All Forum Posts by: Derek Clark

Title update 👉 COVID-19

With several residential rental properties in North Georgia I'm curious to hear from other landlords in Georgia and other areas on how they are helping tenants while at the same time protecting their investment. 

Investor from Gainesville area here. I would be willing to meetup if my schedule permits. Sounds fun!

Thanks a lot @David Gonzalez!

Thanks for the feedback. Ill take a closer look into what ill need for GA.

@Joe Villeneuve I have asked around and that is usually what others have said, they have never seen it been called due. When you say the lien won't change, that means I would continue to pay the mortgages from my personal bank account or can I pay them from my business bank account or does that matter you think? 

thanks for your response!

I am closing on my first commercial property soon and already have my tenant ready to move in once the deal is final! I have other residential tenants but I am not sure if the lease used on commercial should be similar to that of a residential tenant? 

I could not find a commercial lease agreement on the FileShare here on biggerpockets. Would anyone be willing to offer me a sample commercial lease agreement or give me some advice on what should be different from commercial vs residential on the lease? 

I do realize I can google and find a lease out on the web but, when possible, I prefer advice and guidance from experience vs search engine results and blog articles. 

thank you in advance for your response and advice!

I am in process of setting up LLCs to begin the process of getting properties transferred over and out of my personal name. I have 7 investment properties with 1 of those commercial. I setup three entities a residential, a nonresidential, and a management LLC. The strategy would be to transfer the residential title/deeds into the residential LLC and commercial title/deeds into the commercial LLC and then lease those to the management LLC who would then sub-lease to the tenants.

Has anyone with experience transferring property deeds that are financed with mortgage companies ever had any issues with the due on sale clause and is there anything I should be aware of during this process that other beginners may miss? 

I have heard that as long as the LLC is in the same name/address as the primary mortgage payer and the payments remain in good standing then usually you would have no problems. Has this been the general outcome that you have experienced? If the mortgage is in both my wife's and my name would it matter if my name is the only one on the LLC?

How do you handle your mortgage payments? Would I start paying the mortgage from the LLC business account or still from my personal bank account?

and my last question! I've heard the saying, "it's better to ask for forgiveness than permission", does this apply here?  Should I contact the mortgage company and let them know I'll be transferring the property or would that be more like waving a red-flag in the air?  

as always, I appreciate anyone's response and advice!

@Bob Langworthy Appreciate the tip. I will definitely be utilizing the built in lease increase strategy on this property and some of my others.

@Paul Smythe You are correct in that I do not own the property currently and will close in the next few weeks. I definitely see your point and would completely agree with buying something else that would generate more cash-flow. Although, I am at the point currently where my debt to income ratio from other financed properties is starting to limit my purchasing power through traditional financing. This deal is owner financed at only 1% higher interest rate than  what I can get on a traditional residential investment loan and amortized over 30yrs with a balloon of 4 yrs. The current owner of this property also has other properties in the area that he is ready to offload in the near future and that may come into play at a later date if this deal happens. I am interested to see how this property appreciates given the new developments that are starting to creep closer. I live in the area and keep up with the trends and road maps as best I can. 

@Henri Meli If this is in fact "a long-term, set it and forget it" type tenant then I would do just that and let the property appreciate like I believe it is going to in the near future. I would re-evaluate finding new financing or selling near the end of the 4 yr balloon period with the owner financing. 

I have also heard that office tenants sometimes can take longer find. My plan B if that happens is to re-zone back to residential and rent it that way. Surrounding properties are residential and commercial mix so this would work. 

Because I have other residential rentals in that area I am confident I can rent it in that way.But this option would require the re-zone and up to 5K worth work on the property. If they do outgrow the space I would come out with a property having some upgrades already paid for by the previous tenants. If they move out then I still have option A ( lease again as commercial) and B (re-zone, make a few upgrades and lease as residential). 

They have been in their current leased space for about 8 yrs and would still be there but new management has came in and hiked the prices.

Thanks for your response!

@Jeff Kehl & @Paul Smythe 

Appreciate your response! 

I agree i do not enjoy the idea of $100 cash flow a month and I too was thinking just aquire the tenant and increase rents over time. Losing cash flow in the first 1 or 2 yrs to have good tenants in place is worth it in my mind. 

That being said, I do have a nice cushion of cash flow coming in from my other residential rentals along with my wife's and my employment income, fortunately, I'm not really in need of the additional $200 a month and can wait it out . Also,  the money I'm using to purchase this commercial property is from a cash out refi from another rental. So, in a way, I've made myself feel better about the initial $100 in cash flow because of the fact that I'm using the same money I used 4 yrs ago to buy what has the potential to be more valuable in the future and have the ability to raise rents over time. 

I do realize the commercial valuation is based from income generation and I plan to one day develop  3-5 townhouses on the back side of the property or something else that would generate additional income.  There is space to build and already a Rd on the side for 2-3 entrances to the property. 

Thanks.