All Forum Posts by: Pedro Martins

@Fredie Robinson, as I understand the FMR numbers you posted are the correct numbers, however you have to take into account that they are supposed to include utilities. There is an information packet that you can get at the HUD office that explains the calculations.

I do not have actual section 8 experience, though I considered it. As my mentor (who is heavy into the low income area) puts it - "I don't want section 8 because I don't want another boss"

FYI - I have a 3/4bed 1bath in Portland - about 2100sqft - i put in new flooring and paint so it's decent - rents for $795.

@Justine Scheuher, here are a few thoughts:

1- Can you create a "master suite" in the basement leveraging the existing no-wall toilet? You could then move yourself there and move in another roommate

2. With the same basement suite, you could try to rent it or airbnb it

3. Stay for a couple of years while paying down the mortgage mostly through roommates. Depending on the location there is good appreciation to be had, with combined with a lower balance on the mortgage can give you access to cheap money through a HELOC for other investments.

4. Start rounding up your team, whether you are getting a deal tomorrow or in 3 years - find your attorney, cpa, contractors, etc and network using KREIA

5. Do your utmost to find a mentor, even if it means doing menial work for free - a good mentor is worth their weight in gold. maybe partner with them in a deal.

6. Do feel good about what you have accomplished thus far - you are on the right path at an early timeframe. 

Mike Grinnan - jmgcpa.com - does great work for me and for a lot of experienced RE investors in Louisville. I am not sure if he is taking new clients, though.

@Scott L. the issue with the idea of using the 10k to just pay down the principal is that then it's gone and you can never see it again - in a HELOC you can take it back if there is a need for it in the future.

The next step on this ideia is that you have a HELOC as your emergency stash, so that you can always access it if there is an emergency, but you don't pay any interest if you don't and you don't have money sitting around in a checking account or under your mattress.

@David Dachtera, @Chris May, @Joe Au

I can speak about the origins of this concept and why it works.

This whole theory is based on a specific type of mortgage that exists prevalently in Australia and sparingly in the UK. I know it well because I had such a mortgage in the UK.

https://en.wikipedia.org/wiki/The_One_account

In the UK they called it the One Account and basically it is a combination of mortgage, checking account and line of credit - all in one.  You buy a house for $100k with 20k down. From then on you have an "available facility" of $80k - that facility will have a certain timeline (20-30 years) before it expires. You use the account as a checking account so that your income and expenses come out of it and you pay a set interest daily on whatever you owe. So, if you receive $5000 in income you are now paying interest on only $75k. A few days later you pay a bill for $1,000 and now you are paying interest on $74k. The interest is calculated daily but paid once monthly.

So yes, you can save some money either by:

1. if you take advantage of interest free offers, credit cards with 60 days to pay and just the lag between income and expenses you can save by basically "earning" the same interest rate on the mortgage on any money you can keep even for one day in the account.

2. if you need money for another purchase such as a car or whatever, you can withdraw the money up to the facility and only pay interest at the mortgage rate (typically lower than other rates)

I recently sold the apartment in the UK that was under this mortgage and all that happened was that once I transferred the sale money, the account now had a positive balance and so I no longer owe any interest.

It seems that someone has tried to reverse engineer that concept into the US reality by using separate HELOC, mortgage and checking accounts - it will work in the same way but less efficient and a lot more work to do all the transfers...

@Corbin Wafford, the way the market is locally, I would say your timing should be "whenever you find a great deal". Even if it is tomorrow! If you happen to find yourself with a du/tri/quad-plex under contract and it is a great deal you still have choices:

- rent it all out, maybe with a short lease or air bnb for the place you would move into

- make improvements in the waiting time on any vacant unit

- wholesale the place and find another one, but this time with some extra cash in your pocket - hell, send me the deal :D

- and if you really want to buy it, can't quite afford it but it is a ginormous deal, there is always money to go into a good deal

Any of the attorneys at Borders & Borders

@Paul Passafiume, I would get a statement in writing from the bank that they are ok with it. Even if the person you are dealing with verbally agrees that does not give you enough protection against someone else down the line disagreeing!

I am in the process of doing a quitclaim deed from one LLC to another (both mine) and those are the costs I am taking, so can't be far off... and yes, they are negligible

@Paul Passafiume, a quitclaim deed will set you back about $200 and the recording fees are $17. All straightforward done through an attorney. However, more important is the discussion you have with your bank. If you don't tell them that you are doing this transfer and they find out they can activate the due on sale clause which would mean you having to pay the full owed amount immediately. And since the insurance would have to be in your LLC's name, they will find out...

You are better off finding another bank that is ok with the property in your LLC's name from the start - I have done that with First Capital Bank of Kentucky with no issues. If 0.5-1% rate difference creates a big concern than maybe you shouldn't get this deal to start with.

Nicholas Patrick , you are looking at this as an EITHER/OR situation when you should be looking at it as an AND. Use a self directed IRA/401k AND your taxable savings to invest. One will be more focused on short term and one will be more focused on long term. Also, if you have a current 401k where you work, you may be able to borrow from it (depends on your particular plan rules) - you pay interest on that back into your account so you're basically paying yourself interest...