All Forum Posts by: Account Closed

Purchase a property on hard money with intent to flip. Partnered with another LLC not on mortgage. Ran into significant sewer repair that was completely unforeseen even after camera. Has completely crushed rehab budget and set us back significantly in timeline.

Internet was to flip, but wondering if it's even possible for us to refinance and rent it now. Issue is we have the JV partner and they would like to be part of the ownership if we long term hold. We have great relationship with the partner and would be open to long term hold together if that's our last resort. I just don't know if we can refinance it into a long term mortgage with 2 LLCs even though my LLC solely purchased.

It is possible to refinance a property purchased under one LLC, but JV'd with another LLC, into a long-term mortgage. However, the process may be more complex due to the involvement of multiple entities. It would be best to consult with a mortgage lender or financial advisor to explore your options and determine the best course of action. Additionally, you may need to have discussions with your JV partner to come to a mutually agreeable solution for the long-term ownership of the property.

1 Vote

Quote from @Laurent N.:

All,

First, thank you in advance for all the insight I will receive from all of you. I'm a real estate investor who currently lives in Washington, DC. I have 3 doors and am trying to expand further.

My sister and I will inherit our grandmother's property in New Orleans, Louisiana. The house is paid off free and clear, but we have no intention of selling it; we want to keep it in the family and turn the lot into a vacation home, Airbnb, or even a rental. The property will likely require substantial work to make it a rental. Furthermore, the property sits on a nearly 6,000-square-foot lot. We believe we have enough space to rezone the lot and construct a duplex, bringing the number of doors from 1 to 3.

We have a couple of questions. Please excuse my ignorance.

1) In an attempt to learn from folks who have done this, what is the best way to finance the gut rehab of the existing property and the new construction of a duplex?

My initial thoughts would be to secure a construction loan for the total rehab amount based on the entire property's ARV. In order to not have to put any of our own money into this deal, we intend to leverage the equity of my Grandma's home as a down payment for the loan.

2) Should we leverage a construction loan or some other form of financing?

3) Is all of this reasonable and possible to do? My initial assumptions are yes, based on the “build to rent” strategy. We still need to work with the city to ensure we can rezone and get permits to start construction (but for this thread, it's implied that we will get the permission to rezone and start construction.)

4) What other steps should I be thinking of?

Thank you again for all the insight.

-Laurent

1) Utilizing a construction loan for the rehab and new construction is a common approach in real estate investing. However, it's important to carefully consider the terms and interest rates of the loan to ensure it aligns with your financial goals. Additionally, be sure to have a solid business plan in place to present to potential lenders.

2) In addition to a construction loan, you could also explore other financing options such as traditional mortgages, lines of credit, or even private investors. Each option has its own benefits and drawbacks, so it's important to research and compare to find the best fit for your specific situation.

3) It is reasonable and possible to turn your grandmother's property into a profitable vacation home, Airbnb, or rental property through the construction of a duplex. As long as you follow the necessary steps and obtain the required permits and approvals from the city, you should be able to move forward with your plans successfully.

4) In addition to securing financing and obtaining the necessary permits, you should also consider creating a detailed budget and timeline for the rehab and construction process. It's important to carefully plan out each step of the project to ensure it stays on track and within budget.

0 Votes

Quote from @GG Smith:

I'm a first time investor, about 40 years old, looking to take over a family property. Property is worth about 600k market value. We feel good about this as it almost sold awhile ago for this exact amount and has been appraised around this as well.

I'm in the unusual position of being able get financing from a private lender. It's a 12 year term with a 4.75% interest rate with $175,000 down. Which in this market is very good. Only problem is with a short term my monthly mortgage payment will be 2K, and will cut deep into my cashflow during that time.

With a little work I can get my COC to 3.1% per month for that 12 years.

Appreciation is about average in this area and I expect to get about 4% annually maybe 5%. All told the property would be worth about 800k when its paid off.

I can expect to get about $4,500 gross from the property with an NOI of $2,500 monthly (would be about $3,100 with inflation at that time). In other words once that mortgage is paid off I would be getting about $30,000 a year

It's just leading up to that my cash on cash is very poor. Is this a deal worth considering?

One final note, this property has a lot of potential for value add opportunities as its located right on a major highway and is 2 acres. We could easily put in a ministorage down the road or some other high caprate investment.

Based on the information provided, it seems like this could be a solid long-term investment opportunity. The private lender financing at a 4.75% interest rate is favorable, and the property has good potential for appreciation in the future.

While the monthly mortgage payment may cut into your cash flow in the short term, the opportunity to increase the cash on cash return to 3.1% over the 12-year term is promising. Additionally, the potential for value-add opportunities such as adding a ministorage or other high cap rate investments in the future could further increase the overall return on investment.

Considering the potential for appreciation, the current NOI, and the future potential for additional income streams, this property could be worth considering as a long-term investment, despite the initial lower cash on cash return. It may be a good idea to carefully consider your financial situation and long-term goals before making a decision.

0 Votes

Spokane, Washington

Quote from @Tobi Isaacs:

The 2 houses are being sold together on the same lot for 1 price and they are calling it a 5b/3b (which isn't quite accurate since that makes up both houses-it's really a 3/2 and a 2/1). I can't figure out how to calculate them… do I split the asking price by 2/3rds and 1/3 and put it in my STR calculator? Also if I'm renting them separately, shouldn't I get separate data (occupancy and nightly rate)? Lastly, how do I determine cleaning costs, insurance, etc. Has anyone done this before? Thank you!

When dealing with two separate houses on the same lot being sold together, it is important to consider several factors in determining how to calculate potential rental income.

Firstly, in terms of breaking down the asking price, it would be reasonable to split it based on the ratio of the number of bedrooms and bathrooms in each house. In this case, since one house is a 3/2 and the other is a 2/1, you can calculate the price based on the proportion of the total bedrooms and bathrooms each house contributes to the total.

For example, if the total asking price is $300,000 and the 3/2 house accounts for 60% of the total bedrooms and bathrooms, you could assign $180,000 to that house and $120,000 to the 2/1 house.

When it comes to renting out the houses separately, it would be advisable to gather data on each house individually in terms of occupancy rates, nightly rates, and any other relevant information. This will allow you to make more accurate projections for each property.

In terms of determining cleaning costs, insurance, and other expenses, it would be best to estimate these costs separately for each house. Consider factors like square footage, number of bedrooms and bathrooms, and any unique features or amenities that may impact these costs.

Overall, while calculating rental income for two houses being sold together may require some additional considerations, breaking down the costs and revenue for each house individually can help you make more informed decisions and projections. It may also be beneficial to seek advice from real estate professionals or financial advisors with experience in this type of situation.

1 Vote

Quote from @Jalen Wilson:

Hey everyone, I know having central air for rental properties over window units can make things a lot easier and beneficial. Would it be worth it to convert a multi-family from window units to HVAC?

Converting a multi-family property from window units to central HVAC can be a worthwhile investment. Central air conditioning offers numerous benefits, including increased energy efficiency, improved indoor air quality, and better overall comfort for tenants. Additionally, central HVAC systems typically require less maintenance and provide more consistent cooling throughout the property. This upgrade may also increase the property value and attract higher-quality tenants, ultimately leading to higher rental income. Overall, the long-term benefits of converting to central HVAC outweigh the upfront cost, making it a worthwhile investment for landlords.

2 Votes

Shreveport, Louisiana

Quote from @Wes Selman:

Is there a way to structure a scenario where a long term tenant of a single family home can receive homestead exemption? Is there a way to do that?

Thank You.

One potential way to structure a scenario where a long-term tenant of a single-family home can receive homestead exemption is for the homeowner to designate the tenant as a co-owner or co-borrower on the property. This would allow the tenant to qualify for the homestead exemption as if they were the owner of the property. However, it is important to consult with a legal professional or tax advisor to ensure that this arrangement is feasible and complies with all applicable laws and regulations.

0 Votes

Austin, Texas

Quote from @Michael L.:

If a boat can be considered a second home, is there a Heloc equivalent available for it aswell?

Yes, there are options for financing a boat that can be similar to a home equity line of credit (HELOC). One option is a marine loan, which is a type of loan specifically designed for purchasing or refinancing a boat. These loans typically have competitive interest rates and terms, similar to a HELOC. Another option is to use a personal loan or a line of credit secured by the boat as collateral. It is important to compare different loan options and choose the one that best fits your financial needs and goals.

1 Vote

Quote from @James Haggard:

My wife and I own 50% of a rental property with another couple. The other couple also has 50%.

They're separated and are getting a divorce, so we're going to dissolve our partnership.

My wife and I are trying to determine if we should sell the rental property and use that cash for our next investment.

Or should we buy our partners out of the rental? Do a home equity line of credit, and use that money for our next investment.

We've had the rental for almost 7 years. The rental is out of state.

What factors should I be looking at to make the best decision? What variables should I consider? What numbers do I need to look at?

Thanks!

When deciding whether to sell the rental property or buy out your partners, consider factors such as the current market value of the property, any outstanding mortgage or debts on the property, the potential for appreciation in the future, and the rental income generated by the property.

Calculate the amount you would need to buy out your partners and compare it to the potential profit you could make by selling the property. Also consider the cost and risks involved in obtaining a home equity line of credit.

Evaluate your financial goals, risk tolerance, and investment strategy to make the best decision for your next investment.

0 Votes

Quote from @Chris Dumesnil:

Hi everyone, I’m looking at purchasing an investment property (short term rental) on the West Coast of Puerto Rico. I know things work a little different down there than they do in the states, so I was wondering what the best type of loans or financing there might be rather than a conventional loan? Thanks in advance!

One option for financing an investment property in Puerto Rico is through the Puerto Rico Housing Finance Authority, which offers loans specifically for short-term rental properties. Additionally, local banks and credit unions may offer specialized financing options for real estate investments on the island. It is recommended to research and compare different loan options to find the best fit for your investment property.

0 Votes

Quote from @Troy Sabin:

Hi. I recently acquired a townhome in Asheville, NC that I'm operating as a furnished mid-term rental. I have been contacted by multiple corporate housing companies that would like to secure long-term leases and then operate it themselves. Having a long-term lease at mid-term rates and not having to worry about keeping it booked, cleaned, or maintained sounds good. However, I'm a bit hesitant to allow this, as I won't have control over who is occupying the property or how well it is being maintained.

Does anyone have experience with these arrangements? Am I right to be hesitant?

I would appreciate anyone's perspective on this.

Thanks,

~ Troy

It's completely understandable to feel hesitant about handing over control of your property to a corporate housing company. While there are potential benefits such as consistent income and reduced management responsibilities, it's important to carefully vet any potential partners and ensure that your property will be well-maintained and treated with respect. Consider setting clear guidelines and expectations in any lease agreements to protect your investment. Ultimately, trust your instincts and do what feels right for you and your property.

0 Votes

All Forum Posts by: Account Closed

Account Closed has started 0 posts and replied 42 times.

Post: Refinance with JV Partner

Post: Major Rehab/Construction Loan on Inherited Property

Post: New Investor Need Advice: Private Lender, Short Term, Low Cash on Cash

Post: How do I analyze 2 properties on 1 being sold for 1 price?

Post: HVAC Systems in multi-family

Post: Long Term Tenant- Homestead Exemption

Post: Asking about yachts and financing.

Post: Should I sell my rental?

Post: Best financing options for STR in Puerto Rico

Post: Should I be hesitant to give Corporate Housing long-term leases?