All Forum Posts by: Brit F.

@Scott V., another point to consider is that go-fast cars are only fun (and safe) in places where you can drive them fast, i.e. on a track, and I mean a road course not a drag strip. 

Given that it's way more fun to drive a slow car fast than to drive a fast car slow, one alternative strategy is to look for some High Performance Driver's Education (HPDE) programs in your area and take your street car, as long as it's not a truck or SUV.  Sedans, coupes, and wagons are fine.  Some HPDE schools offer rentals for the day for an additional cost.  The objective of HPDE is to learn car control at the limits of traction.  Modern street cars' capabilities will surprise you, you'll have a ton of fun in the process, and it'll make you a much better driver overall. 

I've done HPDE's both with dedicated track cars and with a daily driver sedan, and it was always a great time.  I'm currently paused on HPDE participation until the kids are old enough to drive :)

Take the following with a grain of salt since I don't know your market: 2.4% annual cashflow seems oddly low for a property where you have 75% equity.

On the chance that you meant 25% equity with 75% LTV, then 2.4% annual cashflow seems more realistic, but I would hope that there is very little, if any long-term risk, i.e. it's in a great neighborhood with almost no expected vacancy. Plus, there would need to be significant equity upside that adds to your overall return. Don't over-estimate equity appreciation, however; some people call it 'hopium'.

Since we're comparing to 401k, a good metric for you might be that your after-tax cashflow plus estimated equity growth outpaces your current 401k return or a stock market index like S&P500.  If the S&P500 avg is 8%, try to find properties that will do better than that.  Hopefully, your market offers this in abundance.  If you have trouble finding them, check your math, look at more properties, and/or talk to other local investors (with the understanding that many investors inflate their return %).

@Ryan Fox, love all the thought you're putting into this.

Can you do both?  Meaning, contribute to 401k but only up to the employer's match and participate in REI, making sure to evaluate other REI strategies beyond SFR, such as multi-family, crowdfunding Resi & Comm, private lending/investment clubs, notes, etc. I mention these other options because diversification is still important in REI, and ideally, you find strategies that you have a lot of passion around that also meet your financial goals. But, if you've already explored those and really want to move forward on SFR's, then go for it.

@Alex Martinez, I'm not sure how you're searching because this is a frequently discussed topic.  To help you search, go to your favorite search engine and type (without single quotes): 'site:biggerpockets.com cash vs finance brrrr'.  There are plenty of threads to bring you up to speed.  And to @Alexander Felice's point, make sure you also search for ROI vs Cash on Cash Return.

@Briette Awbrey, unfortunately, Wells is correct. Fannie's rules for property transfers to LLC require the loan to be closed on or after June 1, 2016 (among other requirements). That said, if you ever refinance the loan and presuming Fannie buys the refi'd loan, you could transfer the property at that point. I wrote a BP Member Blog article that goes into lots of detail on the transfer process.

I've been following Curbio since the summer now that they are working in my TX market.  It's an interesting and creative model.  That said, some of the following may be controversial and might spark some debate:

-In TX, Curbio secures loans by a Deed of Trust against the property and recorded in the county.  Their website's FAQ indicates their underwriting criteria is based on home equity, not the borrower's income.  However, Curbio doesn't appear to be a licensed lender in any state, as of Dec 2019.  One key difference vs traditional equity lenders is that Curbio doesn't specify an interest rate, nor do they require any installment payments.  If this is a legal way to lend against consumer home equity w/o a license, kudos to Curbio for finding the loophole; it opens the door to pretty much anyone becoming a home equity lender to owner-occupants without the SAFE act overhead, which would re-shape the industry.

-In TX, consumer home equity lending products are limited to 80% combined LTV, using FMV on the date credit is extended. It's not clear to me if Curbio's combined LTV calculations are based on FMV or ARV. Inflated ARV's could create an undesirable scenario where the homeowner unexpectedly walks away with less than 20% equity.

-Curbio's first project in Dallas County is still on the market after 140+ days with a ~2% list price reduction every 30 days.

-A completed project in Dallas had a cumulative 13% price drop over 41 days before it sold.  With the reduction sales price, the owner's equity may have dropped to 11% before commissions (well below TX minimum of 20%), assuming they didn't pay extra principal on their purchase-money mortgage from 2013.  If that's correct, it makes me wonder if Curbio shouldn't have made the equity loan if the owner didn't have enough equity plus some margin.

-On a positive note, a completed project in Dallas was under contract in 12 days and sold a month later for the original List Price, and the owner appeared to exit with 20% equity before commissions.

-For the two sold properties above, which sold more than 30 days ago, I don't see any lien releases from Curbio in county records, but I do see releases from first position lenders.

-A completed project is pending sale after a 4% price reduction after 30 days.

It's hard to know if the price reductions mentioned above were caused by inflated ARV's, seasonal slowness, or both.

Curbio has a few active projects going in TX, and I'll continue to track them.

If Fannie owns the loan (regardless of who Services it), you can freely transfer the property to your own LLC under certain conditions, and you can use a Warranty Deed: How to Transfer Property to your LLC without fearing Due-on-Sale

@Mike Khalil, if you're trying to get a conforming loan, then yes, you'll need to first put the property in your name.

And as Wayne Brooks indicated, yes, you can also move it back to your LLC presuming that Fannie buys the loan, regardless of who services it btw. I wrote a member blog post explaining how to transfer a Fannie-owned loan to one's own LLC.

@Toan Hoang, yes you can transfer property to your own LLC under certain conditions. I wrote a series of detailed posts about my experience transferring 3 different properties to my LLC with 3 different mortgage servicers, and I ultimately succeeded with each. Start with this explanation of the criteria to be exempt from Due on Sale: How to Transfer Property to your LLC without fearing Due-on-Sale

@Aiden Harris, what about getting an air quality test to determine if there is any mold actually present?  Let the tenant pay for it initially, and if mold exists, you can reimburse him and fix it.