All Forum Posts by: John Leake

@Ryan Copeland I preformed one of these most recently in a very small town and they wanted a drawing of the property for any changes made that could affect property lines. For the inside they wanted floor plan lay outs and general notes as to what was being changed and where. That was to give them an idea where specifically to inspect. I drew all mine by hand with my submission for the permit. I would reach out to the city you are working with for exactly what they are looking for to make sure you don't get in a bind. I have also been given bad information by a city clerk before and now request a "no inspection necessary" in writing to keep on hand just in case. Hope that helps good luck!

I have always felt willing to pay my dues to get to the end result. I will say not know anything about the tenant in place gives me a reason to pause. I would want to ask the seller a few questions about their vetting process. Unless the tenant would be willing to leave or breach their lease giving you a reason to evict, you would need to honor it. I have so far had good luck inheriting tenants but they have predominately been month to month and I was able to get them on my leases. If the cashflow is only a little negative and will not put undue financial stress on you, it is worth pursuing. Will the additional rent all be profit even after accounting for repairs, maintenance, and misc. expenses? The last question would clear all doubt in my mind! 

In my mind if all partners are staying the same you could maintain the current structure and banking, essentially you are just adding a property to the LLC. I also think the value of the assets in the LLC should be a factor for consideration in the future. So 2-3 single families isn't too big of a value but if you were adding a 50 unit I would have some concerns about not having the assets a little more segmented. That is my general thinking but getting some attorney or CPA's to weigh in would likely be your best bet!

I like this as a future strategy so hopefully a qualified intermediary on 1031 can give you general information! In my mind this should be doable. Then you would get a cash flowing asset while adding another one in a new market! Is the current asset not worth refinancing for you to gain access to the funds or do you just feel this is a good opportunity to move the capitol into a larger deal as well as acquire funds for your Mexico project?

I agree with Scott I would like to have a year's worth of data to know for sure what to keep on hand. My thinking is I would probably keep 8 months of reserves as a happy medium and then decide if you feel more comfortable in reducing that amount after you have some real numbers to work off of!

@Lindsay Kuzara My Brother is my general contractor so often times we "suit up" and do whatever abatement is necessary ourselves. @Bonnie Low had a fantastic response for the what if's and sounds more familiar with your market area. I also believe in Illinois we have similar provisions for covering it and leaving it undisturbed as well as the same for scraping and painting lead based paint areas. I also think you are supposed to disclose lead based paint in Illinois where I am from. That hasn't, in my experience been any issue purely just used for informational purposes.

I can see your point of view but at this point in my investing journey I appreciate the barrier to entry and the fact that I have some leverage with a deposit. I'm a few hours away from Chicago so I likely have a very different environment to work with. I have found folks that have a concern with the deposit also have a problem with making their payments on time. The tenants also find value in getting the deposit back at the end and I set the expectation that my goal is always to give it back unless they damage the unit or break their lease in some way. Even still It's not an all or nothing for me I generally try to itemize the deduction and give them a portion back. In the small towns I rent in, how I handle situations as a landlord is important and I want my tenants experiences to feel fair.

I would want to know what I'm purchasing in the form of those hazards. Asbestos abatement can become very expensive. In a home that age I would also expect knob and tube wiring which can be a fire hazard as well as problematic with higher energy demand with the world we live in causing issues. In your renovation budget what are you planning to do with the $30,000? If those items are included in that budget and you've gotten estimates from a few different folks that support that as being sufficient its ok to overpay/ not get a deal on your first purchase getting started is the hardest part.

I would be interested in using equity from the property for this repair expense, If you have it available. A loan secured by the property should be lower than the rate they are offering. You may be able refinance your entire loan to a lower rate depending on when you put financing in place originally. If that isn't appealing I would be tempted to pay out of pocket unless you have an investment you can spend the same money and get a better return on your money.

I do not have first hand experience. However the lease should address your concerns for who is responsible for the pool (the bigger pockets leases do include provisions for that) and you will want to make sure your insurance has coverages specific to the pool being present. You'll also want to check for local ordinances about enclosures for pool area and other requirements. I think your insurance provider will be your best bet!