All Forum Posts by: Buddy Holmes

@Brian Thacker

Brian, I am over at the UFH PTI for a few more weeks and have some free time.  Let's have a coffee together some time.

Cheers, Buddy

@Marta Cieslak

Rob Beardsley has some webinars on the subject and offers some worksheets.

Cheers, Buddy

@Guillermo Oyola

Your buyers agent can simply write the contract with the specifics of the seller financing you are looking for. They two agents can negotiate the terms or perhaps meet and let you and the seller negotiate.   The old mortgage would have to be paid off at closing unless it was so old that it was assumable.

Cheers, Buddy

@Juan Zabala

I think you will find few mortgage folk that will look only at a LLC and leave out your personal D/I ration and personal signature.

On the other hand they should use the all the rentals Schedule E incomes (modified by Depreciation) as income in the calculation.

Might need to find a more inovative mortgage broker. 

Cheers, Buddy

@Troy Gandee

Troy brings up the real issue. In liability if you are negligent, you are liable whether or not you have it in an LLC. As the principal of the LLC you are responsible for the operation of the LLC. A good lawyer can skirt the LLC in such a case, IMHO.

@Dante A Minjarez

Dante this is called House Hacking.  BP has a great book on the subject to help in you education.

Be sure you understand how to estimate rent, costs and reserves to try to assure you have a positive cash flow on your first deal.

Save your money and rents to make your net purchase after living in the duplex at least a year and several days from that first closing. I think you can then get another FHA or look in Dept of Ag loans which have similar good deals on down payment.

Cheers, Buddy 

@Tom McMahon

I will leave the legal question up to a legal expert.  I dn't think you mortgage holder will allow a change to your mortgage.

They want a person with a credit score and history on the hook to pay them back. I have had up to 10 SFR w/o going to any LLC to protect liability. You can buy a liability policy with less effort than the LLC route IMHO.

Cheers, buddy

@Matthew Adams

Matthew, first an accredited investor has specific requirements but one is that you have $1,000,000 in net worth without considering your residence.  Second is you have a high income of $?  

May I say that you have been lucky in your first RE investment but to continue your success you need to become more educated in the tools of RE investing.  Please take this as positive advice not as criticism.

The 1031 Exchange is the number one tool of RE investing.  Study the rules. The IRS allows you to exchange an investment property to another investment and delay paying federal tax on capital gains and depreciation recapture. These are carried into the new properties. You need to invest an amount of $ equal or greater that the sale of the property you are exchanging in the purchase of new property or properties.  You also need to have the sum of new mortgages equal or greater that the mortgage you may have had on the property you sold.  The most complicated part is the sale and purchase through a third party called a QI, qualified Intermediary.   @Dave Foster can explain all the ins and outs if interested..

My suggestion of using the 1031 exchange in your case is generally based on what is know as the 1% rule. Meaning if you find a property that has a rent ratio (monthly rent/cost of property) of 1% or better you can be resonably assured that it will have positive cash flow. POSITIVE CASH FLOW is the #1 goal of a RE Investor.  You have + cash flow currently and that is great but as you property appreciated I am sure you are well below the 1% ratio.  If you sell and re-invest in several lower cost properties which have higher rent ratios, you cash flow from them will increase from the current $400 /mo.  You delay the Cap Gain Tax and invest it for your benefit.    Once each of your new rentals increase in value, repeat the process.

Just my humble opinion. Cheers, Buddy

PS

Do not refi if you plan a 1031.

@Matthew Adams

Hello. My thoughts ar first based on 1) are you an accredited investor, or 2) not yet accredited.

Assuming #2 based on your call for help:

Plan carefully to see your SFH/SFR in Austin through a 1031 Exchange and buy multiple SFR properties in a different area.

Learn the rules of 1031 to be sure you can make it correctly, choose a good QI, get a god realtor to start looking.

In the hot market of Austin, I would assume you can sell quickly once your new exchange properties are found.

Once they are found sell the Austin property. Perhaps you can sell it off market for a bit less even just to be sure you meet the 1031 time rules.

If 2) let me know and I will give IMHO on that route.

Cheers,

Buddy