All Forum Posts by: Erick M.

I've been considering a few rental property investment scenarios that have been proposed and would like some advice and feedback from those who have much more experience between the two. Thanks very much!

Scenario 1:

-Rental Property Appraised Value: $200k

-Monthly Rent: $1400/mo

-Mortgage: $67k ($700/mo)

Current owner is looking to sell equity in the property to raise cash. Investor offers $67k for 50% ownership in the property. Owner agrees to sell equity at a discount and would keep the current mortgage in place. Owner and Investor would split net rent proceeds ($1400 - $700 = $700) each receiving $350/month until the end of the lease. At the end of the lease, the property will be sold for fair market value (estimate $200k) and the Owner and Investor would split the proceeds, each receiving $100k. Owner would be responsible for paying off remaining mortgage. 

In this scenario it looks like the Investor gets a good rate of return and the Owner gets access to needed cash without an expensive loan. Owner would also have the opportunity to benefit from potential appreciation. 

A few questions:

-How would the Owner show/record the 50% sale for tax purposes? Would it be a capital gain to be offset by the cost of the property? 

-What's the best way to structure the partnership? Move the property into an LLC with the Owner and Investor being members? Add the Investor to the Deed and draft an agreement between the Owner and Investor?

Scenario 2:

-Rental Property Appraised Value: $200k

-Monthly Rent: $1400/mo

-Mortgage: $67k ($700/mo)

Current owner is looking to sell the property to raise cash. Investor offers $150k for the property. Owner agrees to sell property at a discount to appraised value.  Investor would pay Owner $83k up front and asks that the owner keep the current mortgage in place for 2 years. Investor states they will be obligated to pay the mortgage for 2 years and the final payment will be a balloon to clear the mortgage. 

In this scenario it looks like the Investor gets a good discount on the property and the Owner gets access to needed cash. Owner receives initial lump sum + monthly payments.

A few questions:

-There could be a possibility that the mortgage could be called if the property was moved into an LLC?

-Should the current owner take a lien on the property behind the mortgage in case the Investor fails to pay Owner for the mortgage?

Looking for advice on finding some local real estate investors in Maryland who would be looking at a possible equity sharing scenario with my rental property, or to find investors who would buy the property and be willing to keep the lease intact. It's a great property and I'm looking to partner with someone more experienced than I am at this point.

Any suggestions would be greatly appreciated! 

Looking to connect with other real estate investors in the Maryland area on here. Also are there any recommended events to attend locally or any local folks willing to meet up for coffee?

Hi everyone - thanks for the great info on this board. 

I've currently got a tenant in a SFH and we have been using a property management company for the past year. For the upcoming year, the tenant will be signing a lease directly as we have found we more often than not just communicated directly which rendered the property management services not necessary.

Does anyone have a Maryland lease they would be willing to share that they have been using, or can anyone point to one online that they are happy with?

Thanks!

@Stan Butler the broker just said he has had many investors do it that way. Would the other option be to move the property into an LLC first and then obtain the mortgage in the name of the LLC and myself? How does this usually work with a conventional loan?

The issue I have with umbrella policies is that many of them have exclusions which the owner would still potentially be liable for. Is there any additional liability coverage an owner can add (General Liability / E&O) that would be prudent?

Have a few questions for those more experienced on here and would appreciate any advice. I've been renting out a SFH for about a year now. Currently have a tenant who will sign a new year lease in about a month. Have been advised by a few folks to move the property into an LLC. A couple questions:

-Will be looking at refinancing the property, the mortgage broker says it's ok to get the loan in my name since it's being noted that the property is an investment property and then to move the property into the LLC - thoughts on this?

-If I'm managing the property, should I conduct all business through the LLC (i.e. use LLC member after correspondence, in official documents, etc)?

-I've read some folks set up a secondary management LLC? How does this work and it seems like quite a bit of extra work and potentially an additional set of books, tax schedules, etc?

Thanks for the great information!