All Forum Posts by: Matthew Mucker

Requirement or not, ponder the possibility of this guy suing you in the future, claiming you took advantage of him because he didn't understand what he was signing.

Picture the jury looking at the poor, helpless, hardworking homeowner who was forced out of his home by the remorseless, money-hungry "real estate investor" who would do anything to make a buck.

Our society has a warped and twisted legal system. I'm sure there are lawyers who would jump at the chance to represent this guy and present the story in the above paragraph.

This could come back to bite you in a big way. I'd encourage you to get a lawyer's opinion before continuing with this transaction.

I don't want this to come across as rude or snide. Please take this as an honest suggestion.

It sounds like you don't yet know enough about tax laws to even know what questions you want to ask. My suggestion to you is that you should go to your local public library and check out a few books on rental properties. Many of these discuss the tax implications of owning investment properties. After a few hours of reading some of these books, and perhaps checking out some of the excellent publications on the IRS' website (I'm assuming you're in the United States), you should have a better idea of the tax advantages that property ownership brings, and you should have a more specific set of questions that you can ask here to get the nitty-gritty detailed answers to.

Kathy,

I'm new to RE investing and I'm not really familiar with the services a title company offers. Care to offer an introduction to this concept for the newbies? :)

-Matt

Anyone?

I'm just curious about common financing options for a buy-and-hold landlord investor. Are 30 year terms common? How much higher than owner-occupied loans are investor loans?

I'd like to get ballpark ideas here so I don't come across as QUITE the idiot when I start talking to bankers.

Thanks!

I see in the tutorial that BiggerPockets "has transformed the concept of Private Messaging into the form of CONVERSATIONS."

It would be nice to be able to start one of these conversations from another member's public post, much like the "private message" function on other forums. It really is clunky to have to go to the dashboard, click on start conversation, and find the username of the person I want to converse with, when all of this could be done by clicking a link in the post that's made me want to PM.. er.. converse with that member.

Where do y'all get reasonably priced postcards printed? Do you print 'em at home on your inkjet?

An LLC offers no tax advantages. The profits/losses of an LLC "flow through" to your personal tax returns. (Unless you choose to be taxed as a corporation, but in that case your profits are taxed twice.)

The reason to form an LLC is to limit your personal liability, not for tax reasons.

Under what circumstances would a balloon loan benefit a borrower?

After 10 years, most of my payments have gone toward interest, and a balloon would force me to refinance, which would mean my payments are once again going almost all toward interest.

Thanks for the feedback everyone! The property is now under contract so the discussion is moot, but I used some conservative numbers on the back of my envelope and came up with:

Purchase Price : $95K (asking price in MLS)
Rehab Costs: $20K (guess, probably would be lower in actuality)
Closing Costs: $3K
Down Pmt: $10K

Total Cash Investment: $13K

(ignored hard money loan carrying costs, evaluated ARV refi)

15 yr term at 9% (are these reasonable numbers?)
Monthly Payment: $1064.98

Monthly Gross Scheduled Rent: $2400

Est. 50% Expenses: $1200
Est. 50% NOI: $1200
Cash Flow: $135

So, $135/mo isn't sufficient on a fourplex, but I tried to choose pessimistic numbers. If I were to pursue this, I would of course get a more firm number for rehab costs and would make a lower offer than MLS list price. Also, a 30-year term would make it cash flow quite nicely.

Were there any fatal flaws in my initial cash flow computation?

This won't work in Texas. Sales prices are not public information. If you read the deed, most of 'em say the transaction was for ten dollars "and other good and valuable consideration." The final transaction price is private.

Bummer.