All Forum Posts by: Pete M.

Yes, can be found.  The hot market plus appreciation is making these harder to find, but we've done several in this price range in the past.

I always groan inside when I have to call KC Water... just did today, in fact.  Most of their agents don't seem to know how to do their jobs.  Thankfully I've never had to deal with them for such a situation.  This is also why some areas (in other cities, not sure about in KC) require landlord to keep utilities in their name... it's annoying that you have to pay utilities and then bill back to tenant, but it also avoids these kinds of catastrophes.

@James Leigh Duplex valuations should be based on comps (similar to SFH). I will sometimes see both methods, comps and income, on a report, but the inspector usually selects the comparables method as the most suited. With that said, I've seen so much variation in how appraisals are done that I wouldn't doubt some have had it driven by income instead, especially if it's a weird property with comparables being hard to find.

This is true in virtually all major markets. 

Thanks, Will!  We're using the attorney our PM recommends:

Darquita L. Maggard

Attorney at Law

DARQUITA L MAGGARD, PC

4045 N.W. 64th Street, Suite 510

Oklahoma City, OK 73116

<phone #s and emails redacted for forum rules>

My understanding for OKC is that if your mortgage is in forbearance or the tenant is on government assistance, you may be boned on getting them out.  Otherwise, you should be able to evict for non-payment.  You can still evict for non-renewal either way, but that's obviously only relevant if their lease is up.  We use an attorney to file any evictions, so I can't help you with the details on that side of things.

Your case will also look better if you have clear documentation of trying to reach out and work out a payment plan with the tenant first.  Tenants are generally getting the sympathy vote, so be sure you have your ducks in a row.

1) Do you put each property in a separate LLC? Also, do you have a separate "main" LLC that each "property" LLC pays too

We use a WY-based asset-holding LLC as the "main" LLC, and separate state-based LLCs (including MO, since we also own in KCMO) that are then owned by the "main" LLC.  Each property does not have to be in a separate LLC; that is up to you, and is based on your risk tolerance vs the pain of having separate bank accounts, meeting minutes, etc. for each LLC.  You can also see if series LLC is available in MO.

One other option you may consider is using revocable living trusts for your conventional financing needs.  Offer much the same protections, conventional conforming loans can be done to them, or you can just get financing in your own name, then transfer title to the trust (which is protected by federal law).

2) I know all about tax depreciation and what not, but what is the biggest difference in taxes when a property is in a LLC vs personal name

LLCs are usually pass-through entities for tax purposes, so they don't really affect the bottom line.  LLCs are primarily legal entities.

3) have you had difficulties in refinancing when a property is in a LLC and have you had conversations with your lenders when you transition the property

Depends on the type of lender.  Conventional/conforming will most likely require you to first deed the property back to yourself, and there are differing seasoning requirements on that.  Commercial/portfolio lenders often prefer it in an LLC, but those are more flexible and more expensive usually.

4) Do you get each LLC insured or is there a umbrella policy?

Each property must be insured, and the associated LLC on title also needs to be on policy.  A commercial insurance policy can cover multiple properties with different entities.  An umbrella policy is usually separate, and provides coverages above and beyond the landlord policy.

5) are there any unexpected costs or annual fees you didn’t expect?

Depending on your state and how you structure things, there may be fees for registered agents, renewal costs, etc.  If you have an attorney handle everything to keep it buttoned up, that will inevitably come with costs as well.

6) Does anyone deal with putting rent income into a whole life insurance policy

We use WL insurance policies, but don't necessarily feed the income directly into the policies.  I would think you'd simply be taking the rent as a disbursement, and then putting it in yourself.

@Alex Olson is right--it's highly dependent on the market and availability of data.  I use it as a quick sanity check when evaluating properties, but I'd always take a good local PM's opinion as a trustworthy source over the websites.

I'm not a lender, but my understanding is that even when bought with cash, he's still subject to the six month waiting period for cash-out. Delayed financing exception means he can cash-out sooner, but still limited to 75% LTV, based on "no more than the actual documented amount of the borrower's initial investment in purchasing the property plus the financing of closing costs, prepaid fees, and points on the new mortgage loan" (from Fannie)--which, in this case, would be 75% of what he bought it for, not including rehab costs.

Either way, definitely check with a lender for your options and restrictions. 

@Greg Satter Welcome to BP. If using conventional loans, then you're stuck with waiting the six months until you can cash-out refi. There are inventive ways of getting around this, but you have to plan those out from the start (including putting your rehab costs on the HUD-1 at closing, or using private/HML to put a mortgage against the property). I should say that you can cash-out sooner, but you're restricted to using the value you purchased the property at, not a new ARV.

You could also explore finding a local bank for a portfolio loan; since these are non-conforming loans they keep on their own books, they make the rules entirely... including how long you have to wait for seasoning.  Rates and fees will tend to be higher than with a conventional conforming loan, though.