All Forum Posts by: Eric Mcginn

Your dad is correct, you're fresh enough to basically have no assets to protect. Plus, early on it's hard to get protection from you LLC, surely needing to personally guarantee (or your mom)

The main reason you’d want to refi the s because your rate lock is going to run out on the commercial loan.

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I haven’t read any books or podcasts on RE investing. I learn from trying to make deals happen. The ones that don’t go through are the biggest learning points.

Having a 20 minute chat with a knowledgeable finance person is probably with 50 podcasts

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Quote from @TJ Nowitzki:

Hey all I have searched the forums but don't seem to be finding the answer I am looking for. My question is related to a commercial mortgage with three partners holding an apartment building in an LLC. Since the LLC is new we will have to personally guarantee the debt. My question is since we each guarantee the debt it is my understanding that the liability is 100% counted against our DTI ratios. However we are only able to offset our DTI with our percentage ownership of the profits which in this case is 33% each.

To better illustrate my question below is how I roughly understand how the DTI calculation for our partnership would work.

Partner 1 Net Income share: $50,000

Partner 2 Net Income share: $50,000

Partner 3 Net Income share: $50,000

PITI: $100,000

For this example each partner would have there DTI negatively affected by $50,000. Is this understanding correct?

Is there a solution to this? Can we just personally guarantee 33% of the loan each so our DTI does not take such a large hit? Another option I thought of is alternating which partner personal guarantees the loan for each deal. It's not a huge issue for the first couple of deals but something I want to be mindful of as we grow.

This was a good question. DTI can be tricky! Did you ever get an answer?

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Quote from @Gabriel L.:

Quote from @Eric Mcginn:

it’s up to you!

if you want them gone than get it going and start the process.
otherwise, have them sign the new lease!

If they are paying tenants than I don’t see the harm in keeping them.

Quote from @Gabriel L.:

Quote from @Nate Sanow:

The lease is attached to the property.
whatever the terms were. Are now your terms.

I agree I probably would require the tenants gone as a condition of purchase but you are likely past your inspection period.

If that is the case. I would say, make sure you have a well defined plan to get them out after acquisition

So yeah I got inspection done a while ago, came back mostly in good condition. Got 15k sellers confession and appraisal came back actually better than we anticipated.

That's where I'm confused. Because the leases they currently have with the seller are month to month. So since they were given notice to vacate by Feb. 1st, am I still supposed to give them another month to month lease beginning of January?

I want the basement tenant gone. Which is why I had the seller give them the notice to quit. I have an owner occupied loan, and was looking to have the basement for myself and rent out the other 2 units.

All I really want to know is since they have already been served "NOTICE TO QUIT" by Feb 1st, do I still get them to sign another month to month lease until they have to leave?

you need a lawyer.
one that does evictions, that’s who you need to be asking, not us.

I personally would be starting at “ground zero” to avoid sabotaging any future eviction hearings. But again, this is a question for your lawyer.

mine hired the sheriffs deputy to serve the notice, a good way to confirm delivery and let it be know. You’re serious.

Either way you need a lawyer, but have you tried talking to the tenant?
that’s what’s ultimately worked for me.

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Newark, New Jersey

$1k a month positive cashflow is pretty decent. Instead of giving that up, I’d leverage it to buy another one on a 4plex in the area you’ve decided you want to invest in.
SFH are a nice investment but they are 4 times more paperwork work per unit than a quadplex.

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it’s up to you!

Quote from @Nate Sanow:

The lease is attached to the property.
whatever the terms were. Are now your terms.

I agree I probably would require the tenants gone as a condition of purchase but you are likely past your inspection period.

If that is the case. I would say, make sure you have a well defined plan to get them out after acquisition

So yeah I got inspection done a while ago, came back mostly in good condition. Got 15k sellers confession and appraisal came back actually better than we anticipated.

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Newark, New Jersey

I would double check with a lawyer and give him the renewed lease in his name if that's what he wants. certainly take no further action than that and keep collecting rent

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Sacramento, California

"Hey (insert name), just checking in. I noticed a smell in the hallway that seems to be coming from your place. Let me know if you want me to check on anything for you in the apartment or take the trash out if needed. Best wishes, Richard"

1 Vote

Indianapolis, Indiana

I love the Smokey mountains and bet they turn a better profit than out here. But I think managing an STR remotely will be much more complicated and expensive than you might expect at least for the first year or two.

There are some deals in-state that could still cashflow.

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Quote from @Kimothy Bynum:

Quote from @Eric Bilderback:

Bad *** baby! I think house hack go big if you can do a 4 plex maybe. Keep buying one home/plex a year as your primary home with conventional financing. And when you and if you can buy more properties on the side. I hear David Greene say that and I think it is the soundest advice out there. I did that to an extent but I could have loped some time off the W-2 if I would have done that. I think it is fun to start with where you want to be when you retire and reverse engineer. 5k a month 10k, 20k etc. Then it will help you see how much you will need own/do.

I would love to house hack a 4 plex. I jumped right into a duplex but if a 4 plex comes up and the numbers look right and the unit is pretty decent i would have to jump on that if the mortgage people don't give me a hard time. I'm starting to form my number and how many properties i need to acquire to reach that number and it looks very doable. I was listening to biggerpocket rookie podcast and they were talking about how you dont need to own hundreds of properties. That really hit me because you don't you can have a few that produce good cash flow and you'll be set if that's what your looking for.

Exactly, a few really good ones can give you the security of financial freedom and stability for the rest of your life.

I know people that are hustling with hundreds of units and making a killing and doing big things. But all that isn’t necessary to get the cashflow and stability you need to leave the 9-5

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All Forum Posts by: Eric Mcginn

Eric Mcginn has started 37 posts and replied 221 times.

Post: Putting rentals under personal name

Post: What's The Best Piece Of Advice You Heard On The Podcast?

Post: Partnership DTI Question

Post: Notice to quit given by seller

Post: Selling one expensive property to buy 10+ cheap ones. Thoughts?

Post: Notice to quit given by seller

Post: Tenants Break Up - But BOTH Want To Stay - What should I do?

Post: 4 plex with a smelly public area

Post: Realistic Performance in Smoky Mountains in 2022

Post: Looking to retire early