All Forum Posts by: Bill B.

They could sell them to “recoup” some of the downpayment. (Recoup means get back. So they would have to have the cash for the downpayment to begin with.)

If they get 5 individual loans this is EZ Peasey. Just sell and pay off that loan or two. If it’s a blanket loan they would talk to the lender ahead of time. Mention which properties they would consider selling. Then the lender would say that house is worth X% of the loan. So you need to sell for more an x% of loan or you have to give us more cash. Sell for more than that and you’ll get the leftover cash after paying off that x% of the loan. (So unless they sell for much more than they paid they will only get a small percent of their down back, especially after selling costs,) but you did say they were getting a discount. This is when they’d find out if they really did. 

A couple options… 

1) Coast as is until March for better selling season, more buyers, higher price. 
2) Raise the rent at least half way to market. Helps carrying costs while waitingg to sell and makes financials look better for investor buyers. If they decide to move out you can do the remodel. 
3) are the tenants in any kind of financial situation to buy the property? They may less sensitive to need upgrades/remodeling and avoid moving. 
4) get a backup/lowball offer from opendoor, offerpad, etc etc. Then you’ll have a backup plan. Heck, who knows maybe they’ll be acceptable. 

@Becca F. those are insane prices Becca. From what I coulda find you were already paying 22c/kwh in 2014. So your rates have doubled in 10 years, about 7% annually. (I couldn’t find if that was a nice gradual increase or mostly done in 1-2 years.) But….

You can see you’re being screwed over by the power company, or the government, or both. Peak and off peak shouldn’t be a 6% difference, it should be closer to a 50% discount.

PLUS, if they’re charging you 49c/kWh and solar is needed to SAVE THE PLANET. Why are they paying you 10c/kWh? Does that mean they’re paying 10c/kwh already and charging you 49c/kwh? (When I’m paying 11c/kwh I assume it costs my power company 7-9 cents?) Or, are they paying you less than they pay everyone else to discourage it?

They want 6% for their half? That is far from “the norm”. What are they suggesting you off the buyer’s brokers, another 4-6%?  Buyers are harder to find than sellers these days so the buyers broker should get more than them. 

Or…Are they saying they have a buyer and they'll charge 6% total? If so are you sure you're getting market value for the property if it's not listed on the MLS. I'm not your buyer but you might want to shop the deal around or get it on the mls and then get closer to 5% total. Good luck.

Again, I like the idea of a new fourplex, it just seems like you’re glossing over alternatives/possible problems. 

1) You say you want to hold for cash flow instead of taking $120k cash by selling as soon as it’s built. How long will it take for the property to cash flow $120k?

2) You say you can kick in another 20% of $650k if they can’t finish. So you’d be ok coming out of pocket another $130k and paying $780k for this property if the builders fail to perform?

Lastly, I’ll repeat. I want you and them to succeed. I want more new fourolexes to be built. And I am solely a buy and hold guy. I’ve done one 1031 exchange in 25 years, I own every other investment property I’ve purchase in 25 years. But if someone said they’d NET me $120k more for a property I bought yesterday, I’d probably take that deal. 

Are you assuming they are lying to you? Or are you assuming you should buy them all and list them on the MLS for $820k, clear $770k after closing costs and put $120k in your pocket?

How much of the $650k do you have to borrow them to complete the build? If it’s over $150k it’s too thin. You need margin for the point it’s 80 or 90% built and the builder says they’re out of money. 

I hear you now. “No, I’ll release the money on draws, that won’t happen…” Ok, so you need margin for when it’s 50% done and they say they can’t afford to get to the next draw point. Give them money or they lien the house and walk off the job. 

MAYBE I’d buy the land and lend half the building COST while the builder puts up the other 1/2. Then you agree to buy them out for 1/2 the difference between $650k and cost? Like a partner would? You being a “partner” and then paying the “profit” to the builder makes no sense. Anyway, as long as this is money you can afford to lose good luck. I love the idea of new fourplexes being built. But I haven’t seen one pencil in a long time. You could look at “FIG” (fourplex investment group) I get ads from them occasionally. 

Raise the rent to market or even slightly above market. Either they choose to move out or you get paid for the “hassle factor”. These are a few of the advantages of having a property manager. You don’t get involved personally. You collect market rent (You might be collecting less net rent without a PM, you’re essentially managing for free.) And you stay legal with time frames, notices, etc etc. Plus they’d be collecting late fees I assume you’re not charging. 

You say she can barely afford your rent but now she’s paying that rent and presumably rent at another place she’s staying?  If you won’t hire a PM I’d send something like: You’ve been a great tenant but because of market conditions the rent will be increasing to $x at the end of your current lease. If you’d like to continue renting I need to know when you plan to reoccupy the property unless your son would like to apply separately. (If they are an adult you should have already done a background check on them.) you could also renew them at the higher rate on a MTM term in case the payment issues continue. But before you do this I would think of the “market rent” you plan to charge. Then I would reach out to a couple PM’s and ask them how much rent they would charge, their fees, and what you would net. You might find out your rent is unrealistic or that they could still “manage it for free” at the higher rent. 

Good luck. 

As mentioned, you probably have to skip condos, and you REALLY want to look up the local laws AND the HOA CC&Rs. Don't forget this can't be done in Las Vegas proper. They only allow STR while you are in the home. You could look at NLV or Henderson depending on where you're going to school. (I'm not sure of the laws/regulations outside of the Las Vegas valley like Reno/mesquite or pahrump.)

Are you currently working? Is there anyway you could make the NV your primary home? (Live there 2 weeks and rent out 2 weeks.) This would lower your down payment requirements, lower your interest rate, lower your property taxes, and MAY make you exempt from state income tax. Heck, maybe the school offers lower tuition for instate students?

Or maybe you could find a really naive landlord outside of Las Vegas that would let you rent it out while you’re away. But you’d have to target the <5% that are privately managed by newbies. Just PLEASE don’t “forget” to tell them your plan. 

If you sell property 1 you’re basically paying off a 3% mortgage. That’s not something I believe anyone would recommend. If you can afford the 6.1% rate for  2025i’d hold until at least April. You’ll be in a better selling season and you’ll have a better idea of where interest rates will be at the end of 2025. You might find you can beat the 7.1% rate for an owner occupant by then, especially if you have 20%+ equity. Don’t forget you’ll get 20-30% of the rate increase back in tax savings. 

If this member is paying rent, they can’t homestead it. If they are paying you rent you can’t homestead it. Homesteads are for owner occupants. (Hence the “owner” can’t be paying rent or collecting rent without living there.) That member could get an owner occupant mortgage (much cheaper, lower downpayment, lower interest, etc etc.) as long as it’s their home and they are not paying someone else rent. 

MAYBE the member who is going to live there and nowhere else could homestead it and charge the LLC rent for the time when they aren't home. You have to be careful how close you come to defrauding the county tax people. They give a discount to owner occupants and you're trying to claim that discount without being an owner occupant. Only that member that planned to Levi there could. But then they have to be the owner, not rent from the LlC.