All Forum Posts by: Robert Spencer

If your long term strategy is to rent it out anyway, my personal opinion is as long as it cash flows every month, I don't worry about appreciate or depreciation much at all. I do expect the market to dip. However, even though this could lessen the value of my current properties, the amount I need to borrow against them should dip correspondingly. If anything, I'd take this as an advantage, because if I'm observant and fast, I could possibly borrow that money and snatch a good deal from a motivated seller before my properties get devalued from the ensuing dip. I would have to see the writing on the wall and qualify for the loan before the wave hits though. Just my thoughts. Good luck.

I use a lease from my local landlord association.  It was drawn up by a lawyer.  I'd definitely recommend one that is drawn up by a lawyer.

Dude! Rock on!  That sounds like a killer deal. 

good advice above.  Just make sure you look for reviews and try to hire a good property manager if you go that route.   If you buy any distressed properties, make sure to get more than one contractor's opinion of the repair costs and get at least one in writing with specific repairs listed. 

The process is a maze. There seem to many things to consider, and they vary from state to state. I live in Michigan and all my properties are in LLC's. As I understand it, at least in Michigan, the liability benefits of an LLC and an S Corp are comparable. One major difference, however, is for taxes. A financial advisor that works for my of the Landlords that belong to the association I am a member of, said that an S Corp has to pay its own taxes and then the member has to pay separate personal income tax. An LLC's money simply goes in a separate "schedule" on the member's personal income taxes. For me, this means it is beneficial to use an LLC. It does, however, present some challenges while trying to obtain financing. For instance, I've been told by bank after bank that they won't do a low down payment mortgage like FHA for an LLC. On the business side, I haven't had the required down payment and since the term of the loan is shorter, the payments are higher than an FHA loan, which changes the equation for cash flow. Also, they usually have a minimum loan size for business loans that is higher than I need or can afford for the houses in my market. So there is definitely advantages and disadvantages to any way you choose.

I'd say that if she didn't realize she would be required to live there, not initially planning to live there when she didn't know, doesn't really add up to the intent to commit fraud. Not to say she couldn't be charged, but I don't think she intended to commit a crime. Sarah, if you can gather enough for a down payment, you could refinance with a different type of loan. Also, it could be expensive and you take the risk of not being able to refinance after, but if you could pay it off with hard money, you might be able to refinance to pay off the hard money loan. I think your best bet is to live there for a while and fulfill whatever requirement the loan stipulates. If you already had the money to move on and get another property, you can still get your next property and rent it until the commitment on the loan is fulfilled. Good luck, I hope you can make something work.

I was going to suggest the cash for keys route, but it sounds like that might not be the right move. Then again, if she is not having financial issues, why has she not paid you rent for the time she is there? I guess the lawyer is your best bet now.

Hey Darrell, welcome. My sister lives in Raleigh. I'm fairly new myself, so I can't really help, but I think I'd get as much info as I could about the land (zoning, what the local cap rate is, what things are surrounding the land, is the neighborhood on its way up or is it dying, has your family ever had an environmental impact study for building an apartment complex there, etc). I'd gather as much info about the land that you can, and then maybe contact one of the people who have been interviewed on the podcast who has done apartment complexes, and ask either for some guidance or ask where you may get some guidance. Maybe you could offer some equity of some payment for their help. My biggest property is a triplex at this point, so take my words with a grain of salt. I'm really a newbie as well, but I just thought I'd offer what I think I'd do in your shoes.

Thanks everyone.  I appreciats the responses. I wish you all well, also. 

I know I already posted an introduction, but I wasn't sure where else to post this.  

I'm addicted.  I love this process of taking a complete dump that has been neglected and turning it into something nice.  I love the fact that my last two places were in such bad shape some people thought I was nuts.  They were very ugly.  By time they were done, I heard things like "I've looked at 15 houses just this weekend alone, and this is by far the nicest place I've seen."  

I can't wait to get another one.