All Forum Posts by: Justin Holley

@Michele B. Zoned residential and I am not over the 10 personal loan threshold.  

The last bank (US Bank) I spoke with insisted that they are putting me in the commercial loan category and that it is still a residential loan, but because it is 3 units Fannie Mae requires 25% down.  On the BP podcast, they often talk about how one can get a 20% down residential loan on up to 4 units.  Does anyone know the language I need to you use or what I should be doing?

Good day BP!

I have a quick question.  I have a 3 unit under contract and the local banks and credit unions keep telling me my loan is commercial, but it is a simple 3 unit. I have not run into this problem in the past.  Am I giving them too much info?  Like telling them I will not be living in the house, it's 3 units, etc.

Thanks,

Justin 

Please join us for conversation, networking and education about real estate investing.  The meeting is being coordinated and lead by real estate investor Katherine Holley.  The goal of the meetup will be to help attendees meet other real estate entrepreneurs in Flathead County to learn, share experiences, share opportunities, or simply to learn more about real estate.

Disclosure: No advice will be given about specific investments. 

@Robert Gilstrap Thank you for your reply. Yes, I was definitely planning on using an LLC. Yeah, I struggle with the idea that I will be taking on a lot of risk both financially and working with newbies. That said, it is hard not to want to try to help them get their start in real estate investing. At the end of the day, I figure I can make them 2 offers. One a bird dog fee or I will structure it such that the title is only in my name and that within a certain specified period of time they can buy into the LLC with a minority stake. That said, if they buy in do they buy in at the current value or the ARV?

The snag with the bird dog fee arrangement may be that seller may walk away from the deal if one of the newbies isn't involved because he the seller is his great uncle. 

@Jay Hinrichs How do you typically set up these bird dog monthly payments?  I was thinking of offering them both a fee of 5k.  Is that too generous or too little?  On all my other deals I have never used a bird dog, so I do not know what's appropriate. 

Hello and thank you in advance for any guidance provided.

I have a "subject to" deal/opportunity that I am doing with 2 newbies. They approached me with the deal because they couldn't get the math right nor a bank to finance the project the way they had structured it with the seller. They were basically trying to refi the existing while adding themselves to the deed. Anyway, it was a bit messy, but besides the point in this post. At the end of the day, I renegotiated with the seller that the 3 of us could take over his mortgage (in place for nine years and low rate) and provide him with some cash (10K) to walk away from the property after transfer of the deed. I am basically the money provider in this deal. I am providing 10k upfront and all rehab cost (estimate 25k). My two partners simply brought the deal to me. They are wanting to be buy and hold investors, so I just don't feel right just offering them a wholesaling fee. They have offered to supply property management and to complete the rehab, but they are unseasoned at both. I am struggling with how to best structure the ownership arrangement as I am taking on the vast majority of the risk. Do I set it up 60-20-20 split LLC? We plan on refinancing the 4 plex after the rehab is complete and the rents have been raised. At which point if all goes as planned I should be able to recover my cost. However, in the rarity that the mortgage is called due before the completion I will be the only one that has the finances to complete the refi, so that would also be additional risk. I am looking for ideas. Thank you for any guidance or advice on how to best structure this arrangement.

Best Regards,

Hello and thank you in advance for any guidance provided.

I have a "subject to" deal/opportunity that I am doing with 2 newbies.  They approached me with the deal because they couldn't get the math right nor a bank to finance the project the way they had structured it with the seller.  They were basically trying to refi the existing while adding themselves to the deed.  Anyway, it was a bit messy, but besides the point in this post.  At the end of the day, I renegotiated with the seller that the 3 of us could take over his mortgage (in place for nine years and low rate) and provide him with some cash (10K) to walk away from the property after transfer of the deed.  I am basically the money provider in this deal.  I am providing 10k upfront and all rehab cost (estimate 25k).  My two partners simply brought the deal to me.  They are wanting to be buy and hold investors, so I just don't feel right just offering them a wholesaling fee.  They have offered to supply property management and to complete the rehab, but they are unseasoned at both.  I am struggling on how to best structure the ownership arrangement as I am taking on the vast majority of the risk.  Do I set it up 60-20-20?  We plan on refinancing the 4 plex after the rehab is complete and the rents have been raised.   At which point if all goes as planned I should be able to recover my cost.  However, in the rarity that the mortgage is called due before the completion I will be the only one that has the finances to complete the refi, so that would also be additional risk.  I am looking for ideas.  Thank you for any guidance or advice on how to best structure this arrangement.

Best Regards,

Justin

Hello Biggerpockets Members,

My wife and I just moved to a new area and we would like to house hack with a duplex or 4plex.  However, we moved to a small town and there really isn't very many duplexes or 4plexes in the area let alone for sale.  However, there are some that have been built in the downtown area amongst the single-family homes that are quite nice and seem to be rented.  Zoning is flexible within the town (it's a tourist/resort town and the city encourages additional units on lots).  My question is basically, what's the math on constructing a new duplex, etc in which to house hack?  What's the math, does it make sense, etc?   Thank you for the help!

@Don O. (Please seek the advice of your personal tax adviser, following is not intended as legal or tax).  So it depends.... is the life insurance owned by a company, is it funding a buy sell agreement and are premiums paid by a company or personally held?  Please note that in most cases with company owned and paid life policies, in which a deduction was taken the death benefit is then taxable.  The same is true with disability insurance, if you write off the premiums through your business the benefits become taxable.  Great job wanting to protect your family in the case of your death.  However, statistically speaking you are far more likely to become too sick or injured to work than you are to die during your wealth accumulation years (25-65).  Therefore, the best and first use of dollars allocated to insurance should be to disability insurance.

Simply put about the deduction.  It really depends on the purpose of the life insurance.  

Thanks! 

@Brian Mathews If you have about 20mins for a quick web-conference in the coming days or week I am happy to show you the math, with no strings attached what so ever. I believe once you see the numbers calculated live, especially taking into account the time value of money, you will understand more clearly. What's great is this technique is simply one of the many tools to potentially have in your REI tool box.