All Forum Posts by: Jeremy Dugal

Hello. I am currently in the process of purchasing a triplex in the town I live in. This property will be purchased by and LLC and I am working with a commercial lender.

I also have a duplex that I purchased last year under my personal name. I want to transfer this property into my LLC. The numbers on the duplex are as follows:

Purchase Price: $60,000

Appraised at: $80,000

Remaining Mortgage: $45,000 at 4.625% for 14 more years

Monthly Payment: $370.28

The purchase price of the prospective property is $73,000. The bank wants 75%LTV. My plan was to use equity in the original property for money down maybe with a little extra cash as needed. My hope was that they would transfer the first property to the LLC just by re-writing the note as all of these transactions are with this one bank.

The lender called me today and asked me if I would mind consolidating both of these properties into one loan. This would make it easier for him to transfer the personal property to the LLC was one reason given. The terms are as follows

$120,000 loan for 20 years at 4.8% for a monthly payment of approx. $780

Does this sound like a good deal?  Am I missing something because I think I like it?  Will this prevent me from selling the properties separately in the future or using their equity separately.  Are these two properties always going to be a package deal.  Do I need to ask the lender any further questions before preceding.  Please Advise and thank you in advance.

Thanks everyone for you input.  I suspect the owner is playing a very large role in the pricing of this and don't know how much input the realtor has but I may drop her a very friendly thank you note with some of my reasoning for not accepting and hope she passes it along.

@Ed Emmons,

Thanks for your input.  Nice to get an opinion from someone more local, if you can call three hours away local,  who understands how things work in these communities.  I will likely take your suggestion.  

@Russell Brazil

The thing is I suspect the owner(family member)  is calling all the shots from the pricing standpoint. He seems very involved in that process.  Showed up to both showings and just stood outside and waited while she showed us the property.  

This is actually how it has gone down. Priced at $109,000 originally. Dropped 5-6 months later to $99,000. Then all of a sudden a couple weeks ago dropped to $73,000. This is when I got interested. Contacted agent who stated that owner had died, family not interested in managing it and they were dropping price and dumping all tenants. Looked at the property once. Went back to take another look today and showed interest. Received a call from agent no more then 5 minutes later with the following "I was speaking with the owner and I guess we had a misunderstanding. When he had called me to drop the price I thought I heard $73,000 and even asked him if he was sure he wanted to drop it that much. He says now that he had said $83000 and thats what it is. But he is willing to sell it to you for $73000 after he met you today. Non-negotiable." Looked on MLS a little bit later and listed at $83,000.

Anyway I'm just confused.  Have no idea how they price these things.  You have a vacant 1909 3 unit building with gross scheduled income of $2100 monthly.  $2900 taxes.  At least $6000 to heat.  Needs a lot of work probably 2500sq.ft of flooring, all painted, all new doors, just to get rent ready and is likely to need more work in the future just based on age.  $0 current cash flow and no formal past records of performance.  Do you think I'm underpricing at $63,000.  Anyway I'll stop rambling.  

Hello.  I was recently in talks to purchase a three unit building in Maine.  Original asking price is $110,000.  Owner dropped price to $83,000 after approx. 9 mos on market.  The owner is the son of the deceased previous owner and I think has emotional ties to the house but knows nothing about investment value.  His final non-negotiable offer is $73,000.  It is a nice big building but has lots of deferred maintenance and would need at least $8-9000 cosmetically to get it rent ready for quality tenants.  He has recently gotten rid of all tenants as well because he has no interest in land-lording so the building is vacant.  

With all operating expenses and debt included this building would net about $110 per door at a $63000 price point and this is as high as I am willing to go and what I think its worth.  This is without all the cap ex.

I am thinking of sending a letter to the realtor and ultimately to the seller declining the final offer and breaking down the numbers for them and explaining why its only worth what its worth. The problem is I don't want to be insulting to the owner or the realtor who seem to have no idea how to price a property like this.  I live in a small town in Maine with not many multi-families for sale and I don't want to burn any bridges.

Has anyone had any success doing this and is there a way to do it without offending all parties involved.  Thanks in advance.  

Hello. I currently own a duplex and hope to sign a lease with potential tenants later this week. The property is in my name personally at the moment however I recently formed an LLC and plan at some point in the near future transferring title to the LLC. This is a single member LLC. I am assuming at this point that the lease needs to be in my personal name initially. I am wondering what the ramifications are for transferring title mid lease to my LLC when I do so in the future. Do I put language in the current lease explaining that this may happen, do I add and addendum to the lease in the future, or do I need a completely new lease at that time. Thanks in advance.

Hello. I currently own a duplex and hope to sign a lease with potential tenants later this week. The property is in my name personally at the moment however I recently formed an LLC and plan at some point in the near future transferring title to the LLC. This is a single member LLC. I am assuming at this point that the lease needs to be in my personal name initially. I am wondering what the ramifications are for transferring title mid lease to my LLC when I do so in the future. Do I put language in the current lease explaining that this may happen, do I add and addendum to the lease in the future, or do I need a completely new lease at that time. Thanks in advance.

Thanks everyone for the input.  Seems like a little bit of a mixed bag on what to do.  I did speak with my local attorney who stated that typically in his experience in this area, Northern Maine, that trying to pursue unpaid rent like this is an "exercise in futility".  Especially with students.  The plan at this point is going to be to try to re-rent as quickly as possibly as there has already been some interest.  If rented quickly it will be a moot point I guess.  If not, I still hold the security deposit as unpaid rent and will pursue this further if it proves to be an extended vacancy.  Thanks again.

Also to @Roy N.  Thanks for the tip on how involve the parents on a limited basis when students are involved.  Seems like a pretty solid system.  Although based on my experiences with students and broken leases over the past year, I will likely be shying away from them.

Hello. I have some tenants under a 1 year lease who decided to up and leave today essentially breaking the lease. They were four months into their lease at $750/mos. These are college students. I politely sent them a text reminding them that a lease is a legal contract, that I would be trying to find a new tenant asap but that they would be responsible for the rent until I was able to do so. I also stated I would likely pursue legal action if they did not pay. Of course she sent a text back asking who I thought I was threatening and her uncle is a lawyer and all that other good stuff. My question is if it is even worth it financially to pursue the unpaid portion of the lease if I am unable to re-rent for a while or will I likely just be bogged down with legal fees making it all a wash. And why even have a lease if this is the case. Should I just let it go even the I'm burning up inside about her response. Has anyone had this experience and how did it turn out?

Hello. I have some tenants under a 1 year lease who decided to up and leave today essentially breaking the lease. They were four months into their lease at $750/mos. These are college students. I politely sent them a text reminding them that a lease is a legal contract, that I would be trying to find a new tenant asap but that they would be responsible for the rent until I was able to do so. I also stated I would likely pursue legal action if they did not pay. Of course she sent a text back asking who I thought I was threatening and her uncle is a lawyer and all that other good stuff. My question is if it is even worth it financially to pursue the unpaid portion of the lease if I am unable to re-rent for a while or will I likely just be bogged down with legal fees making it all a wash. And why even have a lease if this is the case. Should I just let it go even the I'm burning up inside about her response. Has anyone had this experience and how did it turn out?

Thanks for all the input everyone.  I guess the consensus is to put procedures in place and hold out for the good tenant.  Just a little scary having potentially long vacancies when just starting out with not much cushion, but what you advise makes a lot of sense.  Thanks again.