All Forum Posts by: Josh Engelhart

Absolutely not. If the furnace breaks during the winter and she needs to stay with family for a week that's a different story.

Not with a conventional bank loan. You'll be capped at a 2% of the purchase price max credit that has to get applied to closing costs. A portfolio lender with their own money can do whatever they want but you'll pay more for it. 7% is high, but if you hold that long enough you could then rate and term with more traditional financing later. You are likely paying closing costs on the acquisition, again on loan number one at 7% and then again on loan number two for your permanent financing. Just make sure to underwrite your deal with all of those costs in mind.

I closed on a little single family house for 46k on 4/30. The bones were great and with new vinyl floors, HVAC work, and paint I'm in it for about $55k total with 40k financed. I finished today and am ready to list it for rent. I think I'll get an easy 800 a month and my PITI payment is only 308. Yesterday a realtor literally comes to the front door of my house and tells me I outbid the developer she was representing and asks if I'd sell.

In this scenario am I am able to 1031 exchange the profit into a new deal?

I know there is normally a seasoning period for the original property but from what I've read it seems like your original intention is what really matters.

I had no intention of selling, but I also didn't know I might make a quick 30k. If a huge chunk of that is going to taxes it is much less attractive and I'd absolutely rather just rent it out. If I can legally roll all of it into my next deal it might be the right move. Any advice is appreciated.

If it's a family/ close friend type deal it's probably easier to just leave everyone on title. All of the liability is based on who is on the loan and you won't be able to change that unless you pay it off or refinance. The lender probably wouldn't ever find out and/ or care if you were paying on time. If they do you would either need to refinance or come up with all the cash to pay if off, which would really suck.

I would personally want to stay on the right side of the line. It will get more important the bigger you get.

If you are on the mortgage you need to be on the title to the house. If the bank were to find out at a later point in time that one of the people was no longer on title or that ownership was transferred to an LLC they would be able to call the full note due.

From a business/ profit perspective you can structure the partnership however you want you want. It would be up to the two partners to agree on the terms of the arrangement and ideally put it all in writing.

From a future loan qualification perspective this monthly payment will count against the debt to income ratio for all parties for future loans based on this bank/ car/ mortgage payment being reported to the credit bureaus. If their income is high enough it doesn't really matter. If this is going to eat up all of their available income  and prevent them from qualifying to buy their own house/ car in the future you should probably figure out another way. (If it is a car loan and they can show that they are not making the payments some mortgage lenders will be able to ignore it)

The big issue with condos are the risk that HOA dues go up, potential very large one time special assessments, or bylaws currently prohibiting rentals/ the chance that they forbid them in the future.

I don't know that this is a homerun. It does sound like it would cash flow and give you instant equity depending on whether or not it needs any work.

If you have a better deal go for that, if not this doesn't sound too bad.

I would view it as a negative, but it all depends on how much you buy it for. If it's a sweet deal I wouldn't care about the pool being there. The pool will cost a lot more in maintenance, risk, and insurance. I don't think it will get you much if an more in rent.

I would try to figure out how to get the tenant to pay for the utilities. If the lease on the 1 bedroom specifies the landlord pays I would draw up a new lease once that one is over. If the tenant has an issue with that just find a new tenant and you save $150 per month. If you could get the water sub-metered that would save another $200. I've never done it personally, but even if it were a $4,000 expense after 20 months of not paying for their water you have your money back.

Remove the utility figures from that equation and it looks like you have a pretty good deal.

I would be more sketched out by getting 3 units for 90k. Are you sure it's a "C" neighborhood? Would you leave your car there over the weekend?

Are you running into issues with your debt to income ratio? You should be able to do 3.5% down. The lender also shouldn't care much about what they are renting at currently. If you don't have enough income to show the ability to repay I can see why having higher rents and a larger down payment to drop the monthly payment would come into play.

Either way I would figure out what the issue is specifically so that when you call around you can easily explain your situation. Some lender's are more flexible than others so if you're right on the line I would just pull out the phonebook/ google and call around.