All Forum Posts by: Mike Levene

So far this is looking like a great option for my situation but I've never done one before. Just curious, what is a typical LTV I can draw up to with a HELOC on primary and investment property? Around 80%? I'm sure some local banks will do higher especially with a strong relationship but don't think I will fall into that category.

I currently own 3 units and looking to add to my portfolio in late spring/early summer of 2025. I'll be in the market for a duplex/triplex in the $400k range that I will owner occupy and use a 5% down loan. I have some of the required funds in a HYSA, but will most likely need to draw from another account and I'm curious which method is the most efficient in terms of taxes/capital gains, penalties, loan repayments, etc.

Based on my previous transactions in the market, I estimate ~$45k cash to close: $20k for the down payment, $15k for closing costs and prepaids, and $10k of starting reserves. I have gotten a seller's credit for my 3 existing units but to be conservative, I will assume I am paying full closing costs here.

At the moment, I have ~$25k in a HYSA and expect to save another $10k from my W-2 before I start putting offers in. That means I have roughly enough for cash to close, but no reserves left over. FYI I do have plenty of reserves for my other units already, but would like to keep each property separate.

My question is, where should I draw funds from to pay the least amount in penalties, taxes, loan interest, etc. from the following sources I have available:

- 20 year 401k loan for a property
- Sell a piece of my stock portfolio at 15% capital gains tax
- Take a HELOC against an existing property
- Private money loan from a trusted partner I have worked with before

Alternatively, I could pool the reserves for all my properties to ensure I can cover anything immediate and know that I could always sell off a piece of my stock portfolio if needed and have the funds within 3 business days or set up a HELOC and only draw from it if needed.

Appreciate any thoughts or what you have done in the past.

I've been using Baselane for a while now and just saw this feature roll out. I didn't think much of it but just signed a tenant that was thrilled to have this feature available. From a landlord perspective, its great to be able to provide these simple services/amenities at no cost to us, yet empower the tenant to enroll in programs like this.

I use Baselane and know many people that use both Baselane and Stessa. My personal experience is that Baselane has all of the needed features to manage LTR and STRs and also comes without the cost. The banking features are truly unique and best in class. I haven't seen another PM tool do what they do with the virtual accounts, simple transfers, savings and checking accounts, etc. It truly lets you be an asset manager, not just a property manager. I actually have some friends that use Stessa or other tools to do the lease signing, etc. because that is what they are used to, but choose to do rent collection and all of their transaction management in Baselane because it is so user friendly and really prepares you for reporting and tax season. Personally, not having an app isn't a big deal as I do all of my PM work on my laptop anyways. 

I'm a big fan of my current tool called Baselane. Its super easy to setup and use, but it still comes packed full of great features and automation to prepare for tax season, but also for rent collection, transaction management, and so much more. I manage 2 LTR and 1 MTR using only Baselane which makes it so convenient to streamline my processes. Specifically for taxes, its pretty straight forward with Baselane because you can tag all of your transactions with the pre defined categories for a Schedule E (the tax form you submit for rental property). The best part is that its a free tool unlike many of the tax softwares out there. Once I realized I could do tax prep, automate rent collection, manage transactions, set up multiple bank accounts with a single click, etc. I don't think I could manage my properties without Baselane.

 This is the reality, and a much needed perspective. I'm glad to hear your first property worked out and turned out to be such a success. I think this is the reality for those who are not willing to completely relocate. Sacrifice something such as a longer commute for the opportunity to dramatically change the future. For example, in your case, 3 years later you didn't need to worry about that commute anymore.

Hi Amelia, I'm excited to hear that you are starting to use Baselane. I've been using it for a while now and it has so many great features, many of which you are touching on with your questions. 

My suggestion is the following:

If all of your properties are in separate LLCs, under the Baselane Banking tab on the left, create an Account for each Entity you have. This will help separate your finances, but when you do reporting on the Analytics & Reporting tab on the left, you can still see all of your properties together in one place. When you create any type of transaction (income or expense) you can choose what category it is, and what property it is for. This is what organizes your transactions and allows you to clearly see what your income and expenses are for each property, or as a whole portfolio.

For each Entity, you would then create an Account. Once you have an entity, click the name and inside that account, you can do all of your sub accounts for that specific property. For example, I like to set up the following accounts for a property:

1. Main Account - Checking account to set up transfers or draw money from for mortgage, insurance, taxes, etc. and I get a Baselane debit card (physical and virtual)

2. Rent Collection - Savings account, as soon as I collect rent, I like to put it in a savings account to start earning interest. I then set up automatic transfers within Baselane to disperse the money to the correct accounts. Ex: On day 25, I have an automatic transfer to my main account for the exact amount for my mortgage payment, but I earned interest on the rent for the first 25 days of the month.

3. Utilities - Checking account I use to draw from for utility payments. I have automatic transfers from my rent collection account to this account for my estimated monthly utility costs. Essentially, I put myself on a budget plan where I take the annual cost of utilities, divide by 12, and transfer that amount +10% every month into the utilities account. Every so often I will rebalance the account if it grows too much.

4. Reserves: Savings account that I place reserves for maintenance, Capex, vacancy, etc. Everyone has their own preference on how much reserves to keep. Once I hit my reserves goal, I transfer the additional money to a separate "War Chest". If I draw from the reserves, I start to pay back into immediately to bring it up to my golden number.

5. Security Deposits / Escrow: If you would like to use Baselane for an escrow account, you can simply open another sub account that is separate from your day-to-day activities. In some states however, you need to open the escrow account in the tenants name and unfortunately that is not possible at the moment. Here is Baselane's article related to state requirements for security deposits: Baselane Security Deposits

Overall, there is so much you can do with the Baselane banking features. Although there are best practices, everyone prefers to set it up with their own unique flavor. If you want to be more hands on with it, I recommend something similar to the above. If you want to simplify it because you have too many properties to maintain, simply create a main checking account and a security deposit account for each property or Entity. If you are migrating from another platform, to help bridge the time in-between, you can also set up automatic transfers directly to and from Baselane to make sure everything is in the right place during the temporary transition.

This is only the tip of the iceberg of what Baselane can do. If you have any questions or want me to do a walkthrough with you, send me a DM and we can set something up.

I love what Baselane is doing with their platform and even happier with surveys like this. As a smaller investor, it's great to do all the data analysis with widely tracked metrics, but its also refreshing to hear the emotional and experiential data points from fellow investors as well. Some call the stock market a representation of human sentiment in real time, and I imagine the real estate market is not too different. What better way to gain insights than go straight to the source on sentiment instead of trying to work backwards with data and reports.

 Couldn't agree more, our focus is to get our first hit to get the experience and learn from doing and then start saving up for the next one. Thanks for the insights.

 Thanks for the local input, this aligns with what we are seeing. I agree, its easy to say oh I want cash flow, but ultimately, most of the gains are made with appreciation and principal paydown over long periods of time. 

We certainly have found some deals that would reduce our living expenses compared to renting. In the short term this is great, but after moving out of the property, these units would be ~ -$500/month in cash flow. I'm all for an appreciation play, but this seems like the reality of the current rates and the market in this area.

Just curious, how did you find your househacks?