All Forum Posts by: Clinton McGilvray

@John Word read books and blogs and then start calling lenders. Smaller banks and credit unions may have more flexible financing products. Also remember, loan officers and mortgage brokers are people and some of them are much better at their jobs than others.

@Jimmy Barry I'm an agent and motorcycle rider but I don't think I would mix the two. My riding gear isn't exactly what I would wear when interacting with clients at a showing. I also wear a jacket and helmet when riding that becomes cumbersome if you're trying to show a house. If I was just going to be in the office that day, then I might consider riding but I haven't had a predictable day in real estate yet.

@Randall Re II if the ARV is $140,000 and you will have $145,000 into the deal, why would you even bother with a rehab? It sounds like you could find a property of equal quality without the headache of repairs, permits, contractors, and start collecting cashflow from day one. What is your reasoning for chasing this property?

Yes it will be the property as a whole that is evaluated. That strategy sounds hopeful and speculative to me, but I don't know your market conditions. Why doesn't the property cashflow currently? Is the current landlord paying all utilities or have they just priced it that high? I would figure out what the purchase price would have to be to give you the return and cashflow that you are looking for and offer that. Then at least you have an investment that stands on its own and then if you want to add another unit, you have a financial foundation to build from. If a property doesn't cashflow, then it is a drag on your bank account every month.

It is allowed but you should talk to an accountant as to the tax implications.  Doing so may cause you to pay double taxation on the money earned, however it could bolster his businesses income if you are trying to use that to get bank financing.

A generalized question will receive a generalized response: every situation is different and you should talk to a CPA about your specific tax implications. There are different tax laws for every state and depending on where you are investing in and from will change the best route forward. There are going to be states that are more OOS investor friendly, just look at the markets that trend on BiggerPockets. They are popular for a reason. As far as opening an LLC, that is not likely to change how you are taxed since most of the time it is a disregarded entity, but again, a CPA and a lawyer familiar with your specific situation are the only ones who can give you an answer. Or at least an answer that they will defend in court or to the IRS on your behalf.

Location will definitely dictate how desirable your rental will be.  Is this a common sight in your area? How easy is it for someone to find a house just like yours that doesn't have neighbors like this? Analyzing the market compared to what this house offers will tell you what kind of rents, and tenants, you are likely to get.  The hesitation in your post and the way that you describe the neighbors tell me that this is an uncommon environment in your area.  Don't fall in love with a deal and overlook something that is obviously making you pause.  Ultimately it is all about the market and how well this house conforms to it.  I live in a rural area and this would not phase many of the tenants that I have, but it probably would also not be my highest grossing property. 

Depends on your PML's goals and their trust in your abilities.  If they give you a loan for the terms that you described then the monthly payment to them would be $746.96 per month which would give them $22,408.90 after two and a half years.  There are also typically points paid on the front end of a private or hard money loan.  From their perspective, if they loan you the money short term, they get to collect almost all of the $800 of cashflow and possibly reinvest those proceeds somewhere else.  Your equity split returns their money to them at half the rate with the added risk of the property losing value.  Also a potential for a higher return.  Thus, what are their goals?  Find someone who's goals align with yours and has a complementary skill set or, it sounds like in your case, someone with more money than time.

It depends on the actual numbers. Price of the property, rental income, cost of permits, material, and labor for the ADU, and ARV of the property upon completion.  A bank will not likely give you 100% of your capital back after you build your additional unit.  You would also have to estimate what the increased costs of refinancing those funds back out would be vs what kind of increase in rental income you might expect.  An easier or more cost effective strategy may be to split an existing unit if possible.  Taking a 2 bedroom and making two one bedroom units may net you more than the current 2 bedroom apartment.  Sometimes it takes creative strategies to make a deal work or you may need to get more creative in your lead sourcing and you may find an as-is deal that already cashflows.

You're casting a very wide net right now. Every market has its pros and cons. You can literally rent a house or apartment in any market which means that some investor figured out how to make money there. I'm in Zanesville, OH. Very rural market and you can get some good cash flow on cheap houses, but you're not going to get rich on appreciation anytime soon. You need to get specific on your criteria and what your goals with REI are and then you can really hone down on a market. Ohio has already piqued your interest, I'm sure one of those cities that you mentioned is more appealing to you than the others. Just research that one market and find your niche within it. It's counter intuitive but the more specific your focus is, the more likely you will find what you are looking for. There are thousands of people on BP that LOVE Ohio and an open ended request for advice or contacts could quickly overwhelm you.