All Forum Posts by: James Dainard

Quote from @Dominick Johnson:

Hi @James Dainard! Your answers are a bit confusing, as an LLC can not get an FHA or Conventional loan for an investment property. The work around is as you stated, purchasing the property in your name and then doing a quit claim deed to transfer it to the LLC.

 That's what I meant, thanks for the clarification!

This is an interesting debate going on right now.

There may be an increase in sales but most generational wealth is transferred through the ownership of real estate. Death, divorce, and disagreement are the three primary reasons that people decide to sell real estate. With those two things together, even with more people going through that process, we're not likely to see a huge selloff. We might see some more estate sales but nothing crazy.

If the death rate increases dramatically and in turn puts pressure on the inheritors to figure out what to do with their properties and then we will likely see an increase in listing activity.

Make sure to keep in mind that this will be a mostly local phenomenon based largely on the population statistics of a given area. Suburbs with rambler-style houses will be the one hit by this trend the most. It's unlikely we'll see this drastically impact infill pricing.

Hey BP Community!!

I've been getting a lot of questions over on my Instagram and I wanted to make sure I shared the answers with you all as well!

The question we got recently was, if you're starting out and are looking to buy a duplex, should you buy it in your name or should you buy it under an LLC?

There are always multiple ways to answer every question in real estate. If you're starting out, you probably want to go with a 3.5% FHA loan if you can afford the monthly just because it's going to be the highest leverage position that will jumpstart your investing.

Answer one: Highest leverage

If you're looking to get yourself into a high-leverage position to get a jumpstart on your investment you're going to want to take the property down in your own name. This will allow you to go get conventional financing through Fannie or Freddie with as low as 3.5% down. We saw a lot of this back when money was cheap, it's not working as much now that the cost of money has nearly doubled.

Answer two: Highest cashflow

If you're looking to maximize your cashflow, you probably want to put more money down and get the property under an LLC. This is the safe, stable option. A lower leveraged position will make you more bankable and make it easier for you to go on to the next deal.

Keep in mind that putting a property into an LLC is about liability control. I will often close a property in my name then transfer it into an LLC. Make sure you talk with your lender to confirm that you won't trigger a due on sale clause by doing this.

Hope that helps! Thanks for reading and best of luck out there!

Hi Annalie,

Congrats on your first post!!

If you're both first-timers you can see if you qualify for any down payment assistance programs in your state. Check with agents in your area to see if there are some loan options like that available to you. Typically these are reserved for single-family properties but since they're the highest leverage you can get they can put you in a good cashflow position if you're willing to make two units or rent by the room.

In terms of looking at 2-4 units, the sweet spot tends to be 3.5% down on an FHA loan for a duplex. Any more units than that and the math typically works out to be more favorable with a coventional loan. FHA typically comes with more fees due to PMI and the lower down.

If you have the cash your best bet would be to go low down on the most units you can get while keeping enough cash on hand to get you through any renovations. You could also consider hard money, but for your first property, it'll feel a lot safer for you if you can get something that finances conventionally.

Best of luck!

Hey Sleeman,

This really depends on the market you're in locally and the market we're in nationally. It's a great question!

Go to where you can provide the most value.

In a market like right now where we're seeing more and more deals pile up on-market as interest rates get higher and more buyers leave the market, you probably want to be positioned where the money is. In this scenario it helps to be actively looking for investors with money. Regardless of the market conditions someone is buying and selling every day. If you can get connected with the people that are insulated from these markets you'll be solid.

Eventually, we'll return to a place where affordability rises again. In that situation if we get back to a deep sellers market you want to be working with sellers.

A balanced real estate business takes both of these things into consideration and adjusts output levels in response to the market. A good real estate business will anticipate these changes in the market and prepare in advance to be targetting the right clients. We thrive on lead gen but survive on cost control. Always consider revenue vs profit. Keep your costs down and get dialed in on what things are actually bringing in dollars towards your bottom line.

Hope that helps and best of luck!

Join us for our next Market Update with James Dainard!

Keep up with the trends in the Pacific Northwest and get your questions answered by industry experts during the Q&A portion of the hour.

Let us know how we can help!

Get in touch with our team of brokers to help find, underwrite, and execute on your next deal.

Hey Matthew,

Welcome!

You're doing the right thing by hitting the forums!

The best thing you can do right now to work towards a deal is get your money lined up. Make sure you've got a good lender in your corner that will get you to the finish line.

Feel free to reach out to me or my team with any questions! We'd love to help!

Hey David,

If you're looking for security you might consider a lower leverage position on some SFR's. You'll be insulated against inflation and the houses will appreciate once rates normalize and more buyers return to the market.

If you want to maximize your portfolio gains you're going to want to shoot for multifamily. You're going to have to spend more in renovations over time but the gains will be well worth it.

Let me know if you want to come in to the office for a portfolio review, we'd be more than happy to review options with you!

Hi Debbie,

Congrats on getting your offer accepted! I'm sure you've already done this but it's the forums so we gotta say it:

Make sure you do your due diligence on the HOA to make sure they allow STR's / MTR's.

There are a lot of buildings in the PNW that are now charging a change of occupant fee each time a new guest checks in to cover the expenses of the additional wear and tear on the building. This is more common in Seattle but it never hurts to triple-check.

Let me know if our team can help at all in helping you find/underwrite your next deal!

Quote from @Jeff Si:

Thank you all for your great suggestions! 

To answer the question that was asked the most: my house is a 3-floor single family. all the bedrooms and bathrooms are on the top floor, living room the second floor, the basement and the laundry room on the ground floor. The problem with the basement is there is only a 0.5 bath (toilet, but no shower) next to the basement. For the guest to take a shower, they have to use the guest bathroom on the top floor. 

any idea how to handle this other than adding another shower?...

My girlfriend and I are actually seeking solutions to rent this basement out but not as a living space. I'm open to all suggestions. 

If there's exterior access you might consider putting a keypad lock on it and setting up storage stalls down there.
You can market it to the crowd you were initially thinking of to store their ski equipment in the off-season.

This is probably the cheapest reno you're going to get away with since you can just frame in what you need. I've seen some people do it with chain link but those don't do as well.
The challenge with this is going to be the marketing, you're going to want to hit Fb marketplace and craigslist etc to get local people to rent the storage units once you've made them.

Hope that helps!