that could change the stability or DTI. I suppose that's why there's a lease though that says new occupants require approval though.

Thank you for your feedback! I am really appreciative for the responses coming in so quickly.

@JD Martin Thank you for your reply. I rehabbed the property for resale but decided to keep it. While the rehab and finishes are high end, it is considered a transitional neighborhood where most applicants in the area have had one challenge or another. Needless to say, I won’t be creating that combination again in my future renovations.

I have two approved applicants for my property and i have required a double security deposit (two month's rent, totaling $3,800.00) due to lack of rental history and one of them having some delinquent credit history. They are currently living with family and have stable employment history. I plan to agree to give half of the double security deposit back at the renewal of their one year lease, pending that they have maintained good standing and there have been no incidents within the first year that would warrant otherwise. Meaning that they don't have multiple late payments, cause damages to the house, cause unnecessary wear and tear, exceed the occupancy limit, breach the lease in other ways, etc. .

The goal here is that after the first year they will have established a track record that serves as it's own landlord reference for me to renew without requiring the double deposit. They have requested a clause that they will receive half of the security deposit back after the 1st year of occupancy provided there aren't any incidents. Has anyone had experience with writing such a clause, or would you write it as an addendum?

My draft as an addendum is as follows

Landlord and Tenant agree that provided a history of good standing, no damages to the property, minimal wear-and-tear, and a satisfactory Premises Inspection prior to renewal, half of the security deposit will be returned to the Tenant upon decision and approval to extend the Lease Term for a Renewal Term. The return of half of the deposit will be made at Landlord's sole descretion, and Landlord reserves the right to consider any and all factors in making a decision to approve or deny the return of any Security Deposit amounts outside of the terms under Return of Deposit contained within the Lease Agreement.

The property is a full gut high end renovation so precautions are being taken, however I want to be fair to good tenants, especially if they are long term. The lease is written to renew for a year if decided, it does not go month-to-month. Does what I have written seem safe to include as an addendum to the lease, or am I exposing myself to too many potential issues?

Thanks Whitney and Stephanie for your replies and for welcoming me to the group! After I posted this I spoke with two real estate attorneys AND my accountant who confirmed what the two of you said and added some points: The LLC adds a layer of protection, one attorney did bring up that an LLC does not protect the landlord against liability for lead paint (the vast majority of homes here are pre-1978). They also mentioned that a good insurance policy is probably the better protection to consider. My accountant confirmed that purchasing using my LLC does not change anything about the ability to write-off expenses.

With that being said, this all seems to revolve around the lending and whether borrowing in one's personal name vs. LLC is helpful or harmful from a loan approval standpoint. Borrowing in an LLC keeps the loan off of the personal credit report and therefore can make my DTI look better, even though they would still consider the loan in the overall analysis. The detriment to borrowing in one's personal name is that it negatively effects the DTI for the next personal loan approval until the investment property is rented. Since I am interested in refinancing my primary residence for the better interest rate very soon, it seems that the best way is to purchase any investment properties under my LLC, and use the ability to purchase in my primary for later down the line. Does that make sense, or is it just paying higher interest now for no reason?

Additionally, I have been told that may not qualify for the refi until I get a tenant in either my listed property or the one I'm closing on soon based on my cashflow.

Hello everyone, new to the BiggerPockets community here and I'm at the point where I want to leverage equity assets to complete more rehabs on existing properties, and fund more purchases, and am learning more about the BRRRR, having completed B,R, & R so far on several properties thus far.

I've been talking to commercial and conventional lenders and my questions are as follows: Is borrowing in the LLC better, and does this really gain a better write-off potential? I am gathering that borrowing in my LLC using a commercial style 30yr for purchases and refinancing is better as it will enable me to write off the mortgage payments as well as prevent my DTI from rising too high, is it worth the added points and interest in most cases? Also, have you been able to achieve a blanket loan secured against multiple properties to avoid multiple closings?

Credit is great, but self-employed net income was low prior to 2019.