All Forum Posts by: Dustin Summers

I have 14 doors.  I've built a system where I can drag/drop any bill into a Google Drive folder, and I have some systems set up to split the bill evenly among tenants, automatically bill my tenants, and even send them an email with the breakdown. I have one duplex that shares an electric meter, so I use RUBs to calculate the bill automatically.  I have simple-sub ($5.00 a month) meters established at a few of my other duplexes to calculate water usage among my units and automatically calculate/split/bill tenants.  Again, all I have to do is download my bill into a folder, and the rest is taken care of.

I'm not a fan of paying utility bills because they eat into your cash flow, and the tenant may not be as "resourceful" with their usage if they aren't getting hit by it. For instance, I've had tenants drive up the electric bill during the winter because they left HVAC window units in, which then meant the heaters were running non-stop. If you are only charging $50.00 a month for specific bills and suddenly get hit by a $500.00 - $1,000.00 bill due to tenant negligence, you have no recourse.  In this case, I billed them and then sent my handyman over to figure out why it was so high, and he uncovered the issue, but fortunately I did not have to foot that bill.

Follow your local laws & find a way to sub-meter. You will earn more in the end.

If you want me to assist with setting up something similar to what I have, feel free to reach out :) 

Hey Jackie... are you looking to transfer to an LLC for asset protection? The issue with that is I'm pretty sure that's considered a "taxable" event as you're transferring an asset from your name to a business... I ran into this scenario earlier in the year as I did a 1031 Exchange of a home in my name, and by the 1031 Definition, the new properties had to STAY in my name.

Also, if a lender finds out that you did a "Quit Claim Deed" and transferred the asset into a business, they can call the "Due On Sale" clause which means you owe back the entire amount of the mortgage within a certain amount of time.

Again, if this is primarily for asset protection, what I ended up doing is starting up a Land Trust for each property I purchased.  You can put these into a Revocable Living Trust, which by Federal Law, means that the lender cannot trigger the "Due on Sale" clause as long as your parents are the beneficiaries of the Trust.

I would look into going that route. This also means that, down the road, you can take the asset out of the Trust and do a 1031 Exchange, but it still provides you with that layer of protection that an LLC would provide.

Would this be a similar approach for something like a Home Office deduction? Just attach that to the highest income producing property?

I have a similar question to what others posted about, but another slightly different twist.

My wife and I both jointly own a renovation business, and for this purpose, we can refer to it as our Renovations, LLC. We are wrapping up a flip with hopes to sell in December. I have an offmarket tri-plex soon to be under contract and was hoping to do a reverse 1031 exchange with it.

I have a completely separate entity that my wife and I own for our "passive" investments. Let's call this our Properties, LLC.

If I understand correctly, I would have to do the 1031 Exchange into the "Renovations, LLC" initially. At what point would I then be able to transfer this property from the Renovations, LLC into the Properties, LLC? Would that be considered a taxable event? My wife and I are joint owners of both businesses. Thanks!

Thank you so much, @Jay Hinrichs! I appreciate the vote of confidence.

And you're definitely right. I have to find the lender for the first, so I'm going to make some calls for that. I do appreciate you raising some caution though. Cap Rate is low, and a big maintenance task would put this in the negatives quickly, but I'm hoping since it's a recent flip that those will be minimized, but you never truly know that for sure.

I also have my own management company, so that expense is out as well. Bulk of rents would just go towards building up the maintenance buffer, which I typically set aside 6 months of mortgage payments first as an initial step for any investment. I have 7 LTR's and one STR currently that I own.

 That is calculating in Taxes/Insurance. I have other rentals to bear the weight if something happens that requires additional payment, and once the initial loans covered, $600.00 a month is in a much better range given the expenses.

I have savings for the down payment, I am just trying to exercise more creative financing vs. putting my own money up front for this deal since that's what this channels about.

Hey Team

The short version:

Who do I talk to about a deal where I have a private lender providing the downpayment and a standard portfolio lender providing the rest? Do I need to tell the portfolio lender that someone else is providing this down payment at closing and will have a lien in the second position on the property, or is that all just handled by the Title company at closing and the lender/seller doesn't care where those funds come from? Should the title/closing attorney be able to handle all of this?

Long Version with details:

I have an off-market duplex I'm looking to get under contract for 145k (talked the seller down from 150k). This is more of a turnkey rental, so no major work needs to be done for this property as it was recently updated. I have a private lender who is willing to loan me the down payment of 20 - 25% (29 - 36k) with a lien in the second position on the property. The rest would be provided by a portfolio lender. This is my first time doing this type of thing, as I've provided the down payments in the past...

The house is fully rented earning $1,700 a month.

My payments, with Insurance/Taxes + the Downpayment loan, are below(assuming 80% financing from portfolio lender at the moment): 

80% Finance(30 yr @ ~7%): $1,105.08

20% Loan(10 yr @ 8%): $352.00

Total: $1,457.08

Initially, it's earning ~$250.00 a month after all is said and done, but the plan would be to aggressively pay off the down payment loan to free up the other $350.00 cash flow, increasing that to ~$600.00 a month.

Thanks for any help in advance!

@Chris Seveney

I'd be up for that. Do you know a lender who would be willing to do that?

Hello,

I have a seller that I've worked with numerous times in the past who is willing to do a "seller-carry back financing" option for purchasing a property that he has (he flips homes, and I've purchased two from him in the past for rentals)

I am in search of a lender who would support doing seller-carry back financing and tips on finding those types of lenders.  I've spoken to some "investor" friendly lenders and they were not willing to do it, so curious about what tips/tricks people find to locate lenders willing to go this route, or things to "google" to find those types of lenders.  I'd primarily be looking at this just for the down-payment (i.e. covering the 20 - 25% amount).

My credit is good-to-excellent (750+), and I currently have 7 LTR units and 1 STR. I have some strings I could pull on for the down payment like standard refinance on one of my other units, but I'd like to explore doing something like this for practice.

Thanks, and I appreciate all of the help!

- Dustin