All Forum Posts by: Mark Andrews

Sounds like a desperate marketing scheme. Of which I won't be buying. 

Quote from @Sergey A. Petrov:

Again, what is in your contract? If $5k is not there, you never had it. Asking for it won’t hurt anything but if I am the Seller I see no reason to give it to you. The “deficiencies” aren’t always a negotiating point, sometimes they are just a part of Buyer’s due diligence so you know what you are buying. Again, asking doesn’t hurt. Does the rest of the deal make sense and still work and would you have purchased the property anyways knowing the AC will need to be replaced? If not, walk away. Ask for a credit and if you get it, great. If not, make a decision from there

 Dude you keep talking about a contract. Nothing is in contract yet...it's still in the negotiation stage. If her realtor was/were good, he/she would be able to negotiate these things...it sounds like her realtor is either lazy or just wants to make a sale. Personally, I would have fired them if they didn't do exactly what I want...but most people trust realtors and think they're going to fight for you like a lawyer would. Nah, just trying to get a sale. Honestly, Allison, what you need to do is start calling other realtors and find someone who is as fired up as you are...then hire them. That's what I did. It's been working. 

Quote from @Allison W Gammon:

 Cool.  I had no idea that was even a thing.  Even on a 130 yr old house?

 Be careful on that...Most home warranties require a minimum charge to come out and then they replace the part with a refurbished part that will screw up again in a month or two...so you're basically paying an extra $85/mo trip charge for them to replace it with a part that isn't brand new, and will most likely be a repeat offender. How else could they make money?

Quote from @Allison W Gammon:

Hi, I am in the process of purchasing a 3 family.  The house is 130 years old, so I understand that there will be inevitable issues.  The central AC wasn't working, so the sellers offered a $5000 credit for me to repair/replace it.  My real estate agent had someone look at it to make sure it wouldn't cost more than that.  The mechanic ended up replacing something in the unit so that it would work again ($400 fix that the sellers paid for), though the mechanic told me that the system will nickel and dime me until I finally replace it and it will only last about 2-3 more years.  The seller's rescinded their $5000 credit because it works now.  Should I fight to get the credit or let it go?  (I have spoken to my agent.  I'm looking for other opinions).  Thanks!

You need to fight tooth and claw for the credit. I recently had to replace an HVAC unit that wasn't even THAT old...Just randomly stopped working. Absolutely killed my cash flow. Things aren't built to last anymore, so you'd be out of your mind to think that's going to work for the next 2 years...let alone 5. Don't make mistakes on the front end. 

I have heard from numerous insurance agents that the way they would write policies for an LLC would be:

-Primary Insured: Mortgage Holder (Individual's Name)

-Additional Insured: LLC

But if the LLC's name comes up on the Deed, shouldn't it be the opposite? I'm trying to research this but can't seem to find a definitive answer. I even read somewhere that the additional insured is mainly used for property management companies and, understandably, have MUCH less coverage (as little as 10% of the dwelling) than the actual landlord, who should be the primary insured.

How are your properties structured in regards to insurance? Has anyone ever had the unfortunate experience of not being covered in the event of filing a claim with either of these structures? Thanks! 

Assuming there is no mortgage, let's say I bought Property A 6 years ago for $200K and I decide to sell it for $350K with $20K in commission. Let's also assume there are no improvements to make the numbers easy. 

-Total Proceeds of Property A minus Commission:  330K

-Original Purchase Price of Property A:  200K

-Purchase price of Property B: 200K  (60% of Proceeds used for 1031 Exchange)

-Remaining proceeds: 130K (40% not used for 1031 Exchange)

-Accumulated Depreciation: 50K (25% Depreciation Recapture tax =$12,500)

Would the Depreciation Recapture tax in this scenario be $5000 (40% of $12,500)? If so, does the same 40% get applied to the Capital Gains taxable amount? Or is it just the unused proceeds of130K multiplied by either 15% or 20% depending on your tax rate and the 40% has nothing to do with it? I'll definitely get with a CPA on this before I do anything - just trying to get a ballpark idea of how it would go hypothetically. Thanks in advance!

"What would be the best way to set yourself up for success in multiplying your portfolio?"

Honestly man just never doubt yourself or what you think is possible. Understand that being told "no" means literally nothing in this business. I was told "no" so many times before I found someone who finally understood what I was trying to do. Talk to as many people as possible and learn as much as you can. Call random Realtors and see who gives you the time of day, that's how I found mine and I'll never use anyone else. Just my $ .02

Hi all,

How would you record the "Capital Contributions" to an LLC in the ledger section for the following scenarios:

Scenario 1: Let's say the equity in the property is $60K and mortgage is $140K before the transfer. I deed the property into the LLC and don't change anything else. Would the Capital Contributions just be $60K?

Scenario 2: [Assume the numbers are the same as above] What if the LLC has myself and another family member as 50/50 partners? Would my Capital Contributions equal $60K and the other member's Capital Contributions equal $0 (since technically it was bought using my money)? Or would both of our Capital Contributions be $60K since we would both own the rights to the same property (with $60K equity)?

Also, would a CPA be more suited to answer this question rather than a real estate attorney? Any insight would be appreciated. Thanks.

If you are planning to hold your properties in an LLC, then find lender who is willing to CLOSE in an LLC. Transferring them could trigger the "Due on Sale" clause. My motto when I started doing this a few years ago was "I'd rather have 4-5 properties now in my personal name while it's affordable and figure it out later". Housing prices are never going to decline. It just doesn't happen. Wages are not going to increase proportionately with housing costs. So make your move now because inflation is here to stay.

If a Tenant signs a 1-year lease, can the Landlord sell the property 6 months later? If so, do the new owners have to honor the original lease agreement for the remaining 6 months? Thanks!