All Forum Posts by: Matty Foley

@Brandon McMullin yep just trying to know more to give you an idea of what you are in for. Assumable mortgages are a great benefit for a Borrower in a low rate environment, especially at a long term fixed rate. That’s why you rarely see it in commercial loans (mostly swap products) and residential only offers it for federally guaranteed/insured loans. Congrats.

@David Wandel but I think if a property is vacant or needs turnover - that could be key, I’ll start there for sure.

@Matt Groth very good point. Thanks Matt.

@Lisa Hoover thanks Lisa, I appreciate you response. It may very well be exactly what you said. He’s started college funds for our young kids and has expressed we will be left his inheritance, so i do think he wants to help - but he can be difficult to read. Are there any tax benefits or other benefits you know of that may help my discussion?

Thanks again.

@David Wandel thanks David, believe it or not he is still self managing. If the property was leased with a solid tenant and he would continue to manage - would it make sense to offer that we use the rental income to make our P&I payments, and he keeps 100% of the excess net income until we pay him in full. It would make things all equal to him; so if he’s doing us a favor and would still manage the property for us, that feels fair. I’m not worried about the cash flow over the next few years, more so adding an asset to build more net-worth.

My wife and I know a gentleman in his 60’s that owns 30+ residential rental properties, nearly all owned free and clear. All of the properties are currently leased and cash flow nicely. We are close enough to this person that he has discussed leaving a home for us in his inheritance, however I’d like to work on acquiring a property or 2 from in 2020.

My question: other than then him just wanting to help us, what is his benefit to him in selling one of the properties to us with owner financing? He is making income off the property and we would basically be paying the monthly P&I payments with that income. Is there a way to propose this to him that we can add value to him? I’d like it to be fair to both sides, but I’m not sure what he gets out out of it. He’s wealthy enough he doesn’t need the cash that would come from the sale of a property. Any suggestions?

@Owen Thornton @Lynnette E. @Lee Ripma @Robert Nelson

I have no interest in selling LLC's as I'm not an attorney, and I would suggest talking to attorney - but here are my thoughts: We talk about "risk appetite" on BP, personally I have zero appetite for risk when it comes to my personal assets. Worse case scenario, if one of your tenants were to die or be seriously injured at the property, without a LLC there is no shield in place. How much coverage does your insurance provide? What if the lawsuit filed against you is for $1MM more than your insurance covers and the judge rules in favor of the plaintiff? You're likely filing for bankruptcy depending on your personal level of wealth. By forming a LLC you are adding one more layer of protection between your business and personal assets.

I’m very conservative and risk averse. I have a friend that owns over 30 rental properties, all in his own name - so to each their own. That’s just my take on it. Again, everyone’s circumstance

Is different. Talk to an attorney. A title attorney who performs the closings on the property can also set form the LLC for you. In most states it's pretty inexpensive.

@Brandon McMullin what type of loan does the owner currently have. To my knowledge conventional loans are not assumable, so make sure it's a loan that federally guaranteed - FHA, VA, or USDA. Commercial mortgages but can be assumable, but it'd be rare, and it doesn't sound like this was an investment property for her. So double check on that first.

@Stephanie P. Yep, no disagreement here. Hope you had a Merry Christmas as well.

Thanks.

@Clifford Paul that's very hard to believe. Are you working with a commercial bank, or investment bank? I can't imagine a scenario in which a commercial bank would be non compliant with FDIC and break the supervisory maximum LTV by 10% on a consistent bases (not for 36 years of experience, or not for $10MM cash in a DDA). The guidelines exist for a reason - to ensure banks have sound lending practices.