All Forum Posts by: Matt Hurley

@Patrick Smith make sure to @ us when you respond, sends a notification ping so we can respond quicker :) 

It sort of sound like a bad deal for a buy and hold, especially if you've spent as much time as it sounds like you have on variable landlord expenses. How would this property work as a flip? 

$212 per unit or total? It’s a bad deal if that’s the total cash flow, especially if you’re partnering on the deal and you’ll immediately lose half. 

Will this deal BRRRR? If you can refinance and get that $30k back, do that. If not, I'd back out since you'd lose that cash for the next deal. Two things my 20+ yr. experienced mentor made clear to me on a deal like this

1) make sure both your names are on the title, or that the house is bought in an LLC which you each own 50% of. If he's the only one with mortgage in his name, technically you own nothing and are down $30k

2) Make sure you've got your operating expenses dialed. Capex, repairs, vacancy, AND management. Even if you don't currently plan to use a management company, include it in the number calc so you know if it can scale or if you'll have to take care of it forever yourself.

That depends on your lender, some accept rent as part of your income and some don’t. Find one that does, that’s the first hurdle. Mine accepts rent as what I state it to be, with minor checking. Some require an official rent roll from the current owner.

Anyone stop me if I'm wrong, but capital gains are not charged on a house if it's your primary residence i.e. it's been lived in by your for 2 of the last 5 years. If you're targeting people who own their property outright/the elderly, they're not paying capital gains in the first place. If that's all over your flyer, their first thought might be "oh, that doesn't apply to me" then trash it. 

I ran into the same problem. It has to do with the legalities behind loaning to a business vs. loaning to an individual. Even if you purchase the house with an LLC, living it it pierce's the corporate veil opening them up to other government requirements. My first house hack is being bought with hard money, but I'm just not living in the property until the rehab is complete and I've refinanced.

You need to research your mortgage lenders "due on sale" clause. Most mortgages have this, it's possible your lender will call your whole loan due in full if you quit claim deed (or any other method) your property to your LLC. Not all lenders do this, some do. I found one local to my area who does not have this clause, but it took many phone calls. It's possible, but walk into this with the assumption that a) it might not Be worth the hassle, get an umbrella insurance policy b) refinance all your properties first with a lender w/o a due on sale clause, then QCD them to your LLC

A good umbrella policy can be a lot easier then transferring deeds, and can have the same protections. 

That's an interesting approach, would be curious about this too! 

@Caleb Heimsoth Appreciate the patronizing comment :)  I'll go wherever the numbers take me. 

I've already got a large rehab on my hands, so I'm not looking for something that's going to add massive time and oversight. Bigger Pockets exists to educate people and create community, so that's what I'm doing.  

@Jason Munger thanks for the perspective. I don't know much about fraternities, so simple wording like that would not have crossed my mind. 

I appreciate the thoughts everyone. Any perspectives on how to structure a partnership for something like this? Has anyone dealt with a partner who provided down payment only and how did you split profits? I'm still researching around for investors who have dealt with something like this in my area, as well as finding the building owners of the surrounding sororities and fraternities via public records. Thanks all!

@Caleb Heimsoth, good question. I do need to discuss rates with my insurance company to see how different they might be. That being said, I've read multiple BP forum posts about people who own Frats/Sororities and all speak highly of the investment. Have you dealt much with student housing?