All Forum Posts by: Martin Goodenberger

It wasn't over budget - house needed a ton of work and 203K was the only way I could fund it all. You can't really go "over budget" on a 203k, because every update has it's own budgeted line item (that the 203K appraiser will sanity check and approve) and an extra 10% of those line items gets rolled in as a safety net. We didn't need the surplus and the balance got applied to our principal at the end of the process. Then I refi'd to get out of PMI.

I did a quick google search and can't find anything about a $35K limit...no idea where that's coming from.

I've seen a lot of inventory available in Lynn.  Which areas are good vs to be avoided at all costs?  I keep hearing bad things about Lynn, but it doesn't make sense to me as a newbie to Mass.  Close to beach (Nahant is great) and close to public transport....what's the problem?

I haven't had the 2 building on same property scenario.  I did a 203K on a multi family (3 units) that was all in one building.  It's a little extra work, but it's a great option when you don't have the cash to pay for all the rehab.  I ended up adding about $70K of reno into the loan, on top of the ~$40K I self funded.

As a landlord, I would be open to it, but I would expect the rent to reflect the potential of greater wear and tear in the apartment.  I would also have to think about the security of my other tenants a little more.

I believe a 203K would be fine, but they'll make you fix the other issues you noted and may find some more. Have you done a full inspection?

Hello, first time poster and would appreciate some feedback on a few areas of concern as I look to expand my buy and hold portfolio.  I currently own 2 multi family properties in Portland (ME). The first started as a house hack, but is now fully rented. Both houses are currently held in traditional mortgages and have 3 units each. One of the properties is actually split with a friend of mine - both our names are on the mortgages and our two families have split the expenses and profits 50/50.  

After extensive renovation, both properties are cash flowing >$1500/mo.  Hence, my desire to get more properties. I have ~$150K to invest and some potential investors that could contribute $50K each. I'm not really sure how to approach such a setup, though.

I previous looked at going the LLC route on the 2nd property that I bought with a partner, but it was more trouble than it was worth. I was able to find a mortgage, but I struggled to find insurance.  Only one guy would return my call.  The cost was more than 3X the cost with my current insurance on a similar property and the guy sounded inconvenienced the entire time we spoke.  From reading here, I believe an LLC structure is the right next step (if I'm going to accept contributions from other FAF type investors), but where do you go for commercial insurance?

Secondly, I would appreciate any advice on structuring the payouts and % ownership.  To make it simple, let's say I own 50% and 2 others own 25% each.  I was thinking that some of the monthly gross would be held in the LLC's name to cover repairs and other expenses (please tell me if this isn't normal). Then, when money is paid out to investors, should I ensure this happens equally by % to keep people's ownership % constant? Or allow them to withdraw funds (monthly or quarterly) and immediately recalculate % ownership? I would like an approach that is fair to current investors, but also encourages them to let some of the funds rid for future investments. If I keep money in and they don't, then their % ownership will (albeit very slowly) be diluted continuously.

In addition to using the cash flow of the LLC's first investment to save up for new purchases, I'd like the flexibility to add new investors. Do I simply sell 'shares' whenever someone (that I've vetted) wants to enter?  Or should I try to find a pool of investors large enough to get the next property and create a new LLC each time? Obviously, expectations would be set up front with the initial investors. 

Lastly...where to go for additional funding? I think the approaches above have ruled out any kind of conventional mortgage, so I'm left with commercial loans/private lenders. From what I've read around here, it sounds like getting funding for long term buy and hold will be more difficult than flips or sub-5 year investments. I've also read that approaching local banks should probably be my first step. I've seen some info posted about companies like RealtyShares, which might be an option. Do the eReit type companies invest in people like me, to add to their portfolio? Anything else I should consider? I'm open to setting an exit plan at ~10 years instead of 15-20(buy the investor out, sell or convert to condos & sell), but anything less is throwing away a lot of excellent cash flow from my POV.

Any suggestions would be appreciated.  Thanks.