All Forum Posts by: Julie Williams

Thank you for the response. I just spent the day taking a workshop from Anderson Business Associates about business structures and taxes for investors. Aren't you concerned about lawsuits and someone coming after not only the multifamily but your personal assets in the above scenario? @Rick Martin

Both in person and in webinars, more than one lawyer has said to only buy a multi-family (or apartments over commercial space) under an LLC and one said not to mix personal and commercial real estate. I want to buy property under an LLC, but if I follow this advice not to mix my personal residence and tenants, I can't house hack. Further complicating matters, when I sat down with my bank to discuss conventional 20% down commercial loans, they were interested, but said that I must not live in the property. A second bank voiced the same concern about a commercial loan. The first bank went on to say my other option was to buy it under my own name with a residential mortgage and quietly put the income from renting to tenants on my personal income tax return but "we wouldn't want to know about it. We don't police that." (In that case is was commercial tenants in a barn. The house was a single family.) The second bank said I must not do that. I only plan to buy investments with an LLC. Owners live in multi-families and rent out units to long-term or short-term tenants all of the time. How do owners live in the building in one of the units, get a loan, and have liability issues addressed well? I found a loan product for owner occupied properties but it was in AUSTRALIA, LOL. I first explored this when I looked at a house on almost 3 acres with a 6000 SF barn with tenants in the barn. That town is strict about zoning and would not guarantee the use would be grandfathered and the property ended up having many other serious issues (flood zone, downstream from an antique dam on a river with a history of flooding and bridges and dams being washed out, the rents were below market, there were three code and zoning violations in the use of the barn and a mildew smell in the house. I ran screaming from that property and it's lovely waterfall view.

@Jonathan R McLaughlin I'm looking in the 5 college area, Shelburne Falls out to Colrain and Charlemont, and Berkshire County. My son lives in North Adams. I live in my hometown of Hingham and I rent, sharing a 3 bedroom house with a family member at a townie price. Great situation because he is happy to split the bills but also likes the idea of having the place to himself. So I can move out whenever I want. Totally priced out of the South Shore market. Prices are insane here. $400,000-$500,000 for an 800 SF house. I poke at Vermont a lot and Maine a little but it's a bit futile because of quarantine requirements. You have to get something under contract to be allowed to go see it. I did the free 'subscription' to Airdna. Sheffield, Great Barrington, Lenox and Stockbridge in Massachusetts and Stowe, Morrisville, Manchester Center, Woodstock and White River Junction in Vermont all have $3079 - $4098 monthly average short term revenue (not gross) with 45% - 73% occupancy all depending on which town. The average unit size is generally a 3 BR. Of course those towns are generally more expensive to buy in. I wouldn't consider an airbnb in a town with less than $3000 monthly revenue because the costs of running an airbnb are high. I have also been starting to look at markets in other places in the country, mainly in the Smoky Mountains of Tennessee, since that's a thing, but I am finding myself balking at buying a property I can't hop in a car and drive to within a few hours. I guess I want the insurance that if I screw up and my first deal is a flop, I can at least move in to it and not pay rent or another mortgage somewhere else. I am certain that I want to live in New England. You hit the nail on the head saying airbnbs aren't a conservative investment. I am a born risk taker that has been though some challenges and tragedies that made me much more cautious. So I can skew in either direction. I'm excited to explore this avenue as it feels like coming home to my true nature of being willing to take risks, think outside of the box and try new things. 

@Nathan Gesner I actually decided not to buy it last night- the unknown issues with plumbing kill it for me, but I left the post up for my own education. I have already learned a great deal from the responses. Thank you for yours. I am planning to start looking for off MLS properties soon.

Thanks for the reply @Jonathan R McLaughlin Good information. It has to be purchased cash. So to confirm are you saying to refinance? 

I'm very conservative about buy and hold because I am not at all convinced that between all the money being printed and the years of appreciation in Massachusetts, the current real estate bubble and migration patterns, the market won't soften or even tank here. Everyone has an opinion and no-one knows! On the other hand there is a ton of wealth here and lots of jobs that pay very well. Who knows. If I am going to buy and hold I am more inclined towards multi-families or a short term rental. 

Thank you for the excellent response @Jody Sperling. The numbers are crummy for a rental. It's a fix and flip in a nice suburban area and to get top dollar for it it would require thoughtful and tasteful renovations. I am looking for a property where the numbers are strong on the one hand or where I would be happy to be stuck with it, and move right in, on the other hand if, as you said, "Maybe I'm wrong and I break even. No harm." Massachusetts is a tough market right now. Nothing meets the golden rule! I am willing to deal with tighter/lower profits, but I have limits. 

@John Teachout Thanks for the more detailed explanation. I have decided not to move forward on this particular property but may need it in the future!

Your post is old, but in the unlikely event you again have the opportunity to buy a house that was just raided by a SWAT team, just be aware that sometimes houses are used to cook meth and are contaminated, endangering future residents and remediation. Shockingly, in some states the seller is not required to disclose this.  

@John Teachout would you please explain in a little more detail what unlocking the water meter on and then turning on the water on accomplishes? I get why you want the person inside- to see if there is a leak...but why is there someone at the meter? Couldn't a leak be in a wall? Thanks! 

Thanks for posting this @Jeff Cliff I am on the fence about a bank owned property with the water shut off at the street. Unfortunately the numbers are a bit too tight for enthusiastic purchase and it already has multiple offers on it. It's unlikely they will accept an offer with lots of contingencies.