All Forum Posts by: David Rosenbeck

Hello everyone! Was hoping for some guidance on how others have structured their short term rental deals with equity partners. I work with a lot of very high earning W2 individuals that want to get into investing. I have two Airbnb's and they like the idea of this model. The way that I would structure the deals is they are the silent equity partner while I'm the boots on the ground and day to day management. I would want to take advantage of the 10% down vacation home loan to help get into some of these more pricey vacation home markets to keep capital outlay as low as possible in the beginning for my investors. I've read Avery Carl's book Short term rental long term wealth but there's still some questions I have mainly in regards to the structure of the partnership. 

1) I realize that the 10% down vacation home loan needs to be held in one individuals name. Has anyone utilized this loan package by having the equity partner put down the cash and obtain the loan and then transfer the property to a 50/50 owned LLC to then ensure the equity split for the sweat equity partner? I've spoken with the Mortgage Shop (Mortgage company associated with the Short Term Shop) and he said that there were individuals that transfer the property into an LLC after closing and they were OK with it (thus avoiding the potential for due on sale clause).

2) How would taxes look for a partnership like this? I realize that the LLC would be taxed but those taxes would pass through to the owners of the LLC. So, since I'm not technically on the loan would I be able to take advantage of any of the tax advantages with real estate or would it only be the capital partner since they are the one on the loan?

Those are my main two questions in regards to partnerships with the 10% down vacation home loan. I have a meeting with my real estate attorney next week and will be meeting with my CPA in the near future to discuss this as well and also have my initial consultation with the Short Term Shop Feb 3rd but figured I'd start asking questions here to be able to ask more clear cut questions to the professionals I will be meeting with in the near future. Would love to hear from someone who has structured deals utilizing the 10% down loan in a partnership. Thanks in advance for any advice! 

David 

@Thomas M. Follow up, did you end up pursuing this property? Just curious what ended up happening to it. 

@Thomas M. I don't have under contract. Just wanted to gain some insight from others about my first possible foray into hard money / BRRRR investing. Hopefully going to look at property today to see if it's worth pursuing.

Good morning everyone, 

I have a property that I'm going to go look at that I believe may be a good BRRRR deal. The property is in Fort Wayne, IN and is close to one of the Universities here in town. I currently own one student rental and am looking to add another to my portfolio.

Property details: 

4 bed 2 bath

Built 1910

Nearly 2,000 sq ft on a large lot

Asking $27,000

Needs extensive rehab

Capital is running short after finishing up my last student rental and was thinking about diving into hard money. My thoughts are use hard money to both purchase the property cash and fund the renovation.

My estimated numbers:

Cash purchase price of $25,000

Renovation budget of $55,000

All in at roughly $85,000 with closing costs etc

Hard money loan at 10%

Total cost including hard money interest: $93,500

There are multiple comps in the neighborhood which were recently sold all north of $110,000 with majority 3 bedrooms/1 bath/ or less square footage (1,300-1,500 compared to the 2,000 sq ft of this home) so with being relatively conservative with my numbers a $120,000 appraisal and running this through the BRRRR calculator at a 75% LTV refinance, I am only leaving a few grand in the deal.

This would be my first time utilizing hard money for a deal so please poke any holes in the numbers that you can see. I'm hoping to walk the property today/tomorrow and if it doesn't appear to be a total wreck I will then bring my contractor through to see if the $55k would be adequate for the rehab.

Appreciate any input.

Thanks as always,

David

@David Ross It sounds like you and I are in a similar situation! I just closed a couple weeks ago on a house that I’ll be renting out to 5 college students. What day do you have your tenants set up for rent to be paid so that you ensure that it’s processed in time before the late fee? 1st of the month and 5th of the month? Ever had issues with it not being processed in time? Just curious how I should structure my app to avoid troubles down the road. Thanks for your help! I’m hoping that Rent-redi will be a one stop shop in regards to property management but time will tell. 

David 

So what is everyone’s thoughts on the current economic climate? I know that personally I’m personally putting way more money in the stock market than ever before because I think (i hope) its at rock bottom-ish. I think I should at least be able to come out of this in the next 6-12 mo with at least somewhat of a profit and hopefully come right in when the real deals will be happening in real estate. I’m curious, what’s everyone’s strategies in the next 6 or so months? As I said above, I’m hoping for the buy and hold game long term. I know people keep saying there will be “deals to be had” but when does everyone think those deals will start? All of this economic stress on small scale landlords will have to be a struggle in the next few months with all these new mandates and regulations so I’m hoping for some insight as to when you guys think the “sweet spot” will be. And of course, there is no knowing when the “sweet spot” will be because the market is the market. Just curious if anyone is willing to share their investment plans for the next 6-12 mo. As always thank you. 

David 

All I can say is wow. Thank you guys so much for the encouraging words and the outpouring of information. It really is priceless. I think that developing a life plan would certainly be beneficial and I will work on that first and move forward from there. As far as purchasing during these shaky times, what’s everyone’s opinions? I know that everyone says that you should never let a good crisis go to waste so the question is, when do you think that the deals will start popping up? Have they already? I know every person who is nervous about making their first purchase always has reasons as to why the time might not be right but I think that a national pandemic might qualify haha Do you foresee a lot of foreclosed properties in the future due to people falling on hard times and not being able to pay? I can imagine that there will be an increase in available properties due to all this. 

What’s everyone’s opinions on buying homes for students to rent? Since I’m not too far out of the college world I still have many connections within the college that I attended and think that it could be lucrative. Pros and Cons? My wife thinks that that would be our best bet for a first rental. I’m leaning more towards small multi-family to just allow for some consistency and long term tenants so that were not staying so busy with college kids moving in and out so often. Just curious about your experiences. Once again thanks you guys so much. It’s so refreshing to have a place that you can take what’s in your head out and onto a paper and let someone else analyze it and see if your thinking is on par with others. Thanks again

David 

Craig That would be great if you would be willing to share that information. I agree that finding a place in Fort Wayne would be easier with my current job, my venture into real estate investing as well as finding a suitable place to house hack if possible. Do either of you have any suggestions on good realtors that you have worked with in the past? Thanks in advance. 

David 

I actually just joined the REIA facebook group a few days back! Lots of people and information being passed back and forth. Would you suggest asking in the REIA for advice as well? Just don't want people to feel like I'm spamming them for advice. Thanks for the feedback though I appreciate it.

David 

Hello everyone!

Finally making my first post. I’ve been doing a lot of reading and watching YouTube videos when it comes to real estate investing and I am hoping to just post my whole story here and gain some insight from others and their perspective of my current situation. This will be a relatively long post so I apologize in advance!

I’m 26 years old and I graduated last May as a Nurse Practitioner and I am currently working within a major health system in Fort Wayne, IN. I am happy with my compensation from this job but have always been a dreamer and always wanted “more” looking into what I could do next. Within the last few months with the Covid Crisis I have been doing a lot of reading and came across real estate. I always thought that real estate would be something that I would like to get involved in. The buy and hold cash flow is very appealing to me since I have a lot of time for my investments to grow and take advantage of compounding interest. I recently picked up both Rich Dad Poor Dad as well as The Book On Rental Property Investing by Brandon Turner as well as listening to the BP Podcast from the beginning and I’m already on #30! Both books were excellent and the podcast has had a lot of great information. 

I guess the main goal of this post is just to see what someone else in my situation would do as a first step. I’m fortunate enough to be making $110K+ per year with my job (I don’t want to sound like I’m bragging just want to paint the whole picture for everyone so you have the entire story) but obviously have a significant amount of student loans as well as a mortgage and other expenses. My wife and I originally purchased our home in Dec of 2018 for $131k and it was owned by a 95 year old gentleman so it was very dated. We have since put in wood laminate floors throughout, remodeled both the guest bathroom as well as the master, and improved the kitchen. With the area that we are in, I think that we would be able to easily sell our home for $160 and I would probably honestly like to ask for $170k and see what happens.

So my dilemma is this. I work in Fort Wayne and commute an hour one way currently. My wife and I would like to get into real estate and I know that many people suggest house hacking as a way to dip your toes into the world of REI. For the right duplex, I think that my wife and I would enjoy house hacking. The only problem is should I refinance my current home due to the forced appreciation and possibility of rental income? We are in a very rural area and I don't believe that anyone would be willing to pay $1,600/month in rent to meet the 1% rule. So would I be better off selling, take the money and put it towards purchasing and renovating a duplex, house hacking it until we can generate enough capital for the next deal? I'm sorry if this is all very novice but I am very new to this and would like some expert opinions.

Also, would any of you suggest any of this during this current economic climate with the Covid crisis? I know that many have been saying that they estimate that there will be many good deals to be had in 6 months or so. So first step would be to find a good real estate agent to set up a MLS search for deals in the area. I would love to hear from anyone who has any experience with real estate agents in the Fort Wayne area that invest in real estate themselves.

My main goals and what I would like to achieve out of real estate is what I believe many of you are hoping to achieve and that is financial independence. I am fortunate enough that I do enjoy my job and working with patient’s within my office in the Cancer Institute is very rewarding so I am not necessarily in this to quit my job but would like to have the peace of mind to know that I could quit if I wanted to. I have never been introduced to thinking financially savvy until I read Rich Dad Poor Dad and it made me realize that essentially everyone I know owns little to no assets. I guess my ultimate goal would be to be able to go down to part time at my current job as a nurse practitioner and supplement my income with passive cash flow from my assets so I can eventually spend more time with family and have more freedom. As I said before, I enjoy my job and am not looking to quit and solely depend on real estate cash flow. I’m not sure if this will be a help or hinderance to me since I won’t feel the hunger and pressure that I’m sure many feel that wish to quit their job so they know they need to work twice as hard as the next guy. 

Sorry I just started rambling but I think that this is the first time I’ve tried to put down into words what has been going through my head. As I said before, I would just love to hear back from some others who may be in similar situations and be able to ask questions and learn from them. Thank you everyone so much in advance. It means the world to have access to such a vast pool of knowledge and have people willing to help those just starting out. 

Thanks again, 

David