All Forum Posts by: MATT WARDEN

It is not a bad sign if you are not looking at this as an investment. REI is used to looking at properties as investments, which requires removal of emotion.

Read between the lines here. Why do lenders require down payments? It is to limit their risk if they need to foreclose and sell quickly by pricing under market. If this is such a good deal, why do they want such a large down payment?*

*Although, if it is not a portfolio loan, they could just be doing it to conform to underwriting standards.

My friend, this is absolutely not the worst case scenario! Also, appraisers (for the bank) are biased towards getting the loan to go through. If you are relying on this as a safety net, you should brace yourself for a big impact...

I am philosophically opposed to being litigious in situations like this when the situation you are in is, in my opinion, no one's fault but your own. You were responsible to do sufficient due diligence prior to the deal, and you did not.

However:

You came here asking for help in getting out of this hole you've dug for yourself. If I were to advise you on how to get out and didn't suggest that you talk to a lawyer about potential action against the promoter of this transaction, then I'd be remiss. Talk to a lawyer and lay all of your cards on the table. You and your lawyer will need to come to a decision about whether it is worth taking legal action, given the unscrupulous actions you likely took (knowingly or ignorantly) during the transaction and how that might open you up to additional liability.

This is still no one's fault but your own. But pursuing (common) law that might advantage you is a separate issue.

Not a chance in hell.

First, you should never be earning only 0.5% interest in a savings account. Why would you do that? That's a 2.5%+ loss every year due to inflation! ING, for example, would earn you 4.5%.

Anyway, I have been wondering whether it is a good idea to invest a good chunk of the excess as a loan overpayment at the tax year deadline. I figure there is probably some balance between risk and tax avoidance. This is probably a question for your CPA.

Hey Mike. My farm area is Hamilton/Fairfield. Are you involved in the local REIA? Maybe we could grab lunch sometime.

Take care,

You can do a DBA (doing business as) for a matter of dollars in OH, last time I checked.

I don't believe you will get any additional tax benefits from having a single-person LLC.

Yes, this is a good reason. However, even after 2 years, you may find it eaiser/cheaper to guarantee the loan anyway.

Absolutely. My question was aimed at trying to figure out what additional protection you think the LLC would provide you in your situation.

I'm just saying I think you can accomplish everything you want with a DBA and many fewer dollars.

What risk are you trying to mitigate in your wholesaling and rehabbing business? Are you afraid someone will sue you because of a poor repair job and will be able to access the other properties you are rehabbing at the time? LLCs are a tool for asset protection and, at least in the case of rental holdings, a tax position tool (eg, if your state considers more than x rentals per entity as a different tax position). I think that's where all cash is coming from: what's the reason for the LLC?

My rule: add one B.S. Point(tm) for every exclamation point in the advertisement. For every B.S. Point, you should spend 3 minutes of due diligence.

Make sure your agreement with the ISP allows this. Most normal residential agreements do not.

It sounds like you are more or less operating as a property manager. I would expect a typical property manager's percentage.