All Forum Posts by: JUSTIN NELSON

David, did you just use the business to get a business loan or did you use owner financing (hence the terms suck)?  I am looking at possibly finding owner carry, using business line of credit to secure the home, make regular payment and then structure a balloon payment at the two year mark.

Hi guys,  I saw this post and I was wonder if anyone could chime in on my issue.

newly purchased business I am in the position of not be able to buy a home for two years via conventional lending. The rental market in my new area is very tight so I am looking for alternative ways of getting into a home for my family. The business does cash flow, I pay myself as a W2 and I do have a business line of credit (125K).

Questions:

• How else can I purchase a home before the two years?
• Could I use the money from the line of credit as a down payment via a owner carry deal and rent it back to me at a fair marker value?

I am not looking for tax advantages or losses.  I am purely looking at a way to buy a home via the business that I can use for my family and then possibly keep as a rental down the road.  Any information if helpful and thank you!

-Niles19

Hi, due to a newly purchased business I am in the position of not be able to buy a home for two years via conventional lending.    The rental market in my new area is very tight so I am looking for alternative ways of getting into a home for my family.  The business does cash flow, I pay myself as a W2 and I do have a business line of credit (125K).

Questions:

•  How else can I purchase a home before the two years?  
• Could I use the money from the line of credit as a down payment via a owner carry deal and rent it back to me at a fair marker value?

Any information if helpful and thank you!

-Niles19

correction: sorry, to add to the above definition to "house hacking" you either buy a home, (live in it as) you fix it up and flip/sell it once it is done.

I guess I am kind of doing that right now but the goal is to increase the equity, get it "rent ready", refi and then rent my current house as I "house hack" into duplex 

house hacking is where you  either buy a home, fix-up and flip/sell it once it is done or if you buy a duplex, live in one half and let the renters in the other half pay for the expenses/mortgage as you live for free or at a reduced rate.  

I am thinking a house hacking but it's with the house that I already own.....

1) can I form a business, have the business buy my home from me (or just let it "assume" my mortgage) and then pay rent (at fair market price above my current mortgage) to the business (corporation) as I use the general numbers (cap-x, management fee, utilities) and depreciation advantages like a rental?

2) Or am I just cra cra for thinking I can do this;) 

Thanks for all your help and effort!!

Greg, thank you for your reply!!

Ok….I’m a true greenhorn beginner here ((Basically explain it to me like a 5yo because I see the picture in shades of gray where as you see it in HiDef color ;) ))....So let me try to recap your view the best I can and clarify. 

So what you are saying is that the money I put in the deal or my rate of return via cash flow after expenses must be equal or greater than the mortgage rate (ex. If the rate is 5% I need to be making a return of 5% or greater after net expense). Right?? Questions: My plan is to reinvest all profits back into the properties and future growth and pay down the loans…..to me that is a form of paying myself but not realizing the gains until I sell, refi or increase cash flow in the longterm (true buy-hold guy)….so can you clarify the mistake of not paying myself first? Are you talking about paying myself as a the manager in my expense calculations?? Also, what do you mean (can you rephrase is differently) when you say “keep in mind that when calculating cash flow on property always do so using 100% leverage?” because of the situation (credit etc) I am in I would be saving money or using my own equity to jump start things as I look for investors or leverage via a bank loan once my credit is stronger. Thanks I truly appreciate your insight and help

Best, Justin

Below = my 10yr Real Estate Investment Plan = any comments, thoughts and ideas would be GREATLY appreciated!!

• 10 Year Real Estate Plan

• SFH: current home; Will pay down loan to $50K left on loan. Hold/wait for 2yrs = time to rebuild credit through secured credit cards (5k), secured lines of credit (10k) and then rent for $1200 (mortgage is $960).

• Buy 1st duplex: We will live in one side and rent out the other side as we remodel our side if needed. Hold/wait for 2yrs = waiting period before we can take out equity from the duplex since it will be our primary residence at this time

• Buy the “Big House” residence: refi the other two rental properties, pulling out enough equity plus our regular down payment to keep mortgage under $1500 per month, place the “Big House” under the business and pay rent to the business. Hold/wait for 3yrs, pay down mortgages on rental properties, make improvements and save all net income as down payments for next multifamily.

• Buy 2nd multifamily: Leverage the equity on the other rental properties to buy and use the saved net incomes as down payment to pay for at least half the purchase price if not all of it. Hold/wait 2yrs, pay down mortgages on rental properties, make improvements and save all net income as down payments for next multifamily.

• Buy 3rd multifamily: Hold/wait 1yr, by this time the net income generated per year if done conservatively will allow us to use it to leverage our way into a new SFH or multifamily for this year on out till we get to our goals as we pay them off fast and increase our cash flow year over year.

• Buy 4th multifamily: Hold/wait 1yr

• Buy 5th multifamily: Hold/wait 1yr
• etc, etc, ETC.......

Hi and welcome Sean!!  I am in your same boat (deep in the learning process) and BP is a GREAT wealth of knowledge.  Also look at their podcasts (my goal is to listen to everyone of them and I am on #63).  I am sure P-town has a good group of people to meet-up with and there was an investor from your area on a past podcast.  Try to find others in your area to reach out and ask questions.  That's what I am doing now.  GOOD LUCK!!

Thanks.....I'm originally form Portland and I had a friend mover here after grad school.  He said "you should totally move here!!"  I just thought it was a little logging town on the Columbia river and boy was I WRONG!!  It's the 2nd largest population and a great place to live (don't let that secret out).