All Forum Posts by: Chris Masons

BRyan,

I'm not saying I know what the future holds in the stock market. But I do believe there will be some growth in the upcoming years. Things are very slowly getting better. How much growth is the million dollar question. There are still plenty of blue chip companies that are still increasing their quarterly dividends which is one of several indicators that a company is healthy. I am trying to focus on dividend paying quality companies as of lately so I am getting income at the same time

With that said, I think it's a good idea to stay diversified by investing in RE as well as the stock market.

As you said if your not investing in these infaltion is just eroding your interest or savings at a much faster rate then you can add to it.

I agree. Cash flow RE is a great way to go. With all the shorts and REOs keeping the RE market down relatively low there are some great buys even on single families which were really tough to make cash flow.

I have always bought multi families and made them cash flow nicely but at the prices I am seeing Single families at and taking into consideration the much greater ease of management/headaches on single familiy investments VS multi families I am starting to take a closer look at g etting into single family cash flowo properties.

I have some money in the stock market and things are way down so I don't want to realize those losses by selling. I am hoping to hold what I have in the stock market for awhile as I believe the next few years we will see at least some growth.

regards,
C

Interesting, always seem to learn something new on here. When you said the loan involves "cross colateralization" are you saying the bank is using other properties which the loan is not for as colateral? And if so wouldn't these properties have to be paid off to avoid being in 2nd or 3rd lien position?

That is a very interesting concept and would love to know how that works. Maybe this is in the commercial world which I don't knwo too much about but still would like to hear how it works.

regards,
Chris

Hi Mike. Pretty sure LLC is a flow through entity so wouldn't impact your return much, as you and "it" (the LLC) can file one return even if you have income with the LLC. S corp and C Corp will require their own seperatley filed return. And I think a LLC with more then a single member too but not 100% sure.

If you have 2 rental properties You should be reporting the P/L on schedule E. I didn't think the 1040EZ form had this option. Correct me if I am wrong as I'd like to know.

I have been using turbo tax for my returns. It's real simple and even has to modes of input - expert for straight inputing and novice where it will guide you through and ask you questions which helps you answer correctly.

IF you don't mind me asking what were the costs/ registeration fees to create the LLC?

thx!
Chris

Tenants with nothing to lose or homeowners for that matter are capable of ANYTHING.Can never trust them.

I evicted a tenant once who swore up and down they would remove all their crap from his 2nd fl apt. The loser snook out in middle of night and was never heard from again leaving every singe possession behind.

Live and learn I guess.....

Right, makes sense Nathan. I get the feeling these guys are cash starved right now though. But I can give it a shot, nothing to lose right?

So to ease of example if purchase price was 200k he would give me 20k and I would come to table with 30k giving bank the full 25% dp. His loan rate would be probably little higher then what bank is giving me right?

When you do this type of transaction is the bank aware of it? Reason I ask is I am sure one will have to source where the funds (20k) in the case came from.

as always thx in advance,
Chris

Hi Dave,

I thought about having owner finance but was told these guys currently have a short term hard money loan on the property and need to pay it off. I belive they have a homevestors franchise and specialize in rehab flips.

Just so I understand better what you were saying if owners did own it free and clear you are saying get conventional financing and also get a 2nd loan from sellers? How would this impact my primary conventioanl loan though? b/c I own 5 properties guideliens are requiring min of 25%

thx again
Chris

Hey guys,

I have a deal I am working on here in NJ. 2 family that was rehabbed, investor looking to sell fairly cheap (before winter sets in) not a steal but slightly below FMV.

What attracts me to it is it's location and I already have a tenant ( a great tenant) willing to move in and rent from me for 4 to 5 years and then purchase the property for ~ 35k more then I am paying for it. I just need to fill a small 1 bedroom on 2nd floor which shouldn't be a problem.

Cashflow during the meantime won't be great but will be roughly around ~ 400 to 500 . This is a very small all brick 2 family so the 50% rule may not even apply here. New boiler, new roof, newer windows and I will replace water heater.

Property is a 2 family total rent roll is 1500 and 800 so 2300 total. Taxes are 6800.00

My big hangup is coming up with 25% down as I am governed by the fannie mae stricter guidelines as I have 5 properties. I will be out of pocket around 60k which I am not happy about but thihs property fits my profile of properties that I like to invest in.

any thoughts on how I can be creative and not be so out of pocket on this?

as always thx in advance,
Chris

Hey Brian, are there any states where courts are more Landlord friendly? lol I gotta say though for non payment I have never had a problem with an eviction. It's pretty cut and dry if tenant don't pay Landlord has a right to get them out in a fairly timely fashion... thankfully!!

chris

Hi Robert,

Here is some info on NJ rental security guidelines. Hope thsi helps:

SECURITY DEPOSIT BULLETIN
May 2010
This bulletin outlines the laws pertaining to security deposits for residential rental properties in
New Jersey, pursuant to the Security Deposit Law, as set forth in N.J.S.A. 46:8-19 through 26
and as may be interpreted by a court of law. Landlords are permitted to charge security deposits
as security for the full performance of all of the terms of a lease. The security deposit law was
created to protect tenants from landlords who require security deposits and then divert the
deposits for their own use. This bulletin is for informational purposes only and should not be
used for legal interpretations or legal advice. Please consult an attorney for legal services and
advice when necessary.
APPLICABILITY
The Security Deposit Law applies to all rental premises or units used for dwelling purposes
except owner-occupied premises with not more than two rental units. However, a tenant
residing in an owner-occupied premise with not more then two rental units can invoke the
protections of the Act by giving the landlord 30 days written notice of the tenants desire to
receive the Act’s protection. Such written notice may be given at any time during the tenancy.
AMOUNT OF SECURITY DEPOSIT
Landlords are not permitted to require more than one and one half times the monthly rental
payment as a security deposit. Any additional yearly security deposit increase may not exceed
10% of the current security deposit. There is no time limitation within the statute for making a
request of a deposit.
Note: Be sure to obtain signed, dated receipts marked “security deposits”. Keep receipts for
your records.
DEPOSIT OR INVESTMENT OF SECURITY DEPOSIT
a) Landlords receiving security deposits for 10 or more rental units shall invest or deposit
security deposits in an insured money market fund established by an investment company based
in New Jersey, or in an account that bears a variable rate of interest, at a State of federally
chartered bank, savings bank or savings and loan association insured by the federal government
and located in New Jersey. All deposits and investments shall be made in accordance with the
Security Deposit Law. The security deposit shall be used in accordance with the contract, lease
or agreement and shall not be mingled with the personal property or become an asset of the
landlord.
b) Landlords subject to this law, receiving security deposits for less than 10 rental units shall
deposit money in a State or federally chartered banking institution, in this State insured by the
federal government in an account that bears interest on time or savings deposits. The
Commissioner of Banking and Insurance, by rule or regulation, may require some or all persons
receiving money for less than 10 rental units to follow the investment and deposit requirements
that apply to landlords with more than 10 rental units.
Administrative and Service Fees
Pursuant to P.L. 2003, c. 188 landlords are no longer allowed to take administrative
expenses from security deposit money. The earnings or interest belongs to the tenant. The
tenant’s interest or earnings shall be paid to the tenant in cash, or credited toward payment of
rent due on the renewal or anniversary of the lease or on January 31, if the tenant has been
given written notice that the interest payments will be paid on January 31, of each year.
The landlord must give a security deposit notice at the time of each annual interest payment to
the tenant.
Notice of Deposit of Security Funds
Landlords are required to give tenants a statement in writing including the name and address of
the investment company, bank or savings and loan association along with the type of account,
current rate of interest and amount deposited within 30 days of receipt of a security deposit.
This notice may appear in the lease. The landlord must notify tenants within 30 days of
transferring security deposit money to a new landlord or moving the security deposit to another
account or bank. If notification is not given or if the security is not deposited or invested in
accordance with this law, the tenant has the right to require that the security deposit, plus 7 %
per year be applied toward any rent due. This request must be made in writing. However, after
giving the landlord written notice the tenant must allow the landlord 30 days to comply with the
annual interest payment and notice requirements. The 30-day allowance is not required, if the
landlord failed to properly deposit the initial security deposit money.

HTH,
Chris