All Forum Posts by: Ladd McClain

Awesome. 1031 complete. Thanks for your help! 

My wife and I created an LLC to purchase a 4plex a few years ago. We are the 'members'. We just sold and need to 1031 our proceeds into a new property. I understand our LLC needs to purchase the property. About to start shopping but realtor wants to know how we will 'take title', as Tenants in Common or Joint Tenancy. Which is best for an LLC with two members?

Yes, I should have been more specific. In the theoretical deal we would have some skin in the game (5-10% maybe). But on the buy we're also getting access via our connections to realtors and wholesalers to off-market deals and capturing considerable equity. Our investing partners are benefitting from that and our record of buying in the right neighborhood, experience managing, in house maintenance guy (me), a record of staying in the black for over fifteen years, and most importantly trust. These are friends who have seen us successfully running a small real estate side hustle for years. They know us as a trustworthy and honest couple. I think that counts for a lot. Appreciate all the feedback! It's always good to get pushed a little to consider all the angles and pitfalls.

 

@Max Ferguson

These are great points. We have a good investor/CPA friend who always lines us up with her real estate lawyer when we have a deal in our cross-hairs. A little pricey but well worth the piece of mind to have the details in writing. Appreciate the book recommendation too. Thanks! 

 This is great. Just the kind of jumping off point numbers I need to start a conversation at least. And your point about aiming for % of return based on doing a little better than the stock market makes a lot of sense. I'll start running numbers and test the water a little with my friends to see if there's a possibility of a win/win scenario. Thank you for taking the time to respond!

My wife and I are teachers and over time have leveraged ourselves to several medium term rentals in the sweet spot between two hospitals. Nurses mostly. We've been self-managing for several years and have that dialed in. Unfortunately, we are tapped out for now financially but are starting to see some price drops in this neighborhood. We have partnered with one couple to go halfsies on a couple houses. 

Now to the question. We have other friends with money who have lots of cash and don't really need cash-flow. They have expressed interest in real estate as a way of putting their money somewhere safer than stocks et. We on the other hand have several kids going to college and do need cash flow. Every situation is unique, but what is a typical arrangement for a partnership where one party isn't bringing much money to the deal but is willing to do all the management, maintenance, red tape etc?

Chris, thank you for your reply. we've only ever done HELOCS on houses that we were occupying. Does a line of credit on a rental property come with a higher rate or any other drawbacks? 

Hi! My wife and I are teachers who have been doing the real estate side hustle for 18 years. We're unsophisticated investors (we just heard about Bigger Pockets a couple years ago, LOL). But we have acquired five properties through slow and steady BRRR methods, before we'd even heard of BRRR. Most of our properties are cute downtown A-class properties that we rent as furnished-finders or long term leases. We buy low, I fix them up in my summers and my wife makes them pretty. Now to our dilemma. Our worst performing property is an outlier in our portfolio. It's a 4plex in a C-class neighborhood. We found an owner finance deal in 2006. The neighborhood wasn't great but there was a university nearby and I was hoping for gentrification that really hasn't materialized. In 2017, I approached the note holder about re-financing and he agreed if we would shorten the note to a 15 year term. The rate is 3.2% and we have 10 years remaining on the note. There is $138,000 remaining on the note and the property is roughly valued at $625,000. The rents are low because we haven't been able to keep up on renovations (last one in 2013) and we attract a low-earning/higher maintenance tenant. Confession: We are guilty of some malaise and hopelessness with this property. We're leveraged pretty high on our other properties (HELOCS and cash-out refis) so there's not much money available right now. We don't have a lot of money in reserves as we are paying cash for our kids' to college etc. We're in the Catch 22 of wanting to renovate the interiors in order to raise rents but being short on funds to do so. Current rents are $800/mox4 =$3200. Comparable rents in the neighborhood are $950-$1100/mo. I estimate it would take $60k-$70K to renovate including a new roof. We're not sure if we should give up that 3.2% rate to refi to a rate double that. Also, the idea of continuing to pay this thing off faster has some appeal as I approach retirement in 4-5 years. Not sure if we should power through and try to save the money and do this with cash in two or three years or get creative with financing now, take out a loan? Any feedback is greatly appreciated!