All Forum Posts by: Benjamin Aaker

Quote from @Michael Palmer:

Quote from @Benjamin Aaker:

Assuming you mean 75% loan to value, looks like you'll need to close with $97,285 after closing costs and points. As Ko Kashiwagi says, we need to know more, such as rate, amortization, term. It would also be nice to know what you plan to do with the property once it is built.

 Benjamin,  here is a complete breakdown of my loan costs.  The property will be sold upon completion.

Rate:  12.05%

Term:  13 months interest only

ARV: $648,000

Loan Amount:  $433,000

Processing Fees:  $15,361.64 (3 pts plus processing fees)

Escrow Charges:  $3,130.90

Insurance/taxes:  $1,722.82

Construction Holdback:  $498,361

Cash to Close:  $84,762.36

In the OP, you said that the loan amount was $346k. Taking the higher of the two, that's 52k in debt service for 12 months. If you can get it built/sold in 12 months and are accurate with your ARV the underwriting looks decent. Loan terms seem reasonable. Just be careful your expenses and time to complete don't go over.

No experience in Brooklyn but there are a lot of programs out there for rental assistance. Sometimes the tenant just doesn't know about them or their situation limits their ability to apply. If you are willing to do the work, the landlord can often be the first point of contact with housing assistance. I've inherited non-paying tenants before and assistance has paid their back rent almost every time, but it takes a long time and you will need patience and cash to wait them out.

2.6k a month on a 300k purchase price might put you underwater after all the expenses are paid. Probably not since you are paying cash and will have no mortgage, but then your return goes way down. It could work that way, but will seriously stunt your ability to continue purchasing properties (if that is your plan). It all depends on your situation, but you might want to keep looking.

This will be a question for your bank. They will likely have interest when you want to transfer ownership of the property to the new LLC. That could trigger your due on sale clause and force you to get a new loan. The lender may then require your co-signers to be owners of the LLC, but not necessarily.

Shouldn't be any extra taxes involved. The tax burden will pass through the LLC to the owners.

Keep in mind that your mortgage terms and insurance premiums will probably be less favorable in an LLC. So talk to your bank and insurer before continuing.

A landlord should not be disrespectful or unreasonably severe. That would be a bad landlord. A good landlord wants to do reasonable business to have continued tenants. We do take many steps to consider whether a tenant will be a good fit for the property. That's tenant screening and it also helps the tenant - they are less likely to sign an agreement if the place isn't a good fit for them.

This certainly doesn't answer your question - only the landlords who have interacted with you can - but hopefully it gives a little more about the mindset of a landlord.

I am paying the property tax bill when it comes due, so that is what shows up on my statement. You'll invoice the tenants on whatever strategy you set up in their leases. For me, it all gets trued up after the first of the year. There's an invoice for what's due in NNN reimbursements and then income to pay it.

Lofty goal, to be sure, but take it and work backward. What would you need to be doing each of the next 4 years to meet this goal? Would you be satisfied if you got 1/2 of the way there? 1/4? I would have been. Chunk that goal down into what you need to be doing this month, this week, and today.

For now, it's learning. Read every book you can on different niches of investing, at least one per month. Go to one meetup a month to network. Ask your questions here.

Once you have a niche (this can change), start finding and analyzing deals in it. While doing all these things minimize your expenses and save as much of your income as you can. Keep your W2! It will help you get loans for now. 

Welcome to the forums! This is a great place to learn.

Hey guys, I look at the benefit of the LLC as keeping a loss from one from spilling over into other LLCs or your personal finances. This will work for ordinary losses, but not from negligence or unlawful activity. Depending on your area, it can be a pain to set up multiple LLCs and keep them running. My rule of thumb has been to have a new LLC whenever the ownership structure is different, when I have > 10 doors, or when the total LLC's ownership is > $1,000,000. I'm considering increasing that last one as property values go up.

You could set up one LLC to own your 4 rental properties and quit-claim deed them over and that would be the maximum I'd do with respect to LLC formation. More importantly, make sure you have good insurance coverage and an umbrella policy.

Since you are in the country, you will want to contact the county administrator. In my area, counties don't have zoning, but they do enforce certain rules, like housing eligibility, which often has one house per 40 acres. Probably will be different in your area. 
Another avenue would be to call your utility companies and ask about installing additional meters.