All Forum Posts by: Karl Krauskopf

@Gina Jeannot I'd love to connect with you re: Snohomish county.  I'm investing in Spokane right now but welcome the opportunity for a few properties "closer to home" while still cashflowing and appreciating.

Hi BP Team!

I have a personal situation I'm seeking creative financing from experts on:

• I own a smaller SFR in Shoreline (Seattle suburb), WA in May 2017. My wife and I opened HELOC on and obtained $110k line of credit.
• Of the $110k, we used $74k to buy and rehab a duplex in Spokane, WA in September 2018 that is cashflowing (225k purchase, $2.2k income)
• Leaves us ~$37k line of credit + ~$20k cash

We just welcomed our newborn in January 2019, and my wife plans on continuing to work after 16 weeks off.  Her parents, who live in FL, are planning to move-in with us to watch our daughter while we both work (avoiding $20k+ / year in childcare services plus higher development opportunity in early-life).  In an effort not to go mad, I'm always looking for more creative living situation.  

I came across a SFR in town with an attached ADU that would be able to be rented for ~$1.6k while her parents are not in town (think AirBnB or long-term once they move on) which would be PERFECT both in the short and long term. AP is $524k and is in "as-is" condition (i.e. we'd do most of the fixing while we lived in it).

Question: How can I avoid selling my current primary by renting it out, purchase this new home, and come out on top both financially and socially with the family (no need to answer the latter)?  My initial thoughts are (yet to speak with seller) seller-financing with 10% downpayment + X% interest with a Y-year balloon (let's say 10 and negotiable down to 5).  

How is your GC LLC setup (i.e. pass through, S or C Corp)? I am by no means a tax accountant, specialist, and I did not stay at Holiday Inn, and you should certainly meet with a CPA to confirm; however, from what I've read / heard from several of the biggerpockets resource books and podcasts, an S Corp allows you to avoid paying a portion of the employer-related taxes and allows your money to be taxed at a lower rate.

@J Scott

Great insight. Yeah this wouldn’t be just a straight forward contractor agreement, he’d have more of a partner scope (ie brings deal, cash to rehab, etc). I’d prefer the operating entity, just requires the minimal upfront lift which is well worth it in the long run.

Looking forward to cracking your book. I’m sure I’ll be back here.

J I should've specified, did, in any of those partnerships, create an LLC with a specific GC to undergo one or many flips? Or was it strictly contract based?

@J Scott hey again - took your recommendation from WA Investing facebook group and bought your two books on flipping (music to your ears).  If the answer to this question is lodged somewhere in those books or a previous post of yours, please defer me there.  Otherwise, when you started flipping, or at any point in your journey, did you partner with GCs on your flips, and if so, could you briefly opine on deal structure (i.e. cash, roles & responsibilities, check & balances, etc..)?  

I'd like to partner with a GC I have in a few of the PNW markets I'm focused to reduce financial and qualitative risk.  

@Meghana Garise have you considered Spokane?  Contact me and let's chat about opportunities in that market if you're interested

 Thanks for consolidating... the messages function was NOT cooperating 

Meeting of the minds.  

@Melissa Murphy  Ryan did the bang up work on my Joseph duplex.

@Ryan Knudtson glad to see you've joined here.  There's plenty of real estate investing meetups in Spokane I wish I was local to join.  I think Dan Grishko (tag not working) leads those.  I'll connect the two of you.

Why not do both in tandem? Have access to the HELOC but pursue the 203k multifamily. Presumably the only downside would be some minor annual fee for maintaining the HELOC, but that's likely pennies compared to what you're talking elsewhere for an investment.

I took out a HELOC (110k) on my primary here in Seattle for a duplex purchase in Spokane with some funds leftover. I plan to use the leftover capital to purchase and fund 2-3 fix and flips utilizing hard money loan to repay that debt, freeing up the original principle for further buy and hold multifamilies/apartments.