All Forum Posts by: Mike H.

Hey folks. We bought a lot in Gatlinburg a few months ago and would like to begin interviewing home builders and possibly architects. I've read through the forum, but am looking for more recent feedback than what I found. We're targeting 1,800 - 2,500 square feet to be used as a short term rental with some personal use. We're open to separating the design from the builder, but also spoke to a couple builders that have design in-house. Lot has a view, city water and utilities, and a very flexible HOA.

@Mack Lengel, thanks for the referral.  I've been trying to track him down for the last couple days.  Got a message that he's under the weather and will keep trying. I'm under contract already so need to move quickly or move on.

Looking for recommendations for a lender offering new construction loans for a single family STR in the Smokies. Appreciate any and all tips.

Curt, I'm in a very similar situation except I have an LLC formed and own 2 rental properties in my personal name. I have paid for a consultation with a good real estate attorney tomorrow afternoon and will pass along anything meaningful I learn there. I would suggest you do the same, of course, since the laws in your home state are likely different.

I respectfully disagree with Curt on an LLC's purpose, which is clear, and tax libility. Our LLC was formed as a "disregarded entity" in the eyes of the IRS, with all income passing through to my wife and myself on our personal tax returns. You have several options when applying for an EIN which will determine the tax structure of the LLC. The purpose of the LLC is to segregate assets with potential liability from your personal name. That requires deliberate work and record keeping and likely help from professionals (CPA, attorneys, bankers, insurance agents), but is not impossible. I'm working on it now myself, but I'm far from done.

One of my clients once said the following about LLCs: "you can form endless new LLCs but you can't easily change your name". The likely best course of action is to take an "all of the above approach" if possible, including holding properties in individual LLCs when possible, purchasing personal umbrella and liability insurance for the LLCs. How to get the LLC protection without violating any terms of a mortgage in your personal name? That's what I'm paying the attorney to tell me, if it is even possible.

@derekb I'm with you on the second income.

@rhondalette We will run the background check tomorrow.  Just got the second application in about 90 minutes ago.  Thanks for the feedback!

 Thanks, Justin.  Valid points and good feedback.

Both candidates passed the background checks, finishing references tomorrow.  Both couples' incomes are well in excess of a comfortable margin.  We aren't concerned about the second income for Couple B because the first income is sufficient, still 2 incomes are superior to 1, in my opinion, for spread of risk.  

On your last bullet point - yes, we were a little annoyed by Couple A.  I've never had to show a unit 3 times, or have someone take measurements of every room, corner, and closet.  At first they were very lukewarm, but we engaged them despite the quirks because the property is in the final stages of a 6 month, $160K renovation, so it's not for everyone.  We entertained adding the shed because it would be paid for in 2 weeks of rental income, and we were afraid of having a 1 month vacancy, which would be our first since 2009.  However, now that we have another couple who loves it for what it is, we feel vindicated.  It's almost like dating, so to your point, we should probably go with our gut instinct since the paper file is very similar. 

Never mind - figured out the privacy settings! New to the forum and already very impressed.  Excited to learn from everyone. 

Both couple qualify on the income metric.  I agree with your logic.  

We only offer one year terms at first, but have had success with 2 year terms after  Thank you!  I'm killing the thread, because I was hoping for more anonymity for this topic.  I've reposted under our trade name.

Thanks, Mindy.  3 times in gross income or net per month?

We own 2 duplexes and have been landlords since 2009.  We are just completing a major renovation of our second duplex, which we picked up at auction in the fall.  We have executed leases and secured deposits on one of the units, and have 2 strong applications in hand for the last remaining unit.  We are struggling to decide between the two sets of applications and could use some feedback.

Both applicants are married couples.  Couple A has two incomes, a W2 employee and a self-employed person, and they live in our area.  Couple B has 1 income presently, but are relocating to the area and would have 2 incomes shortly.  Couple A has seen the property 3 times in 3 days, and have seemed lukewarm to our property for a while before coming on strong as of late.  Couple B walked into the property today and said "we'll take it" within 5 minutes.  Couple A's and Couple B's credit scores are within 10 points of each others, essentially identical.  Couple A has asked us to provide a storage shed for the back yard which would add approximately $500-$1,000 in expenses, and have asked other questions that lead us to believe they may a little "particular".  Couple B seems content with the property as is.  Couple A submitted their application 12 hours before Couple B, but were told we would evaluate after reviewing all applications.  We have yet to check landlord references, but have verified income.

I am looking for some feedback from experienced landlords as to who they would select.  We can make a compelling case for each.  Couple A's dual incomes may outweigh their extraordinary amount of questions and request for the shed, etc.  Couple B's lack of a dual income may be outweighed by their very easygoing demeanor.  The credit history seems to be a non factor with each.  What would you do?