All Forum Posts by: Jason Cobb

The seller is 60ish, has multiple multi-family units in neighboring cities. This winter convinced him to retire and live in Florida.

Where do I find 90% LTV funding for putting all my properties into an LLC while purchasing a larger property? The opportunity's numbers are great for my long term buy and hold, just don't know where to find the private money funding. Not looking for 'hard money', knowing how banks 'value' properties, I am not too fond of that route either.

Deal is a SFR, 12 unit apartment mini-complex, a 14 unit mini-complex with coin op laundry. $772,000 funding needed. Value is $863,000.

30 year mortgage at 5%: $49,732; NOI: $70,862; DSCR: 1.42

DSCR without yearly reserves and budgeted repairs holdings: 1.79.

Assumptions are with 85% occupancy, no increase in rent, and I don't know where else to go for brutally honest opinions.

So, I have decided on taking the property. But, I have consulted with CPA and Attorney will handle the moving of properties to create a single entity LLC with all rental properties into it. I have narrowed the numbers down to correct calculations and I will have 12% equity value into the LLC. I am having the hardest time finding financing though. I have found 90% LTV FHA/GMA type lending but am hesitant as it deals with the federal government, and I am still learning their 'rules'.

Any suggestions on finding private money lending would be more than helpful.

I wanted to thank everyone for their input, it has been very helpful. As I move forward with due diligence and the numbers are refined I will post updates on this post. To answer some questions: I do not know if he is interested in seller financing, however, I will be inquiring today. I also want to purchase this property as it gives significant gains to our current operations across the alley, yet a 25% down is financially out of the question. So to make this work, I definitely would be doing this with no money out of pocket (to preserve reserves). I have never done this type of purchase, so I am a little leery of how to structure seller financing, or structure private money for the down payment portion. However, for our long term buy and hold, this property's possession fits right in. Thank You again!

After sitting down and calculating known expenses, inputting unknown expenses, and income, this property will clear $3,000 per month. Eight thousand in, five thousand out including mortgage payments, expenses, insurance, taxes, utilities, and upkeep. Its potential upside is 9 thousand per month. Very little yard, lots of parking. The updates list is very extensive. He does own it free and clear, unknown if he would do owner financing. Have not received my CPA's tax benefit assessment of the property yet. (Depreciation/deduction worksheet). I keep looking for negatives, to the point I am assessing the local rental market as a whole. This procurement would allow me to eventually retire from the Army and replace the income I would be losing. The timing for this opportunity is eerie.

Please give me your thoughts....I had an opportunity given to me from a fellow landlord. He owns the apartment buildings across the alley from my two apartment buildings. We are three blocks from a University Campus. Half jokingly a few days ago I mentioned if he ever wanted to sell for him to let me know. He smiled big and said, "Well, funny you asked. I am getting tired of the snow and cold and Florida is calling to me for retirement."

Two days later he invited me over to the property and showed me what he had to offer. Turns out he and his wife have been planning on downsizing their 34 units in three towns, and want to move to Florida by mid-summer. He offered me his 14 unit apartment apartment mini-complex at $485,000. I have watched in the last year all the updates to the buildings, however, he spelled them out on paper. Over $150,000 in updates; windows, doors, appliances, siding, insulation HVAC, the list goes on. It comes to $34,642 per unit. 12 units are two bedroom/one bath, two units are three bedroom/one bath.

It can gross $9,075 per month. Current is $8,075.

Perks: location local to my own, has office and brand new coin laundry, still close to university, the construction updates were done right.

Our financing would require private money for the 25% down, or more.

My wife and I are torn, but this is a well maintained and updated property, the proximity to our own apartments is great. Please give me your thoughts!

Thank you to everyone who has responded. I believe I need to get a real estate seasoned attorney to delve into the specifics for Illinois. As a full time police officer, the business aspect must be protected from the nuances of my profession. Still new to landlord business, investing, and business management, but I enjoy this very much and looking forward to doing more. Thanks again!

Jeff, before I began writing leases, I spoke with people in the area who were already successful landlords. I limited it to DIY landlord/managers. They all repeated the same statement: A well written lease will prevent many problems and protect you legally. They then gave me a copy of their leases to review. I highlighted the content and wording which appeared most beneficial, then blended all components into a well written lease. Being new I was shocked they were that willing to help. Their help has been a tremendous asset and I thank them every chance. Their guidance has helped to build great relationships and successful paperwork.

Yes, I have been advised that with any further growth, the legal protections would be prudent. It appears as though the LLC will provide the legal advantage, yet, I am not quite sold on tax advantages (still reading tax laws). The S Corp seems more tax friendly, but not as great for legal protection. Either way, to protect my current investments, the purchase of the properties would be under the LLC or S Corp.

What are the greatest negatives (legal, operational, or financial) of purchasing property into an LLC or S Corp, from a private seller under seller financing?

Situation: Multiple properties owned by Seller. Properties are in town where I work and live. Properties are buildings converted to apartments in great locations. B and C properties but well kempt.

Currently have purchased one (strange foreclosure), rehabbed then rented out, and one 12 unit apartment building in nearby town.