All Forum Posts by: Corby Goade

You can get more than 70% of your cash out- keep in mind, you can find a bank that will loan you 70% of the assessed value, up to the total amount you spend on the house, not necessarily the amount you put in. For example:

Purchase price: $80K CASH (Heloc, hard money, actual cash or a combo of those)

Rehab/Closing costs: $20K

You pay for an appraisal, it comes in at $200K ( I know, that's a great deal, but for the sake of simplicity...)

70% of $200K is $140K- you should be able to find a bank that would do a cash out refi for your entire $100K investment, because the LTV is better than 70%.

Interesting angle, but you'll need to prepare yourself to explain why and how you have so many buyers ready when your argument in the letter is essentially that the market is about to crash. As a property owner responding to this letter, I'd want to know what you tell your buyers, because this letter is a recommendation to get out of the business. Fill us in on the results and best of luck!

Why did your mom cosign for your sister in the first place? The only reason to cosign is to guarantee that rent will be paid because it's likely your sister has a poor rental history and poor credit? I'm just confused- your mom cosigned to guarantee rent, and now that she has to do that she has decided it was a bad idea?

All of that said, I agree with the above posts, work with the landlord. If the landlord is reasonable, maybe they will let you buy out the contract with an extra month's payment and/or helping to find a new tenant. It wouldn't hurt to offer to pay for a professional cleaning crew to come in too.

If you don't plan to grow your portfolio, then I would agree that you really just need to present yourself professionally and get a solid lease, find a great tenant and treat them with respect- if you do that you'll be fine. We have an LLC that is a management company and has an operating agreement with our LLC that holds our assets. We present ourselves as owners of the management company, not the property. I see there are several people above who say this looks shady and that tenants will always find out- well, that's never happened to us, I suspect because we screen thoroughly and treat our tenants really well and with respect. There's no reason for them to dig in to our personal situation.

Also, if you DID want to move the property into an LLC, it wouldn't complicate or change your financing situation at all, with the exception of the possibility of your loan being called.

In Idaho, it's $100 to set up an LLC and there are no annual fees. Some states are much more expensive and have complicated reporting requirements, but here, it's a no brainer to set up an LLC so we can open a business bank account, use that for a PO box, etc.

Honestly, the easiest thing you can do to protect yourself is screen your tenants properly, treat them with respect and appreciation and respond promptly to any inquiry. If you do those things you will be just fine. Not to say you shouldn't have insurance, an attorney or a great accountant, but you can avoid 95% of your potential issues if you do the above. Good luck!

It sounds like I should be asking YOU for advice! I think you are on the right track- the only caution I might offer is that, at least in my area, condos don't appreciate at the same rate as SFRs and often come with the liability of an HOA. Beyond that, if you are finding great tenants and seeing reasonable cashflow and ROI, I don't think I would change a thing. Congrats!

So your life changes are simply that managing the property is more expensive than you want it to be and you just figured this out in the last two months? I'd tell the guy you plan to sell the property at the end of the lease term, in nine months. Give him the respect he deserves and honor your lease. Then you don't have to pay him anything- you shake hands and walk away.

There are thousands of different HELOCS out there, so your best bet is to check with your bank, or better yet, check with some local credit unions. Typically, they are all interest only, but lock into a rate and amortization schedule after you carry a balance for a certain period of time- generally several years.  If you look hard enough, you can find someone to do a no closing cost heloc, they might even do a free desk appraisal for you. My credit union does those, so it costs nothing to open the heloc up and you only pay when you draw on it.

I don't think you'll have any luck getting a heloc on a rental property, they are usually only available on primary residences.

Good luck!

I tend to avoid HOAs too- you have too little control and typically condos don't appreciate like SFRs do.

A quick glance at your numbers, I am a bit confused. You are buying the property for $160k and putting $43500 down, so you'll have a loan of $116,500 with a mortgage payment of $414? Even at 3-7/8% and a 30 year am, that puts your payment around $550.

The numbers look pretty tight to me. What is it about this deal that you are drawn to it?

It's very important that you establish your criteria for who you choose and you stick with that criteria. If you get to identical tenants, you must offer the place to the first applicant, offering them a defined deadline to pay all fees to you. Doing this will protect you from any fair housing violations. There are lots of resources on here for helping you determine what criteria you should use. Good luck!

You'll want to talk to an accountant (or you could get great advice from almost any title office), but I believe in a 1031, you are required to purchase "like" properties. I am not sure that bare land and rental properties are considered "like" by the IRS.