All Forum Posts by: Paul Ellerbusch

@Ron Patton
Before the end of the year 

@Pete Woelfel

I inherited the lease for Unit 1 which is a 3 bed 1 bath for $900 a month. Which is too cheap imho but I'm locked into this lease until May 2021.

I think I can get $1200 for the second floor of Unit 2 which is almost identical to the first unit, after some small renovations.

And I will be living on the third floor, hopefully, rent free (PITI is $1959)

@Rich Stark I'm house hacking for the first year. By owner occupying the property for the first year (compared to getting a loan as an investor) my rate went from 5.75% and 25% minimum down, to 3.125% and 5% down. So I will be living in the finished attic (3rd floor) for 8-12 months and I travel a lot for work so I plan on testing the short-term rental market a little bit while away on work. 

@Lola Uriona thanks!

Investment Info:

Small multi-family (2-4 units) buy & hold investment.

Purchase price: $283,800
Cash invested: $22,678
Sale price: $283,800

This is my first RE investment. The property is a late 1800's duplex. I like the location in Murray Hill which is in the middle of UWM and the downtown area. It needs some TLC but I inherited long term tenants so I won't need to worry about the first unit until May 2021.

What made you interested in investing in this type of deal?

I wanted to buy and hold a small multi-family property for my first investment. I think this is a good strategy to help me learn the ropes of RE investing and being a landlord.

How did you find this deal and how did you negotiate it?

I connected with a realtor in Milwaukee while doing my own search online and she, Abigail Wall with Riverwest Realty, helped me A LOT with finding the deal and negotiating price and terms.

How did you finance this deal?

30 yr fixed rate mortgage through Chase Bank, 3.125% interest rate with 5% down.

How did you add value to the deal?

Good question... I value to location and rental history. I am cash flowing the property so the appreciation potential was not a huge part of my decision.

What was the outcome?

No buyers remorse!

Lessons learned? Challenges?

You need more than 29 days to close...

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

Abby Wall with Riverwest Realty in Milwaukee

@Natalie Kolodij

I will talk it over with my lender. Thanks so much for the information!

@Natalie Kolodij

Yes you are right. It will go on my schedule E form and be designated as a self rental..

@Linda Weygant

I wouldn't be put the LLC EIN on my schedule E.

Self rental laws restrict someone from treating self rental income as passive income. You can’t use self rental losses to offset passive income, etc. It doesn’t mean that you can’t “self-rent”....

@Natalie Kolodij

The LLC is not helping me by providing tax benefits or liability protection.

I am helping the LLC by simply running payments through LLC bank account, using the business credit card for repairs, etc. which in turn builds the LLC payment and credit history.

I understand it's not a normal process but it will help me with my rental arbitrage business model (many apartment complexes require at least 2 years of payment history before they will lease to an LLC via Sean Rakidzich on YouTube).

But hey, I am new.. I may be wrong. I appreciate both of your inputs because it’s led me to some newfound articles/learning material. Thanks.

@Steve Vaughan thanks for the feedback. Signing a PM agreement was my original plan but I wasn't sure if someone in my LLC would be required to have a property management license/certification. So I went with the lease and sublease scenario. I will look into that more.

@Natalie Kolodij incorrect. I can legally lease my property to my LLC. This only becomes a problem if I try to double up on tax benefits, which I will not.

@Mark S. To each their own! That’s for the input !

@Christopher Smith

Good question. So here's a rental arbitrage example... I sign a lease at an apartment complex with my LLC and then use that rental as my Airbnb. So I rent an apartment on a long term basis and then re-rent it to short term tenants (Airbnb, VRBO, etc). By signing the lease with my LLC I have no liability because I, personally, am neither the tenant or property owner.