All Forum Posts by: Matt Hurley

I'm not a lawyer, but that sort of sounds like you might be ending up in mortgage fraud territory. Transferring funds from one LLC to the other under the guise of a refi. Why would you not just refi under the first LLC then quit claim deed the house over? Have you discussed this with a RE Lawyer?

Hey y'all! Some bullet points about the property before you look at the calc:

• Rental income is contractual and provided by the frat, ergo 0% vacancy. Any un rented rooms will still be paid for by the organization
• The property is 2 blocks from the local college to which the frat belongs
• Yes, the taxes are accurate and they're ridiculous. The millage rate for an investment/non-owner occ. property in this area is 84.67
• I will be self managing

View report

*This link comes directly from our calculators, based on information input by the member who posted.

My biggest concerns: 

1. I don't want to lose $55k on the down payment
2. This is a new chapter of this fraternity, as of 2017 at this college
3. There's not enough profit to support a partnership

There is unfortunately not a ton of value add, other then maybe a coin laundry in the basement. Most big CapEx and repairs has been completed, so a BRRRR is not an option on this one. If I was seeking a partnership for that down payment, what is a good approach? What would make this worth it to an investor (or is it worth it)? Thoughts appreciated, thanks BP crew!

If I were in the same position I’d get as much credit as possible so you can take advantage of the next market drop. Even if it doesn’t drop anytime soon, you’ll make that $1k back pretty easily with your first deal. 

@Pat Jackson I think the worry is less about the rates and more about where the 20% is coming from.

@Matt Crawford, the partner approach is always a nice one...when you have the right partner. That takes time, and a whole bunch of networking. My local REIA has a "Rainmakers" group where investors present deals and areas of focus, people give a short presentation of what they're looking for. Any options like that in your area?

For #2, has the lender said they would give you a 100% loan IF you gave collateral? What are terms? If so, that sounds like a good deal IF the 5 unit is a good deal. Maybe post some more numbers about it? How much $ is that 20%?

#3 this is also a good option, IF the refinance doesn't cause your 7 unit to go into greatly reduced or negative cash flow. again need numbers here to see if this is an option. 

HELOC: do you already have a HELOC? If you're thinking about getting it on a commercial property that's not an option, residential only.

Overall, I think you need a lot of numbers work to help you choose the right direction. Once you have a spreadsheet side by side of each option and long term how much it's going to cost you, you'll have a clearer path. 

@Seth Greenfield same, I funded my LLC in a similar fashion but I haven't bought any properties in cash yet. Definitely make sure it goes through an escrow officer per @Albert Bui's recommendation. Keep us updated as you work your way through this strategy, would be curious how it pans out for ya!  

@Larry Long sounds like it might be an option then. The properties in my area get 10 offers within 24 hours of dropping on the MLS, so if someone came in and said "could i split the lot" they would get thrown out of the offer pile pretty quickly. Hope it works out!

I've heard this tactic commonly being a 50/50 split, no matter the exit strategy. So, if it's a BRRRR he gets all his money back after refinancing then you split the monthly income and equity left in the property. If it's a flip it's easier, just split the profit after sale. This is assuming he's providing 100% of the $$$$ into the project (rehab costs, down payments, fees etc) and you're doing 100% of the work (finding the property, managing contractors & tenants etc.). As @Brandon Turner says: you bring the hustle, he brings the money. It's an awesome partnership if you have the time to make it happen! 

Best recommendation is speak to a lawyer an have some clearly defined contracts/operating agreements. Make sure you are both actual legitimate 50/50 partners on paper and both your names are on either the LLC or the property title itself. Don't assume things will "work out" after you sell a place. Had a buddy in my area run into a tricky exit situation on a property because there was no official partnership paperwork. Long story, pm me if you're curious. Good luck man!

@Meghan McCallum Found this thread because I came across something similar in my neck of the woods. How did this deal end up for you? Did you go for it? 

That’s super dependent on your district. Have you spoken with anybody from your local zoning board to inquire about the process? If it needs to be split in order for you to buy the property, it’s unlikely the seller would agree to do so. You’d have to pay out of pocket. But that’s dependent on the seller

If I were you, I would keep your mortgages where they are (better monthly cashflow) and use the equity in your properties to your advantage. Take out a HELOC and use that to get the down payment, rehab and pay off your credit card. Refinancing can cost between 2%-4% of the new loan amount, potentially much more expensive then a HELOC that you pay off after you flip the next property. Congrats on the buys, sounds like you're doing it right!