All Forum Posts by: James Letchford

@Thomas S. Thanks for your response.

My Grandfather is 80+ yrs old. Everyone in the family is aware of his/this situation, so there are no surprises there. However this transaction goes from a finance side, it will be properly deeded in my name.

I never suggested that I will be renting to a girlfriend. Not sure where you got that. As part of the property, there is a separate apartment that I will be upgrading and renting to an applicant. This rental, alone, will carry the cost of this purchase.

I think cutting financial ties and purchase outright is a solid approach; it would just cost a lot more upfront to make the acquisition. With a SUBJECT TO transaction or me taking over the HELOC liability entirely, I'd essentially be acquiring the property for $0.

So to summarize: I'm not renting to family or friends.

@Jason Greenway Sorry for the late reply. I've been traveling a bunch for work.

Like @Steve Racicot said, you can be the Agent and get your own CPA. (I'd especially recommend finding your own CPA that is an REI themselves or is very familiar with REI.)

Let me know if you need anything else.

I was approached by my grandfather about purchasing his property in Southern NJ. He owes $75k on a HELOC (3.25% that matures in 2022) and is ~$5k behind on taxes. He's getting older and just wants out from under it all. He really doesn't have the money to keep up with the home payments and live the life he wants.

He's agreed that the property is mine if I assume the liabilities on the property and allow him to continue to live there indefinitely. From a cash flow standpoint, I'll be able to rent out an already sectored off apartment to cover the overhead while I improve the other parts.

Because I'm essentially 'purchasing' this property for ~40% ARV, I'm going to move on this. Not only would this be a great acquisition, it helps out my GF, so it's a no-brainer to me.

I'm reaching out on BP because I'd love to hear some recommendations from the super-professionals on how to structure the money. 

• Is this something you would SUBJECT TO with the HELOC already in place?
• Would you recommend that I just get added to the HELOC and get the Grant Deed in my name?
• Does it make sense to do a full Homestyle / 203K Loan Purchase and wrap in all the home improvements into it?
• Any other creative ideas that make this smooth for him/I and limit my 'exposure' so I can easily do future deals?

Thanks in advance for any inputs provided.

@Jason Greenway Without getting into the debate of whether or not investors should/not have or use and LLC, here are some of my experiences:

• I just went through the same process last year. I'm not going to lie, I got up-sold to the 'Diamond Package.' I was excited about my new business and couldn't help myself. The truth is, I probably didn't need everything I purchased, but did it anyway.
• I probably only needed to get my LLC name cleared/approved with my filing state and a basic Operating Agreement. You can file for your own Tax ID pretty easily with the IRS.
• I've used LegalZoom in the past, but I would highly recommend checking out Incfile.com and Bizfilings.com. They offer fast, clean, and reasonably affordable services.

Let me know if you have any questions.

@Michael Ramos -- First off, thanks for the vote.

Full disclosure:  I'm in the middle of my first BRRRR project and about to start my second.

With that said, here some answers to your questions:

1. Although I do have an LLC, the property is not currently owned under its name. It was difficult to get traditional financing (I used a HomeStyle loan for this property) under the LLC.
2. I do plan on putting the property under the name of my LLC at the refi. I'm hoping to work with a portfolio lender that will allow me a little more flexibility on doing so.
3. There is a seasoning period. I need to make a minimum of six mortgage payments before being able to refinance.
4. Like I mentioned above, I haven't refinanced yet, but feel pretty confident that I will be able to. I have an appraisal that gives me ~$65k in equity, so more than enough LTV for the refi.

I can keep you posted on how it goes, but here is my major takeaway so far (and this isn't hard advice to find if you're on BP):

• Buy Right: I'm making my money on the purchase I made. Because I was able to get a "C-" property in a "B to B+" area at 50% of ARV, I'm sitting pretty for the third "R" in BRRRR.

@Chris Porter -- Welcome to BiggerPockets. I'm a former U.S. Marine Infantry Officer living in San Clemente, CA. I'm currently building up an out-of-state portfolio in New Jersey (my old stomping grounds), so I'm familiar with where you are and where you're about to go.

Without responding with a novel, I'm attacking the BRRRR strategy for my properties. I can't speak for Chattanooga, but I've been able to find some "D+ to C-" properties in NJ that I've been able to purchase in "B to B+" areas and improve them for instant equity. I'll be able to refinance within 6-8 months to pull out the cash that I put in. (I'm sure you know of the technique.) So to answer your question: My vote is go for the rental property. Hold it for equity, cash flow, and tax benefits.

Have you been on deployment before? If so, you know there are a lot of ways to financially capitalize on the time you're away. If not, send me a PM and we can discuss.

Best of luck to you.

Semper Fi.

@Jason Haynes I had something similar recently. I considered doing the same (taking out a higher loan), but was concerned about the appraisal value. I ended up doing a Homestyle Loan and wrapped all the rehab into the loan. 

Pros to the Homestyle: All rehab costs are wrapped into the loan and your contractor takes drawls. The loan requires a pre-rehab appraisal based on your proposed improvements and what they'll do to your ARV.

Cons to the Homestyle:  There's a little bit more paperwork. You'll likely have to come out of pocket for 20-25% of the entire loan (purchase price + rehab costs).

I'm just finishing up a Homestyle Loan right now, so let me know if you have any more questions.

@David Zheng Congrats on this and 'going for it.' Super stoked for your success.

BP Community: I closed on my first deal about a month ago and it feels GOOD. I have the real estate bug bad now. I acquired my first property via online auction for 45% of ARV using a HomeStyle Loan. I'm in the middle of the rehab and everything is going smoothly. Because of HomeStyle requirements, I had to get a 'pre-rehab appraisal' based on the proposed upgrades I'm putting into the home. That appraisal came back pretty.

I'm fresh off getting the HomeStyle Loan, so if anyone has any questions about my experience, please hit me up.

I'm looking at keeping my momentum and developing some economies of scale where I purchased my first property. I have some a decent amount of cash to contribute to the next deal, but will need some private money to get me into the end zone. I'm going to approach my 'First Circle' (family and friends) with the opportunity, but before I do so, I have a few questions for those more seasoned the me:

1. I'd like make everyone aware (those eligible, of course) of their ability to use Self-Directed IRA funds as their investment capital. Does anyone have any recommendations on how to go about doing this? Are their any elementary resources that I can direct them to for overview?
2. If I do have takers using their Self-Directed IRA funds, am I able to co-mingle those funds with non-IRA funds?
3. Are there any recommendations on how to handle monies when they come-in? Should I open a specific bank account for each transaction? Should I have a general 'investment' fund that I funnel money out of as needed?

I'm sure I'm missed a whole bunch of other things. Any help would be greatly appreciated.

Thanks in advance.

Thanks, @Brian Eastman  That seems pretty cut and dry.