All Forum Posts by: Ryan Husser

Hi Bobby! 

If you're just starting out it is likely not needed. If you have a rental property, liability coverage should be enough when you are smaller. You can increase the liability coverage on your regular homeowners insurance and also get a supplemental 'umbrella' policy, with can increase the liability limits further. The nice thing with this is the umbrella policy can cover multiple properties as you grow.

Also, lenders will not allow you to close the mortgage loan in an LLC name. It has to be your personal name as it is much harder to foreclose if things go south. After closing you can change the deed over to an LLC but that could trigger the entire mortgage being due if the bank finds out, with the 'due on sale clause'.

All that being said nothing is preventing you from registering as an LLC as it is easier to split up expenses and revenues from your personal accounts. Hopefully this helps!

@Vishal Shah Yup, follow-up with them. It would be called the due on sale clause for mortgages. 

Congrats! That is an awesome deal and so happy that it worked out for you. My partner and I are looking to start BRRRRing later in the year and we have heard that older homes (older than 1950's or so) have significantly more rehab costs than newer homes. 

Was the age of the home an issue for you? And did you decide on the contractor you eventually picked? 

Super curious to get your insight and thoughts in general :) 

Hi Vlad, 

This is something that is common in CA, but I did see this when I was a loan officer many years ago. We classified it on the loan side as a multifamily duplex, and used those underwriting guidelines to approve the loan.

Depending on your market, it could be tough to find comps. in the area for the appraisal. This could cause challenges when/if you do decide to sell the property later on.

You should be able to split the lot lines, but again it would depend on your county and how they have the area zoned. Also they would likely need to complete a land survey which you should budget for too. So to answer your question it is possible but can be easy or a headache depending on your county. 

A local title company would also be a good resource and could provide you with more info on this type of situation as well. 

Hopefully this helps! 

Hi William, 

You shouldn't have an issues refinancing one of your rentals while selling your personal home. The lender might just ask for a few extra documents if your personal home is under contract at the same time, but it shouldn't be a problem. 

Now if you are buying another personal home while refinancing that could cause some issues with the new DTI, downpayment, etc. So I would recommend either buying your new personal home first and then doing the refi or doing the refi and then finding a new personal home.

Hopefully this helps!   

@Account Closed Mainly to help with data entry on listings and comps. Nothing too complex. Looking at seeing if they can assist with Social Media marketing next 

Hi Alex! 

Rent by the room is a great strategy assuming you approach it in the correct way. I've found that this seems to work best for students. Now most people are turned off by renting to students, but with the correct systems I believe it can be successful. 

I don't know which market you are in, but if you are near a major college or university that is something that helps quite a bit. With the student renters you need to put them all on separate leases and have a parents or financially responsible adult also co-sign on the lease. This way if there is damage to the property you can work with the parents on that. 

Second, you need to clearly spell out how the utilities will be split between the renters, what happens if someone doesn't pay their share, how the fridge and pantry will be split, etc. This needs to be very clear upfront and communicated throughout, otherwise missed rent/electric payments could become a habit (having a co-signer helps with this too). 

Also, graduate or medical students are usually a little easier to manage than undergraduate students. So I would take that into consideration as well. Apartments.com has a decent free property management program that I use on my rental for screening, background checks and marketing. We collect rent via Venmo as it is simple but as you scale this will obviously not work. The program you use I feel is less important as you will find the software over time that you like and works best for you.

Hopefully this helps!!  

Hi Ondrej! 

I would need a little more details on the property. With the HML is it significantly below market value? If you were to refi or get a HELOC you would need a certain amount of equity in the deal. Without forcing appreciation and fixing it up, the only way to do this would be to originally purchase it significantly under market. Let me know!

@Gavin DeHaai I have not honestly. It is tough because a rehab could be paint and carpet and cosmetics and be like $10k or whatever. On the flip side you could need a new roof or have foundation issues and now it is $60k-70k. So it is not as cut and dry as the 1% rule for example. I would say with your bids and quotes stay within 5-10% of their proposed budget when all is said and done. Rehabs are very case by case, but if you find a 'general rule' please send it my way as I am always looking for new methods and ideas! 

Hi Vishal! 

If you're just starting out an umbrella policy is likely the way to go. It is much simpler and the nice thing with this is the umbrella policy can cover multiple properties as you grow.

Also, lenders will not allow you to close the mortgage loan in an LLC name. It has to be your personal name as it is much harder to foreclose if things go south. After closing you can change the deed over to an LLC but that could trigger the entire mortgage being due if the bank finds out.

All that being said nothing is preventing you from registering as an LLC as it is easier to split up expenses and revenues from your personal accounts and still having an umbrella policy too. Hopefully this helps!