All Forum Posts by: Account Closed

I'm wondering how BP members feel about outsourcing their bookkeeping to a virtual bookkeeper. Can you let me know if your a wholesaler, fix and flip, multifamily investor, what your pain points are and why you would or wouldn't hire a bookkeeper to save you the time.

It's also about control of your information. Anyone you have involved in your business has a potential of causing legal problems for you. If you want to simplify life, wait until you have enough properties to make sense to hire a fiduciary (someone who has an obligation to protect your best interests.) I once paid a "tax preparer" to do my taxes and paid the consequence of my actions. It didn't go well and took over a year to get things straightened out. There was no recourse. Once you give someone your social security number and asset information it can go sideways fast.

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Originally posted by @Karen Margrave:

@Byron Scott in CA you cannot even mention marital status, I'm surprised in WA you can.

Actually, there are other states out there besides California and yes, they are entitled to their own laws. I'd of thought you'd known that. No matter. There are 49 other states with 49 other laws and then there are territories like Puerto Rico, Samoa, American Virgin Islands, North Mariana Islands, Guam and Palmyra Atoll. In Palmyra Atoll for instance you can actually ask if they have enough money to pay the rent. And you aren't cast off the island if you disagree with California laws.

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Originally posted by @Ted Klein:

Hello BP, I have a question on what to do in the scenario where I have an unmarried couple that I would like to rent to. Problem is, that one of them makes most of the money of their combined income. My concern is that if they were to split up, then the other one would not be able to afford the rent on their own.

Do I write a lease were the primary breadwinner is the sole leasee or do I just go ahead and write a joint lease where they are both on the lease and hope that they stay together.

The candidates appear to be very responsible, clean and drove a clean car. I might add, that one of them works in the law enforcement field and is well qualified, so on the surface, they appear to be a very good choice for a tenant.

Just looking for suggestions on how to handle a possible situation that might end badly.

Seattle Washington, Snohomish County, Puget Sound

I don't rent to unmarried couples. It gets too complicated and is too much drama. I'm for safe investing. It doesn't matter what the claims are, facts are facts.

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Originally posted by @Timothy Borg:

I need to figure out how to do a cash out refi on a property with a wrap mortgage. A wholesaler brought me a really good deal. I can just take over the payments and do some repairs and I will have tons of equity. I plan to hold this as a long-term rental. The problem is that the mortgage is at almost 8%!! I don't want to keep that mortgage. I really like that I can basically get into this property with nothing down but the wholesaler's fee. My plan is the BRRR this property.

What are your thoughts??

When you do a Wrap it implies that title is now in your name even though there is an outstanding mortgage in someone else's name. You can only refinance what is in your name. That means yes, you can refinance but the lender would require the underlying loan to be paid off.

To get a lower interest rate while maintaining the Wrap you would have to somehow talk the seller into doing a refinance, (but he can't since your name is on the title) and the seller has no incentive to refinance anyway.

Strategy would be to buy the property using the Wrap and then turn around and refi when the seasoning allows for it.

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Originally posted by @Jeff Cantrell:

I’m thinking about doing seller financing for him at 12% for two years to let him build/fix his credit and then helping him refinance with a bank and me cash out.

We’d make around 16k in interest over the two years and and he’d be making a payment that’s $100 lower than rent and building credit at the same time. Win win. We’d profit approx $25k at when we cashed out and then could 1031 that into another property.

Something I could add to this to make it better?

We’ve never sold anything before so this is unfamiliar territory.

With 10% down and 12% interest I'd do that deal with him. You are better off using a Lease Option than using a mortgage. If he defaults with a Lease Option you can evict, if he defaults with a mortgage you have to foreclose. It's a huge difference.

1 Vote

Originally posted by @Thomas Lo:

I am currently invested in a small MF in Phoenix in a great area, and am now looking at further investment opportunities in Phoenix in SFRs and 2-4 units. Having driven the market before buying, I know that there is a ton of activity in this area and BRRRR would work for me with the right deal. But, I also sense that there is a lot more competition--please correct me if I'm wrong or have a limited perspective here.

However, I also like Indiana--specifically W. Lafayette/Lafayette, home to Purdue University. I went to school there, so know that it's a very stable and good market with a lot of solid economics there. The prices for 2-4 units are much cheaper, and I can get in with the same strategy for good cash flow.

I'd love feedback on going one way or the other, since I know Phoenix will be more pricey, more time to manage rehab, and more slogging through potential deals. But the appreciation is there on the right deals and it's within driving distance for me. Just not sure if the market is too saturated and ARV prices are stalling a bit. Whereas in Indiana, I know the prices are slightly higher than where they were three years ago in Lafayette, but this is a super niche market so I will be choosing solid cash flow and little appreciation--just not sure how to pull equity out on these types of properties to develop a system for this market.

Any feedback would be greatly appreciated!

I'm doing my investing in Phoenix right now. I have a Turnkey provider that finds off market deals. I like the fact that it is closer to me and has a growing economy. It also makes more sense to me because the appreciation rate is so solid.

2 Votes

Originally posted by @Nicholas Covington:

@Account Closed unless the tenant is on the title it will be considered a purchase.

Regarding FHA doing VOR there is a strong possibility that one will be done. It depends on their profile, but FHA does ask for VORs. And since this is a lease-purchase some might consider this to be non-arms length which can pose problems as well depending on how strict the underwriter is.

FHA does allow 1 30 days late on a payment.

Thanks @Nicholas Covington an additional question if I may,

Does FHA allow for a non-interest bearing, no payment required, 2nd on a purchase? Since it doesn't affect the borrower's DTI ratio and is subordinate to the 1st, do they care?

As in selling the property for $300,000 (appraised value) with FHA in 1st covering $270,000 on a 30 year fixed with the remaining $30,000 non-interest bearing and no payments required, due in 30 years and a day.

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Originally posted by @Chris Mason:

Hi Nancy,

Could you provide more details on the financing of your current house? What type of loan, etc?

@Chris Mason I have a tenant buyer in one of my properties who has been in a lease option agreement with me for 2 1/2 years. They now want to do an FHA refinance to exercise the option.

However, they have just missed the Dec 2019 payment, which I still haven't received. "things came up" they say. If I accept their Dec payment now that it is January, will FHA do the loan or will FHA call it 30 days late and reject it?

Does FHA do VOR on exercising lease options?

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Originally posted by @Nicholas Aiola:

Hey, guys!

I've been on BP for about 7 months now and I have quickly learned two things:

There is no better place than BP to talk real estate
The wealth of information on BP is immeasurable

I've read and learned quite a lot while scrolling through this site, and figured I'd create an open forum to (hopefully) offer some help and advice back to the BP community.

I'm a CPA in New York with a passion for real estate and I'd be happy to answer any tax questions I can!

@Nicholas Aiola

Is my understanding correct that pretty much any SFR real estate transaction that is Not Intended to be a rental, such as Wholesaling (Assigning), Selling Turnkeys & doing Fix & Flips are all treated the same for tax purposes? No depreciation, few tax write offs, ordinary income?

For instance if an investor made $100,000 wholesaling "profit" (after costs), and $100,000 selling Turnkeys (after costs) and $100,000 doing Fix & Flips (after costs) for a total of $300,000 in a given year, would they all be treated as ordinary income and be subject to self employment tax as well?

From $300,000 what would be left to spend? (It isn't a test ;-) I've just never had anybody explain what winds up in my pocket in that scenario and a Search didn't provide the answer) So, the following numbers: Are they kinda close?

Thanks for your time.