All Forum Posts by: Kathy Kathman

I'll try to keep this as clear as possible. This probably should go in legal, but more BRRR's may have experience with it.

I own a lot near Mt Rainier, great location for an STR. My friend, and RE Agent, would like to fund most of the build and we will GC it. in the end it will be a bout a 60/40 split. There will be NO LOAN on the property, all cash. I've handled Perc, soil test, Septic plans and permits, and the architect. Essentially anything that has been completed, I have paid for.

After it's built, we may sell it, or STR it, depending on the market. But first, we would like to pull as much cash out of it as we can and get a mortgage. Can't really do that easily if the house is owned by an LLC we create, since the LLC will have no income, it would be based on our incomes as individuals. This tactic as we all know, will help reduce taxes once it is sold (this will not be an indefinite hold property) since the proceeds will be "less" the outstanding mortgage. It would not be considered a primary residence for any of us.

I understand the purpose of establishing an LLC for a rental property, either LTR or STR, which I believe would be best done AFTER we have gotten a mortgage on it. We also need some kind of agreement since we own the land, will be doing all the work, and he is the cash-guy partner. I also know that as the house is built, on property that is in my name, the whole kit and caboodle will be under my name, unless, before we start building, I add him to the Deed.

I have several questions: What kind of agreement should we be putting in place for the Build? (obviously all the terms and details, notarized etc.)   Does it make more sense to add him to the land deed (this is a VERY trusted non-family member and his wife, fully entrenched top of the integrity line RE agent) so we both own the property as we build and it ultimately will be in our names together?  Hoping for some direction here so I know what kind of Consult I should be looking into.  We want to avoid as much taxation as possible, but make sure each of us is covered legally. 

Thanks for any assistance!

Stay out if the McKinley area for awhile (SE of 60th & pac hwy in Tacoma). While there are some investors flipping, the area is very high crime. Frequent gunshots, lower income. Sale prices are low and on the market longer. You can get some good deals but while we wait for things to improve you may wind up with losses. 

Folks with the funds to buy are not moving to the McKinley area. 

Here in Washington State our Governor recently put in motion an Eviction Moratorium. Landlords are now PROHIBITED from taking any of the following actions against tenants:

Serving a tenant with a notice to pay rent or vacate their home, or

Serving a tenant with a notice to terminate their tenancy when they are a month to month tenant, or

Filing an eviction lawsuit against a tenant for the nonpayment of rent. 

While this is all fine and dandy for large corporations that can handle some cash deferments, us little guys are going to run out of extra savings fast. It is understood that missed rent will still be owed, but it's going to be hard to collect as time goes on, your tenant is still in your rental without paying, and you're doubled up on mortgages. Fortunately my current tenants are still employed as I write this, and I know they will have no intention of using this as an excuse not to pay, however, it it does happen, once I'm out of reserves the only legal way I will be able to get someone out of the house is to sell it. Anyone else have rentals in WA state and are concerned about this?

I recently made an offer on a duplex - I have owned my home for 10 years, and last year I got off my FHA loan and converted to a conventional loan (saving that MIP!) so I could purchase my owner-occupied multiplex with an FHA loan. I was pre-approved by one lender, but was also shopping another. I wasn't planning on making this first investment purchase quite yet, but the price and house were too good to pass up, so I jumped in. After my offer was made, the first lender called me and said that she spoke to underwriting, and they told her that I could not purchase my second home, even if owner occupied, with an FHA loan unless it was 100 miles away from the first home.

Fortunately/Unfortunately I wasn't the only one who saw the value in the duplex I made an offer on, and I was out-bid. I asked the second Mortgage company I was shopping if he knew anything about this rule. I did some of my own research and while I see the '100 year rule" for purchasing 2 homes under FHA, I cannot see where it says I cannot have my first home that I rent out under a conventional loan, and my owner occupied multiplex as an FHA loan. I did see that FHA is not to be used for investment loans. I spoke to the 2nd lender, and he also said he didn't see where it would be a problem.

What is correct? Does anybody have the source on this so I can help my lender(s) with it?

Yes, this area of Tacoma is not so savory, although there are worse areas. Rents for a decent dwelling go for about $1 sf anywhere in Tacoma slightly higher if newer or upgraded. But you will not attract the kind of long term tenants you desire. I agree it's priced 40-50k too high for the area, or to be profitable.  There are some pockets of the neighborhood that are ok, but overall, not so much. You're better off toward the north end / Fife area to service Tacoma U.W, but again, tenant turnover is higher. 

What branch was that? We're in week 12 of the never ending BofA short sale saga!

Interestingly, they are still in the Short Sale Business, and after a Thanksgiving offer, they finally accepted their own "pre-approved" amount after 6 weeks. Now that the appraisal has come back 11k less than their asking price, it's taken 7 days, 6 phone calls and 4 emails from the selling agent to get the response "we've sent this request to the appropriate department". It was supposed to close this Friday - If we're lucky, it will close before the Foreclosure date of April 1st.

I am so ready to get started!