All Forum Posts by: Henry LiChi

@Dustin M Prasuhn be sure you cushion the rehab cost well.  Account for holding cost during the rehab period and however long it takes to sell.  Being that it is your first deal, make sure you vet that rehab cost thoroughly with licensed contractors that are able to do it for that cost.  My intuition is that it is in a D neighborhood based on the selling price and that it is a very very old property.  You are bound to find nasty surprises along the way.  Should not deter you, but buffer your numbers with very comfortable contingencies.  Remember, don't aim to hit a home run on your first deal.  Sometimes it is worth breaking even or even losing a small amount to get the experience and first deal out of the way.  The education alone is worth the admission.

@Jaysen Medhurst 

I have already thought of that but I have very limited time to go back to Ohio anytime soon.  I have already found my answer by needing to file a Foreign Entity form or open the account in Ohio as you said.

Thanks.

I'm not sure if this is the right place to ask this but hoping it is a simple question.

I have an LLC in the State of Ohio for my rental properties there. I have yet to actually put my properties into the LLC nor create a business account. I am in the process of looking into opening a business account and am wondering if I can open one locally in California rather than Ohio? I reside in California and only have a California ID. So my question is, is it possible to open a business account in California when the LLC is in Ohio?

Thanks in advanced.

@Brian M Sweeney 

Thanks but I am looking for someone local that I can meet in person.  I regularly engage my previous CPA and need someone I can actually bring documents to physically when I have questions.  

Recently moved back down to Long Beach, CA and am looking for a new CPA to help with filing for 2018 personal tax returns that include W-2 from full-time job and also Schedule E for rental income that include out-of-state properties.  Closer to Long Beach is preferred, but not absolutely necessary.  Does anyone have any references?

@Kristopher Hanks

Thank you for your input.  Always appreciate the BP community for opening my eyes to a few things I didn't see.  That's correct, I should structure the deal where the buyer actually has positive cash flow even if it is a slight amount.  Deal 1, I currently net cash flow over 900 per month after saving for vacancy, repairs, and capex, property management, insurance, and taxes. As long as the monthly payments can be sub 900, it may be workable.  Say we lower the purchase price to 60000 and require a 20% down, so a 48000 loan.  Over 6 years, that's a $784 per month loan payment.  It's not much cash flow, but the property will be owned free and clear after 6 years.  Similar component can be worked out for Deal 2.  It's just tailoring it to make it work for the buyer.  

@James Wise

This is the exact input I was looking for and understand what others think.  I am just putting a scenario out there and appreciate your input.  I have no desire to sell these right now since they are cash flowing like crazy and I own them both free and clear unless a real good offers comes.  I'm just thinking in a few years down the road what scenarios can I play out.  And I do understand all the risk involved in owner financing it out, but that is my niche that I do very well in.  

@James Wise

Thanks for your input.  I'm willing to owner finance them out to get interest over the 6 year period while trying to get some more investors or new investors into the industry by taking advantage of an owner financed deal instead of a conventional bank loan.  With a 6.5% interest and 30 year Amortization, I will make substantially more than I would if I was to sell it now.  I don't need the equity now so I don't have a desire to sell it outright.  True the 44105 one may be over valued at that price, but once again, I am taking the risk of owner financing it so I want to get more than selling it outright.  It may not get appraised for such, but if the numbers make sense and if I am the one that is providing the financing, it does not need to get appraised.  

Hi All,

I just wanted to get a quick read on a scenario and a general opinion if you would do the following deals. I am contemplating on selling two of my properties via a land contract/owner financing. This is purely for analysis sakes and I will not reveal actual addresses but will give as much details as possible. Both properties, I have spent a lot rehabbing and are all up to date on MEP systems, all repairs made, fully occupied with great tenants and pays on time, and absolutely no deferred maintenance. It is truly a turnkey that is ready to be turned over to investors. I have updated these properties to be bright, modern, and comfortable.

Deal 1:

Location: Central Cleveland 44105

Grade: Class C Neighborhood

Property Details: Duplex with 2 bd 1 ba down, 3 bd 1 ba up, and an enclosed 2 car garage

Rents: DN: $750 - UP: $750 Garage: $50 per month to UP tenant ($1550 per month total)

Rehab scope: Spent over $13,000 on rehab to make this place shine. New paint, water tanks, one furnace (other was still working fine), new flooring and carpet throughout, new doors and hardware, fixed all plumbing issues, updated electrical, and new appliances for both units.

Property taxes: $1,100 annual

Utilities: I allot $200 per month, yet to exceed that (Only pay for water and sewer, trash is included in Property Tax)

Maintenance: $100 allotted, yet to exceed ($70 for lawn mowing from Spring to Fall (bi-weekly), and winter up to $100 for snow plow)

Offering: $67,500 (10% down)

Terms: 72 months (30 year Amortized)

Interest: 6.5%

Payments: $1,188.64 per month

Additional Comments: This property gets a ton of interest because it is the nicest and best looking property in that neighborhood. Looks very unique and modern on the outside with updated Vinyl siding and form that sets it apart from typical Cleveland duplexes.

Deal 2:

Location: Maple Heights, OH 44137

Grade: Class C+ Neighborhood (More suburban)

Property Details: Duplex with 2 bd 1 ba down + Den, 3 bd 1 ba up, and plenty of off street parking (honestly you can build another unit on the property, plus two city owned lots on both sides that the city will attached to the property for only $100-150 each, but must be adhered to current parcel and not to be sold separately. I have not done this yet because I do not plan to develop the parcels and do not want to accrue more landscape maintenance cost)

Rents: DN: $900 - UP: $763; both CMHA tenants, DN has been there for two years and CMHA pays the entire amount, UP is an elder woman who pays 50% out of pocket, Section 8 covers rest, and pays on time online, so all payments are automatic each month like clockwork (Total: $1,665)

Rehab scope: Spent over $5,000 on rehab just to satisfy POS inspection which was tedious and nitpicking at the smallest things. Down did not need any work except minor items, UP had all new paint, carpet, appliances, plumbing upgrades, and a few windows. I am actually going to be spending about 1-2k on down unit just to replace her carpet and repaint the place because she is a good tenant.

Property taxes: $2,400 annual (will be appealing this since it is higher than what it should be)

Utilities: I allot $200 per month, yet to exceed that (Only pay for water and sewer, trash is included in Property Tax)

Maintenance: $100 allotted, yet to exceed ($80 for lawn mowing from Spring to Fall (bi-weekly), and winter up to $100 for snow plow)

Offering: $87,500 (20% down)

Terms: 72 months (30 year Amortized)

Interest: 6.5%

Payments: $1,369.63 per month

Additional Comments: This is a very solid property that is brick exterior with tuckpoint done a few years back. It has a lot of potential for more development through acquiring two adjoining parcels. I can already see both tenants staying there for many years to come as long as their Section 8 vouchers continue. Very minimal repairs (We get maybe 1 call every 3-4 months and it is always something minor), absolutely no deferred maintenance.

Once again, would you do these deals on these terms? Of course monthly payments can be lowered with higher down payments.  

Hi, I am looking to sell one of my duplexes in Cleveland to my property manager via a land contract.  Therefore, I am looking for an attorney who has experience in this and can provide services for such.  I just want to be certain that it all is legal and complies with Ohio laws.  Once contract is signed by both parties, I want to be completely released from any liability thereafter and want to understand how I can setup payment plans in the best way.  Thank you in advanced for any advice.