All Forum Posts by: Logan McConnell

Hi, does anyone have any recommendations for verbiage that should be included in an LLC operating agreement (OA) in relation to multiple business partners owning a commercial building. I was wondering if anyone can share their experiences where a partnership that went wrong and how the OA helped or could have helped the situation. I have two business partners. We are forming an LLC to purchase a commercial building and we want to make sure that our OA covers the worst case scenarios down the road to protect everyone. For example, if one of the partners decides to move in 3 years and wants to sell their 1/3 of the business to get their invested money back, they wanted to sell the building before the other owners, they wanted to pull their 1/3 of the funds out of the business account that was intended for building maintenance costs, etc. Are there real estate specific terms you would add to the OA. The current OA has all the typical verbiage: 2/3 of the partners must agree on selling or renting the building, expenses/profit will be divided evenly, etc. Thanks in advance for any input!

I think that a heloc could be a great option for you. Like Ian said, they are easier to get when you currently live in the property (its your primary) and you will get a better % rate and higher $ amount vs doing it once it's a rental. You can move out right after the heloc is signed and it will still be valid and legal. I have talk to my lender about this strategy and had no issues getting the heloc right before I moved out and turned it into a rental. You can use the heloc towards the purchase of a new home. If your debt to income ratio is tight for the next home, you can try to get your current property under a signed lease before your loan closing date (even if the lease will not start for several months after you close, they just need a copy of a signed leased with the rent amount). The bank will subtract around half of the rent amount from your mortgage amount which will allow you to qualify for a bigger loan (because you will have a better debt to income ratio). For example, if you have a $1,000 mortgage and rent is $2,000, your monthly debt for that mortgage would be considered around $0 by the bank. This way, the bank will just be using your current income to determine what loan amount you are eligible for and your current mortgage will not negatively impact you. The other reason why I like this strategy vs selling and buying two properties is because it's much easier to get loans for a primary. Your second primary home loan should only required 5% down and you might even be able to do better with a VA loan. If you sell and then by two properties, you will have to put around 20% down on at least one of the properties (because it will be considered an investment property) and the loan rates are typically a little higher for investment properties. I would hate to loose that low interest rate you currently have. Also, rates could be up in 1-2 years.

Hi, is anyone familiar with the business ownership (>25%) self-employed rule? I heard that owning >25% of a business negates your monthly wage (even if you are a W-2 earner) from a lenders perspective for 1-2 years. There must be a way around this right. I recently purchased a a portion of a business. I receive a month salary and will get profit sharing at the end of the year. Will a lender give me hassle with a home loan? I have been an employee with the company for 10 years and the company has been profitable every year so it has a good track record. But my friend just ran into this issues and was told that they cannot get any traditional SFH 5% down mortgage for a minimum of 1 year after the business share purchase date. Does anyone have any recommendations to get around this issue and to still qualify for tradition home loans?

I have been seeing a lot of 20-40k gross annually for str.  But the hoa is pretty brutal on apoartment (450-700 a month).  This is for 2 bed homes in the 350-500k range.  Seems like you really have to dig to find an income property with that hoa.   I wonder if there is a significant price drop in the slow season (non ski season).  

Interesting on the HOAs. I do hate HOAs but also like the idea of not dealing with the little things (mowing the grass, snow shoveling, etc.). However, if the numbers are much better for a SFH, then that might be the way to go. I have found some decent condos in the $350-500k range but haven't had time to dig into the numbers associated with the HOA fees. Thanks for the info and the reference for the cleaners!

Hi, I am interested in purchasing a vacation property in Summit County, Colorado .  Me and a couple other investors want to go in on a property to minimize our costs during slow times where people are not renting the place.  We would like to make it a short term rental available year around.  We would like to buy a condo or apartment that is fairly low maintenance.  We could manage the airbnb and cleaning service or let the property management do that.  My friend has a place in Beaver Creek that is ski in/out and the management company takes 38%.  I am assuming you can do a lot better when you are out of Beaver Creek and have a simpler building to maintain.  I would like to run some comps for what other airbnbs go for throughout the year, how often they were available, how often they were booked, etc.  But it seems like that data is hard to come by.  Does anyone have experience in this market and can provide me with some info.  It would be nice to model out the projected gross rental income per year based on some solid data.  this information could help us determine our purchase price range and risks.  Thanks in advance for any information.   

2011 was the year.  Wish I would have bought more than the one I bought near Putnam elementary that year.  I bought another prop last year (paying top dollar in June due to the crazy market) and hope that I got in before the crazy property value increase plateaus (hopefully it never will!).  

Good luck finding anoher investment prop.  I like everyone's advice on being cautious.  I know our market is red hot and looks stable but who really knows for sure.  I still plan to buy another property in the next year, but I am nervous about future market values.  I figure, buy smart and get a deal and it should work out.  

stay away!  

Townhomes don't appreciate like single families and with the negative cash flow, no thank you.  Have you looked into single famly properties?  A 3 bed which allows a dog within 3 miles of old town will rent for $1500 min these days.  And I have seen plenty listed for under $300k.  Adding the dog can offen allow you to add 10-20% to the average rent in the area.  People are dog crazy in this town.  Plus, some dog owners are better tanants than some of the lazy slobs out there, you just need to feel em out and call references.  

I used turbotenant.com top post my listing and had a ton of applicants.  They post your site on multiple websites and assist with the application process.  

Mark, I bet you are having some trouble because of the location.  The farther you get from the heart of Fort Collins (old town/campus), the harder it is to rent.  However, with the trend of Fort Collins turning into a busy busy city, I bet down the road, it wont be much of an issue.