All Forum Posts by: Mike Carroll

@Andrew Postell wow! Thank you so much for your reply. Definitely giving me a ton to think about. And this is exactly what I was looking for, basically all the little ways I can do this that will work for me, and keep me in a good standing with the bank and the law. So for that, I thank you very much! I am going to think on exactly it is I want to do with the second property and then apply the best scenario I find fits. Thank you again to all who responded, this helped me immensely!

@Grant Thompson, thank you so much for answering those questions. So, there are some lenders that will allow for transfer of deed without a new loan? Thanks for all the answers, that was super helpful. 

@Mitch Davidson, The in-law suite is an ADU. I know there is no tax benefit since I would still file under a schedule E. I did not know the cash out would go from 85-70 so thanks so much for that info! I guess I was hoping there was a way to cash out refi in my name, purchase another property and then switch the old property deed to an LLC protecting our other assets, while keeping the loan in my name. It doesn't seem like this is possible, so I think I will do the cash out in my name, buy the new home in my name and later down the road, take the hit with a higher interest rate for the old rental under my new LLC. I plan to do this 5-6 more times over the next few years, so I'd like to start protecting each asset under different LLC's. Any other information on this would be great! I basically got lucky with how well this first property went, but I'll be honest, I'm still very new when it comes to the legal end of what is possible. Gentlemen, I thank you very much for your replies and if there is any other info I'd love to hear it, thanks again!

Mike

I recently built a vacation home for short term rental purposes in Bethany Beach, Delaware. I also built an in-law suite for my wife and I so we could house hack the property. After 2 extremely successful seasons, we are contemplating moving and renting the entire space out (a bit more cash flow). My question is in doing a cash-out refi or home equity loan for another property, should I do the loan first and then transfer the deed to the home to an LLC? I would like to run the rental through that LLC to protect my second home and our external assets. It also seems more tax advantageous since I will be able to write off the entire home expenses as opposed to a percentage like I can now. Will doing this affect my current (amazing) mortgage rate of 2.99% on the original home? Can I keep the loan in my name and put the deed in the LLC's name? Will a lender allow me cash out refi if they know the original home is a business? Sorry for all the questions, thank you so much in advance!

I am doing the same thing in my short term rental. I do summer rentals and someone reached out about staying for 6 months in the off season. Contact your insurance broker and see what needs to be done there, but I used Law Depot to draft up a lease agreement, it’s very easy and has all the regulations in your state. So, no need to reach out to a lawyer in my opinion. The guests have a dog as well and this lease has a replacement clause for damage the dog might create. I also just let Zillow take care of the application, background and credit check. 

@John Underwood At the Delaware beaches, they have outlawed short term rentals until May 15. VRBO has a 100% refund cancellation policy if it is more than 7 days I believe. I will be giving refunds as well inside of that time period for people who are not comfortable traveling. Tough times right now. But let's keep some things in mind. Even if they do not open the short term rentals up until July, there will be so many people itching to take vacations with friends and family because of being stuck inside. I believe the STR market will take a hit this season but when the world does open back up, the people that can travel, will!

I built a vacation home in Bethany beach, Delaware and it’s very similar to the jersey shore. People from surrounding cities and states come visit for high priced stays in nice homes at the beach. I was on pace to gross around 50k this summer. Since the virus hit, my property has had very limited messages/inquiries and no bookings. I do think it will pick up as we come out of this, but I may be dropping my weekly price dramatically if it doesn’t pick up significantly by mid to late May.


Fortunately STR and REI aren't my main sources of income and I can more than comfortably afford the mortgage. But some people do not have that cushion. I am brand new to all of this, so take it for what it's worth, but a basic piece of advice I would tell anyone is to make sure you have enough reserves for unexpected costs and economic down turns.

As far as the housing market, I do believe we’ll see a large number of houses going on the market but I do think you’ll need to act fast on them as there are other savvy investors that realize this too! Like @David VanWert said, be ready with cash on hand! Also, there are probably killer deals farther south both on price and tax incentive compared to jersey.

Good luck!

@John Underwood thanks for that info! I do need to spend a little more time looking at deals outside traditional MLS listing sites! So thank you! @Lauren Kormylo I grew up here in Bethany and know what you mean. OC seems like a good place to invest in because there are a lot of good deals you can get but the taxes are high and vacationers have so many options down there! The property I have now is nice because it is technically in the zip of bethany without being in the incorporated limits of bethany beach (cannot afford that!) So, I am going to continue to look for outside of the box deals somewhere close to the beach but not on the beach. There still seems to be a decent market there! Thanks a lot everyone! 

@Luke Carl sweet! I’m about to listen to it now while I paint some bunk beds!! 

I love the feedback @John Underwood the property is about 2 blocks off of the beach, overlooks a pond and has rented fairly for this upcoming summer season (even with these weird circumstances.) So, I have to find more properties like the ones you stated! @Greg Dickerson and @Mark Miles thank you as well I need to look into those southern beach communities! Thanks for the feed back

Hello all, My name is Mike and I am new to BP and brand new into the world of REI. I am so excited to join this amazing community of bright, helpful individuals! I have recently finished a vacation home located in Bethany Beach, Delaware. This is a tricky market because the market is extremely high and very expensive to get into, being that it is a nice vacation rental area located right on the Atlantic Ocean. I happened to get a great deal and it should work out financially. But when I go to do my second deal, I am going to run into a predicament. That is, buy an extremely expensive home or property, spend a ton of money up front and on the back end with mortgages, and HOPE it rents out. The other option is to buy something off the coast a little. The problem with investing farther from the beach is that people don't want to vacation far from the beach. That market also does not have a high long term rental rate either. Does anyone have any insight to STR investing strategies? Is it just as simple as go big or go home? Higher risk = higher reward? Or is there some key methods and strategies anyone uses? Thanks everyone!

-Mike