All Forum Posts by: Corey Farnsworth

Hi Louis, I would also recommend @Chris Mury to help with your property hunt! He is a real estate agent but also has local investment properties and understands the investor side of the market very well. He helped me purchase an investment property in St Augustine recently and we have it listed as an STR now.

 @Linda Weiner Thanks for the comments/notes throughout this thread! I'm just getting started in AirBnB's in north FL. Is the Hotel license and Sales Tax Certificate needed for STR's anywhere in the state, or are your comments specific to the Naples area? If I do need the Hotel license, how would I go about getting it? Thank you!

Hey BP Community!

Rookie investor here. I've been studying the BRRRR process for several months and I'm now situated to start making my first offer on properties. There are 2 things I want to clarify about appraisals and refinancing to make sure I'm crunching my numbers correctly.

1) I have enough cash to cover a 20% down payment (or close to it), but I will require a mortage to first obtain the property. That will require an appraisal right at the beginning, then of course we would do another appraisal after the renovations to determine the ARV and perform a cash-out refinance to restore my capital funds. The refi would cover my initial DP, along with any HML funds used for the rehab.
The Question: Does the 1st appraisal have to "expire" on a specific property after a specified number of months before a 2nd appraisal can be recorded for that same property? I thought that some lenders don't require much of a "seasoning period", but is the property even eligible to receive a 2nd appraisal within 2-3 months?

2) Do you find that the refinance mortage for a higher loan amount (due to ARV) tends to have a significant impact on the cashflow numbers?
       For example:
       Purchase Price Amt of $210,000 (20% DP, 4% rate, 30 yr term) makes the monthly mortgage payment ~$800
Refinance Loan Amt of $320,000 (25% LTV, 4% rate, 30 yr term) makes the monthly mortgage payment ~$1,145
Obviously that's nearly a $350 impact on the property cash flow! But this also assumes the ARV property can pull higher rent. I just want to make sure my deal analysis numbers are evaluating the end-goal cash flow correctly, considering the market rent before-and-after rehab.

Thanks for reviewing!

@Jeff Copeland
@Mike Sullivan
Thanks for the tips. I like the idea of giving the notice/option for renewal sooner rather than later, allowing the landlord more time to develop a Plan B or find a replacement tenant. If there is no renewal, I also like the allowance to start showing the unit within the final 30 days to place a new tenant. 

@Aaron Law 
Great post. I'm in the same boat, just getting started with investing and aiming for my first LTR in the next couple of months. I too have been concerned about finding a lease agreement specific to FL, and had a conversation with a local real estate attorney recently about their recommendations for setting this up. A real estate attorney can prepare typical lease documents for a fee. However, my recommendation would be to draft a copy yourself first using a solid state-specific template, then submit it to your attorney for review (smaller fee). 

@Account Closed
I also strongly agree with you, the lease agreement needs to cover you in any way possible from the outset of the landlord-tenant relationship. Thanks for the link to the Florida Bar site! That resource seems to cover more FL-specific items than I've been able to find on other templates. I too will be having my lease template reviewed by the attorney prior to using. 

Hi @Daniel Stanziale, I live in St Augustine. I’m so sorry for your loss, especially at this holiday time. I’ve been meeting with the Charlie Douglas law firm recently to set up my investing business strategy. I know they have experience with estate planning and probate. Their website is https://www.dhclawyers.com/

@Karen C. Did you reach a successful conclusion with the cash-out refi of your LLC-owned property? I am just getting started with my first property purchase (about to open an LLC), but I don't want to start down a path that will actually hold up my process! I'd love to connect with you and hear more about your experience, and any options that worked for you. I am located in northeast Florida.

@Danon Albert

I had an introductory consult with my attorney and confirmed he can help me set everything up as needed (LLC, lease agreements, etc), but he advised I meet with a CPA soon as well, then bring them both together for a joint meeting to confirm our strategy before setting anything up. I'll be meeting with the CPA in a few weeks.

Thanks everyone for the feedback! @David M., that link to the other forum thread was very helpful as well. So it seems that some kind of umbrella insurance is a must, and the LLC would add additional layers of protection once you've reached a point in asset-building that is actually worth protecting. That's good to know that the tax advantages are generally the same whether you're operating by yourself or inside an LLC.

I guess the real "limiting" conversations would come from talking to a specific hard-money lender about who/what they're willing to give funds to. And I could talk to a broker ahead of time as well to make sure they're willing to refinance the loan at the end, or what would prevent them from considering it (to an LLC, or personally).   

I'm still a bit lost on the concept of using 1 LLC to "manage" several other LLC's that actually "own" the properties. I've heard of people using this strategy to help separate their name from being tied to all the units, but I've also heard that it looks fishy under a microscope.

I have a meeting with an attorney this week to discuss some of my options and hope to get some feedback on what strategies would work well here. Perhaps using a Trust would be a good way to go too. 
 

Hello BP Community! 

I'm new to the game of real estate investing and I'm doing my best to dig deep into the resources available here to make sure I start off on the right foot! The BRRRR strategy appeals to me in the pursuit of long-term Buy-and-Hold properties (SFH, DPX, or TPX). As I research the Pros/Cons of getting an LLC, I have also arranged meetings with both a Real Estate Attorney and a CPA. Note that my long-term goal is to set up systems for my investing business to facilitate long-term use.

From my understanding so far, an LLC is helpful in that it offers tax advantages and asset protection (if handled properly). However, since it is a business entity, the LLC may also create additional challenges when trying to arrange financing. It seems the LLC will be necessary for my long-term strategy, but is it actually a hindrance when starting out?

The Question: 
How would these 3 different parties (hard money lender, local credit union, loan broker) each be willing to engage with an LLC at the start and end points of the BRRRR process?
   1) Up-front capital (or loan) to purchase a property
   2) Post-rehab refinance to pull cash out of the property