All Forum Posts by: Nicole A.

@Ronald Allen Barney When you say "Urban Center", are you referring to "Urban Centre" on W Kennedy Blvd? That is the only thing I see pop up on Google Maps for that area. I work at MacDill AFB and my current commute is only 10 minutes, but I'm willing to live up to 30 mins away.

Where did you see an ad for a 2BR house for $850/month? That sounds very fishy.

The $1450/month for a nice 1-bed sounds about right in general for Tamp. My $1600ish is for a 2bed/2 bath which is pretty nice with lots of nice amenities too.

Another thing, not to be picky, but not sure I want to move around just to rent again...what a predicament. 
I suppose I could also talk to the leasing office and ask them up front if I should expect a ~ $400 rent increase in April or if they would work out a better deal.

Hey BP! So I have a question that I never thought I'd have. Recently I have relocated full-time to Tampa, FL. As many other places, the RE market is super hot. People are buying homes site-unseen and paying more than they appraise for. I am currently renting, and my lease is not up until April 2022.

In FL, there is no rent control. My current rent is around $1600, but I see on the complex's website that my apartment is now *starting* at around $2000. So in April, my rent could increase by $400. I don't like this possibility.

But I also don't like the thought of over-paying for a house. But at least the money would be going towards an asset rather than rent? There is a house I like that is going for $425K and I feel it's truly worth more like high $300s, but that doesn't matter because people will pay the asking price or more. I'm sure this house will be pending soon and that's ok because there's always another nice house.

What would you guys do? High rent or over-priced home?

Thank you all for your thoughts! This really helps a lot to feel confident I'm on the right track, so I really appreciate it.

1. I believe each of the duplexes would be valued at least at $110K if not closer to $130K. I know good comps for multi-units can be a bit tricker and am waiting to hear back from a RE agent I've previously worked with for her thoughts. The rowhome that doesn't cash flow appraised for $141K almost 2 years ago, so I imagine due to the hot market, it'll be worth at least that much still. All of these properties are in Baltimore County Maryland and it has indeed been a pretty hot market.

2. I know that I want to stay in the rental business. I am the one doing most of the work (which looking back, I'm a bit annoyed with myself that we own the LLC 50/50 when he barely did a thing).

In addition to any possible splitting of proceeds, I would get $25K on top because in the past, I put $25K of my own money into the LLC. I definitely agree on leaning towards a private sale if possible and I like the 5% discount idea too.

***If I end up buying him out, how do I handle the $25K that I put into the LLC several years ago? It is not currently liquid cash, but was put towards one of the duplexes. (Why does it feel easier to answer these kinds of questions when it's someone else instead of yourself? :-)  ) 

3. The rowhome is probably the nicest property/most desirable; it has no problems getting rented from what I've seen (just one tenant so far since I've bought/rehabed it about 2 years ago). The duplexes are in a somewhat rough-around-the-edges area, but they've always been easy to rent out, and several tenants have stayed for years therefore lowering my vacancy rate. I have noticed some growth of new businesses and such close by too. 

Due to the cash-flow as well as the equity, I think I'm starting to lean towards keeping one--if not both--duplexes if my ex is interested in being bought out. If he is, I would go and talk to my bank about the refi details and if I could refi them into my name (and out of the LLC). LLCs cost $300/year in Maryland. It would be restructured into a sole member LLC if my ex got out. So I'm not really sure if there's much of a point in keeping the LLC if I'm able to refi out into my own name (and get better rates too).

4. My goals with RE are to be able to live off of it in addition to my 401K in retirement. If I can be aggressive enough, I would love to be able to have enough cash flow asap so that I can just work part-time and/or take a lower paying FT job than I currently have. I would need to buy more deals to make this happen. I have no debt and a healthy savings rate currently.

@Dawn Brenengen, I'm sorry to hear that you're also going through a seperation. I hope that the split is as easy as possible and amicable. I'm thankful that mine is amicable so far. Without putting too much detail in a public post, I should have done this in December 2017, but tried for about 3 years to work through our biggest issue before deciding that we sadly should just part ways. It seems that it not being nasty and bitter at times makes it even more difficult because I start to wonder if I made the right decision. But my feelings of lightness and relief outweigh my feelings of doubt.

I might have originally posted this a bit too early in the morning. Tagging a few people to try and get some attention. ;-)

@JD Martin, @Ned Carey, @Russell Brazil, @Dawn Brenengen, @Joe Splitrock

Hi BP!

As a few of my fellow BPers know, lots has been going on in my life over the past year or so. I've been in the process of splitting up with my husband/partner. We are on good terms. Everything is fine. He has already bought me out of our primary house.

Now, we have a LLC that we own 50/50. This LLC currently owns 3 rental properties. Here's the details on them:

Duplex #1

Apt 1: $825/month rent
Apt 2: $850/month rent
P&I: $616.99/month
Insurance: $627/year ($52.25/month)
Property tax: $2,240.04 ($186.67/month)
Water: Roughly $50/quarter ($17/month)
Remaining mortgage balance:$44,502.74 (as of 02 DEC 2020) 6.14%

Duplex #2
Apt 1: $825/month rent
Apt 2: $850/month rent
P&I: $455.04/month
Insurance: $610/year ($50.83/month)
Property tax: $2,581.55/year ($215.13/month)
Water: Roughly $50/quarter ($17/month)
Remaining mortgage balance: $39,371.83 (as of 02 DEC 2020) 4.75%
*For Duplex #1 and Duplex #2, insurance and property tax is paid manually by New Page LLC. It is not wrapped into the mortgages.

Rowhome
$1400/month rent
PITI: 1,010.86/month (lately has been around $990/month)
Water: Roughly $50/quarter ($17/month but tenant is supposed to reimburse)
Remaining mortgage balance: $111,252.84 (as of 02 DEC 2020) 7.935%
Prepayment Penalty until April 2022 on rowhome property only (not duplexes)

Certain Sprout loan programs, for investor occupancy, offer lower interest rates for loans with prepayment penalties where permitted by applicable law and regulation. If a Loan is sold to Sprout that is subject to a prepayment penalty, then the term of the prepayment penalty must be 3 years, and the prepayment must be for 6 months of interest on such portion of the loan principal that is (i) prepaid within the term of the prepayment penalty, and (ii) exceeds 20% of the original principal amount of the Loan. Prepayment penalties are applicable regardless of the reason for the prepayment of principal and are applicable to prepayments resulting from the sale of the Subject Property (unless prohibited by law or regulation).

As you can see, decent cash-flow and equity on the two duplexes. Not a terribly awesome deal on the rowhome, but we did get it for just $5K out of pocket money.

I'm torn on what to do. 

• Sell the properties, split proceeds, and dissolve the LLC. Use this money to buy other rentals on my own. Part of me worries it'll be hard to find good deals especially these days.
• Buy him out and keep all properties, but unsure how much this would change my numbers.
• Let him buy me out (if he is interested).
• Other ideas I haven't thought about? Perhaps he keep some, I keep some? Perhaps if they're refi'd out of the LLC and into my name, I'd get better interest rates?
  
• Do...nothing?

Apologies for the long post. I could use the help of those smarter--and more creative--than me at this point in my life.

Thank you!

As mentioned, you need to get familiar with your state--and even county--laws. Sometime laws vary a little bit county to county. You should be able to find out this information online by just searching "<County State> landlord laws" or something similar.

I would highly recommend only doing a month-to-month lease in this situation so that you can end it much sooner if things get to be too much. 

When you know your rights, you can be prepared for a polite conversation with them. Introduce yourself. Maybe to open them up, ask them about the area such as any great places to visit/restuarants they recommend. Then get into the business part of the convo.

Best of luck and congrats!!

You're honestly better off owning your primary residence in your own name. You get the homestead, lower interest rate, lower downpayment requirement, lower overall costs than having a LLC for this. It's overkill.

You don't even *need* a LLC for full-time rental properties. That is your *personal* choice and there's ways to protect yourself when properties are owned in your own name (such as insurance, doing things by the book, and well when you don't have much equity there isn't much to sue you for anyway).

I also agree with John. If this were to go to court, the judge may not look favorably on you for trying to get 11 months of rent out of the estate (if he even has much), and this is not the family's responsibility if their name isn't on the lease. Work with the family. Be delicate but try to work with them to remove things as soon as possible but also not "today!"

Re-rent and move on.

@Anthony McKeen and @Gail Ryder, lots of people do talk about using a HELOC to pay for the downpayment of properties. But you need to know for sure that the cash flow will be there. The monthly payment due each month on your HELOC is *interest only*. So if you ever want to actually pay off that HELOC, you need to be able to pay more than the monthly amount. Ideally, you will have a timeline to pay it off...say 6 months...so you know roughly how much extra each month you need to be able to afford to pay to get that HELOC balance back to zero.

Also, as you've probably discovered by now, Anthony, the bank will only give you around 75-80% of the value of your home (minus any existing leins on the home like a first mortgage) for your HELOC. It will not be the full value of your home.

I recommend using a HELOC for BRRRs whenever possible. I know it can be hard in some markets. And BRRR requires you to work the numbers backwards. For example, if you find a property that will have an ARV of $200,000, you need to remember than when you do the cash-out refinance, they'll only give you 70-80% of the appraised value.

So that means right off the bat that you can't be more than $140,000 (if refi is only for 70% value) *all in*. That means, purhcase price plus closing costs. That means fix up costs. That means holding costs (such as that monthly HELOC payment and utilities and inspections, fees, etc). That also means the closing costs of the cash-out refinance at the end (this is how I ended up $5K short, but I like to think paying $5 for a rental is pretty good, but just doesn't give me the full power of BRRR).

Wow, I'm thinking through all the renovations and repairs over the years, and I can't think of any horror stories! I am lucky! I've had contractors cut corners, but it was more like attention to detail rather than anything dangerous.

My husband and I did some of our own work on our personal home (which will one day be a rental home), and a few highlights of some WINS!:

• I found a ruby ring on the subfloor where it meets the wall after tearing up some old nasty carpet.
• Our basement used to have a cave-cricket (aka camel cricket) problem. They're such gross bugs. The basement was never visible wet nor smelled musty, but the crickets would especially show up after a good rain. Turns out, the driveway out front had settled in a way that all the rain-water rushed towards the house. We poured a new driveway so that the rain-water flows another direction and never had a SINGLE cave-cricket since! So happy about this it made my top list of renovations. lol
• We never would finish most of our personal home renovations so it was always somewhat of a construction zone. I convinced my husband to let the contracting crew that did our last BRRR renovation to finish up our own house. Then we rent out a couple of extra bedrooms for a year (or 1.5 yrs) to pay back the cost of renovation. Now I get to enjoy a gorgeous, *completely* renovated home.