All Forum Posts by: Mike Cachat

Hello - Does anyone have more advanced tools as landlords to run rent-to-own scenarios with prospective tenants? I'm looking for things like percentage of equity to rent, comparing amortization schedules (2, 5, 10, 15 and 20) with different balloon payments, a breakdown of operating expense responsibilities (e.g. lawn and snow, property taxes) etc.

Thanks,
Mike

Bryce - They are different LLC’s but same ownership structure (50/50) between myself and my partner so materially there’s no difference.

Thank you, Roy. The goal would be for both properties to balance out free cash flow and have both properties take a loss on paper. I’d like to transfer free cash flow from property “A” to help fund property “B” that isn’t yet stable. I just wasn’t sure from one LLC to another if there were any stipulations to be aware of.

BP Community - Does anyone have a list of tax specifics/conditions that apply to sharing cash flow between properties to pay expenses?

For example, Property A has cash flow that exceeds depreciation and Property B is a brand new purchase and in a state of value-add that needs significant repairs to bring rents up to market value.

I’m curious about both smaller repairs/ maintenance items as well as larger capital improvements.

Thank you,

Mike

Sam Amir - Would you be willing to send me that pitch deck example you mentioned? I'm also interest in hearing everyone opinion on the below approach I'm pursuing... My business partner and I currently own a 14-unit building that is stabilized now after 9 months of rehab, raising rents and turning over tenants. We are beginning to look for our second property. Based on limited (local) inventory to choose from in the 10-20 unit range (25k-40k per unit), we are considering adding an investor so we can cover up-front cap-ex rehab costs. She was originally interested in the first property we purchased without her. The current building we own was distressed and only about 70% occupied based on actual rent collections - although advertised as 91% occupied based on active leases. Many tenants were multiple months behind. It barely covered the banks 1.2 debt services coverage ratio. And that's not even including proper management fees as the owner tried to manage (3) buildings and 64 total units. We wanted to prove out our strategy before involving her and investing her money. Now we are ready to partner with her for the next one. If we put down the required 20-25%, she covers the initial cap-ex repairs, how would you structure her investment and return ratio? A) Invest X% of purchase price for 1.4X% equity (e.g. receive 35% for investing 25%) with no cash distributions - only equity stake upon sale/re-fi. B) Invest X% of purchase price for the same equity and receive proportionate distributions when we take them?