All Forum Posts by: Rob Beland

@Mike R.one thing to keep in mind. Just because they are not listed on the lease does not mean they are not a tenant. If the person lives there they are your tenant. You have a potential discrimination case on your hands and it would be best to spend a few hundred dollars on a consultation with an attorney and also do a review of your lease to determine you legal standing. Does this person just visit on occasion or do they sleep there regularly. You need to be sure you understand the security deposit laws for your state. in MA we can't charge a pet security deposit along with the normal security deposit if the amount combined exceeds one month's rent. We can charge a pet fee as long as there is no expectation that it will be returned. Essentially you can charge as much rent as you want in exchange for allowing pets. 

@Daren H.one thing that hasn't been discussed from what I can see is your net worth. You have $700K worth of real estate but what is the total value of your mortgages? What is the value of your "cash on hand", stocks, 401K, automobiles, etc... How much equity do you have in your primary residence?

Consider this scenario. An investor has 7 SFRs with a total value of $700K. The properties combined have 75% debt on them leaving $175K in equity. The investor has a $25K car with no loan. The primary residence is worth $400K with 75% debt. The total of other investments and cash is $200K (stocks, 401K, savings).

The above investor essentially has a net worth of $500K. Let's say the investor is sued by a tenant and found grossly negligent in the lawsuit. The investor could be sued for $1M or he could be sued for $10M. The reality is that if he liquidates every asset he has, there is only $500K available for the tenant. What is the point in having $2M worth of liability insurance if you are only protecting $500K worth of assets?

@Elizabeth Colegrove

@David Dachtera

@Joseph Weisenbloom

First consider your current assets and what you are protecting with the complex and often costly to set up business structures. What assets are you protecting and what liabilities do you foresee as somebody who is investing in notes? What is your net worth? How much are these notes that you are going to be investing in? I'd say start out as a dba, make some money, do a few deals, figure out if the business is even for you and spend some time learning about business structures and their benefits. Good luck @Patrick Snoke

@Ahkisha Howard your sign says you buy houses and you just said you have no money. They are expecting that you are going to buy their house. You are already in over your head and you haven't done one deal yet. I would suggest finding a local wholesaler/investor and get together with them and bring them to the meeting. They can work a deal and if you're lucky they will give you 15% as a referral fee. You risk ruining your reputation as a wholesaler/investor before you even have a reputation. People think "We Buy Houses" signs are great until somebody says here's my house now buy it. Good luck.

Try and move into a 20 year loan if possible. Thirty years is great for cash flow but if you can swing it go for the shorter amortization. Either way get out of the LOC. Rates aren't getting any lower...

Good luck @John Lupo

@Jason Krickbeing your first SFR you want to be more conservative in the beginning. Come up with a schedule for items like a new heating system, roof, etc...as an example if you think in 10 years you will need $10K for capital improvements then set aside $1,000/year from your rental income. Keep the 6 months of reserves in a low risk bank/money market account. The $40K LOC is great to have but once you have built up sufficient reserves for one property and you are comfortable with your future needs being covered you should consider closing it out and moving the equity into new properties. Keep your equity at around 35% for new properties if you can and you will be doing great.

I would try and simulate an amortizing loan based on how much $ you are using from the HELOC. If you are using $10K, structure it so that you amortize that over say 10 years or 15 years (fewer years if its feasible). Add that monthly payment to your annual debt service for your first mortgage. If you can't amortize the HELOC as a typical loan and you still have acceptable cash flow than you can't afford to use the money. Good luck @Eric Schrader

It's a loan @Bruce M.  The interest is paid at 12% on an annual basis but you should only need the money for a few months. You determine how long you will need the money but with a rehab/flip you don't want that money out there more than a few  months (six months tops hopefully) then you either sell or refi depending on your exit strategy. 

Certainly @Therese V.cashflow is an important indicator for any investment. I was referring more to the property taxes. I'm not sure there is a guide or basis for analyzing cashflow. Clearly it should be positive although in some cases a zero cash flow investment is a great one. Not the case with small to mid-sized multis or SFRs though. You always want to compare an investment to similar properties in the area and see how the cashflow differs.

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