All Forum Posts by: Steve McGovern

Great advice here. Some have mentioned renting out bedrooms, but I’m surprised no one’s mentioned a duplex, three-decker, or other Small Multifamily. You can live in one unit, get another responsible student (maybe a grad student) to live in the other. Whether you or your parents own it on paper, your fees and expenses can be tax deductible as business expenses, and if yo’re in the paper, you can often still get approved “residential” rates and down payments if owner-occupied. Don’t dump all of your money into the down payment. Be sure to keep a healthy amount aside for reserve, emergencies, and repairs that need immediate attention. Ask your parents: There’s not a month that goes by without someone repairing or maintaining somethings a home— even basic lawn/snow care takes valuable time and resources. Finally, always remember to steer clear of BIAS and discrimination when leasing to others— this is critical and can ruin you quickly. Many rookies simply say the wrong thing and don’t understand that even some innocent, “seemingly beneficial” statements are actually very illegal. Know the “protected classes” in your area inside and out. In your case, just as an example, You can NOT discriminate based on age.... but in most states ”student status” is not a protected class. If worded properly, you can look for non-smoking, graduate students, for example, but you can’t advertise for “responsible students over the age of 24”. Then, if you find a perfect undergrad who’s 26 and was maybe a soldier, sailor or airman at 18, and you were initially advertising for graduates only, you can reopen that discrimination door against you, based on choosing the 26 year old undergrad! Be smart and firm in your advertising and tenant selection decisions. Good luck! You’re on the right path.

Yes! Lots in Mass, including Western Mass!! I can help. Pm me if you still need help.

Wow. Nice work all! Cameron Tucker , I greatly admire your courage and integrity. Hopefully, you will find some worthy info in the site. If I can ever help you personally, please don't hesitate to reach out.

Morning, Brian. I'm sorry, there was no real info or experience to report. For me, the fact that I couldn't reasonably find an individual, coupled with the fact that the pic I found let to someone under another assumed name and occupation ( -- especially the name, many of us do this on the side) had already given me enough chills to avoid any dealings wth him. The results of no one being able to come forward here, be a reference and say, "I know this guy. He's ok and simply avoids conventions of social media today" was just the icing on the cake for me. But I truly hope he's just a "more private than usual" private investor-- we all know they exist. Care to share your experiences with the community?

It's going to depend slightly on the conventions in your state, as well as how you 'described' yourself when you organized the LLC.

It may look like this: 

Signed,  
Craig's LLC

(Enter sig here) 

_______________

By, Craig Osborne, its [Manager, or Member].  

You can also refer to yourself as a 'president' or 'agent,' but these are a little tricky and will depend on your Articles of Organization.  In the absence of all other info, I'd stick to Manager or Member, depending on your jurisdiction.  

your sister is absolutely correct:"Sole purpose entity" is the way to go. Your 'umbrella LLC' becomes the manager of the other LLCs. Two key reasons among others: 1) your risk is separated on each property. If someone sues you on 32 Main Street LLC, the risk doesn't automatically extend to 14 Mayfair Ave., LLC. Granted that there are other steps that you need to take to ensure that your risk is fully separated, such as separate operating accounts etc., but your sister clearly is able to help you with that as well. 2) when you have one LLC per property, you are able to split up that LLC internally into the appropriate percentage interest for all your investors in your operating agreements. Although you may currently think that you will never have anybody else own your properties other than you, you may decide that you want to reach out to do a larger project than you're used to, and maybe a family member wants to be an equity partner. You simply assign percentages with in that soul purpose LLC that reflect the actual business nature of that property. You can even sell a portion of one property and simply amend an operating agreement – take the funds and invest in something else for yourself on another property. Again there are major financial and legal concerns there, too, but it's much easier than having to dispose of an asset that already has lending in place.

Sorry you're going through this. The irony is that although you think "having to pay thousands of dollars" for an attorney is a bad idea, the other 2 parties clearly thought the property was worth the legal risk-- they were willing to risk their own thousands of dollars, a breach of contract, and loss of the asset over it, not to mention some sort of likely punitive damages since they were a lender and the property was REO. Review your docs, especially the dates; make sure that you have all the instances of when they contacted you for termination, and contact a lawyer already. Fact is that this has gone past real estate law because you were actually harmed. Therefore you can probably get Litigation Counsel on contingency and don't have to shell out the money up front . It's at least worth a consult. You'll likely find some crucial misstep was made somewhere on your part... A minor eventual lapse of a deadline or something but (1) it's better to know so you know what mistake to avoid in the future and (2) if everything you're saying is true, there appears to have been intention to deceive so all bets (for them) are off. Even better for you if it's a reasonably reputable local or regional lender who did this. Good luck.

I'm going to give you both answers --YES! And here's why: When commercial (i.e. Income generating) properties are appraised and valued, they are done on the concept of an income valuation. NOI is multiplied by a cap rate that fluctuates under market conditions. This formula renders how the asset is 'actually doing' in the current market. For example maybe the issue is not that the landlord is keeping rents artificially low but that walking on the living room floor is like walking on a boat and there's significant functional obsolescence throughout the asset Landlords do often keep their rents artificially low, but if you were a lender you would agree that someone throwing good money away is also a little insane and potentially suspect. So these are just a few of the reasons that you and/or your lenders and investors are forced to value your target property on how the property is actually currently performing. On the other hand, as opposed to doing a single valuation you should be doing a full pro forma. This will include not just your acquisition costs but also your rehab costs and your leasing comps on the way out. Including expenses, reserves, and management fees. The latter half of this document you should utilize the principles involved in the second part of your question – how "could" this property be doing? What are my real potential areas for improvement? The full pro forma will identify your construction costs, allow people to identify risks, and hopefully will encourage your stakeholders to see what you see-- while acknowledging that the asset is currently underperforming. It should also show you other valuable financial metrics such as cash on cash return, full debt service coverage, and even IRR/NPV. When financial people see these numbers, they immediately become much more relaxed about a potential investment property. I would suggest you learn them well and use them accordingly. The ability for you to walk in as a new owner or property manager and turn an underperforming asset into a market – performing asset is always a benefit. Lenders will often be willing to work with you, based on forward projecting numbers but you also need to show them the full pro forma and probably a short business plan regarding how you intend to pull it off. Showing them that you know what you're talking about, you've identified the risks, and that you're prepared to go forward to implement a solid plan will give your stakeholders a little bit more of a warm and fuzzy on your behalf. Hope that helps.

your Buyer's agent needs to navigate that, then. Again, your other option is to withdraw your offer. How much time did you give them in your offer to except or not except? That's a standard negotiated term. 

Hi José – it sounds to me like you did everything through the seller's agent, from your posting. I'm going to go on the assumption that this is in fact the case. Assuming that's true, then I'm sorry for the trouble that you're in. Additionally, I'm sorry that you feel such pressure about this. I can tell you're kind of freaking out a bit. I can't tell you about California law but Massachusetts laws are generally quite similar to California in the vein of consumer protection and rights of parties. In Massachusetts, every agent always represents the seller unless you directly ask an agent to be a buyers agent. This is not just a matter of loyalty or who's paying the bill – it's a matter of law. Going forward, I would highly recommend that you engage a buyer's agent to work with you on your behalf. If this agent is not appealing to you, then tell him you're going to seek a buyers agent now. The words are "I'm not satisfied with the level of communication that you've given me, and therefore I am going to seek my own agent to assist me here. I would like to amend my offer to put this person into the contract." This action will do two things: One – it will spur The seller's agent to update you much more often because if you do in fact secure a buyer's agent then he will need to split his commission with that person. Don't mince words at this point – get him to work a little for you. After all, he is earning your half of the commission too from what I can tell. Two – your buyer's agent will be walking into this transaction when it's three quarters of the way through. I would think that that person would work extra hard for you now since you didn't engage them to look at 15,000 properties prior to this picking one. They're getting money for almost nothing. I would like to think that that means they're going to work extra hard for you at this very second. Try to find somebody of that nature with good representative capacity. Although it's true that I have no idea what other tasks this agent has helped you out with and/or how long he's been working with you for, personally, I'm an advocate first, a property guy second, and a project guy third. I'm a broker last. I can offer you the above advice with a clear conscience even though other agents may cringe. On the other hand, it will withdraw your offer if he accepts your position. If there are a couple of offers currently in and at odds with each other, then you may lose out on this home quickly. Either way, you should be working with somebody who's working for you alone. If any of my assumptions are not true then please set the record straight so myself and the rest of the community can help you out a little better. Best of luck. Steve