All Forum Posts by: Account Closed

I second Christie and her thoughts on Portland. Inventory is extremely low, prices are far higher than the communities on the outskirts, and local politics related to tenant-owner relations is creating worries. All of the investors I know and work with have been on a hiatus until the market levels out a bit or until the legislative issues are resolved.

Sounds fun! Date, time, and place? Not seeing it.

Hi y'all! Does anyone have any recommendations for agents / brokers they've worked with who have expertise in the Pierce County area? I'm currently in the market for single family and multi-family properties (1-4) and am looking to work with someone who has a good understanding of the market and it's various neighborhoods. Any help is appreciated! Thanks, Ryan

@Ryan Arth Am I able to transfer the title from my name to the LLC via a quit claim deed (or general warranty deed?)? I know that the lenders don't technically allow this and are able to call the loan due to a violation of the "due on sale" clause, but isn't that how most people title a property under an LLC? I've never heard of a bank calling a loan so long as the borrower stays current on the mortgage payment, but I've heard that if this does happen - which apparently isn't THAT rare - you are able to quit claim it back to yourself? But, then if it's under an LLC, you can't refi the property, right? Isn't this not the case if the property if 5+ units? Doesn't this only apply to residential (1-4 unit) properties? Sorry, there's a lot of questions there.

As for 1031 - agreed. It would only be used when there is a significant amount to defer. I think some people don't recognize the number of requirements, downfalls, and long-term issues that can result by taking a 1031 in the wrong scenario. I'll keep an eye out for Jeff. I'm always interested to hear what others think.

I like your strategy. And a $84k mortgage on a $120k property yields a 30% LTV, which from what I'm reading from others, seems to be a reasonable balance between being too conservative and too aggressive. If most loans on single family homes require 20% down, lenders must think that's a safe LTV.

As for taxes, I'm actually a CPA, so this whole thing makes perfect sense to me from the tax side, it's the other end that I'm trying to learn. 

Thanks for your help everybody. I appreciate it!

@Ryan Murdock How did you structure your partnership arrangement? 

Wow - another Ryan! You can't make this up! 

@ryanmurdock - That's a good point. At this point in time I want to learn the fundamentals, so spending a fair amount of time on-site dealing with issues is actually something that I want (for now). Long-term, however, that is not the case. It might be in our (certainly my) best interest to have each property on a different contract. That way we can modify them going forward to adjust to a more equitable agreement, because you're right, you reach a point when it becomes not worth your time. However, for now, his willingness to fund the property free of fees is a better financing arrangement than I've been able to find elsewhere, so I want to and feel obligated to contribute my half.

1. Ryan O - Yes! Clearly a fantastic name based on the number of people named Ryan here. I wonder how many we can get. 

2. Ryan O - So when you refi the property, in theory, you could pull out all the money you put into the property, correct? The remaining 20% will be from the "forced equity" that you created. As for carrying costs, good point! I would imagine that those figures are used in the BRRRR calculator when producing the final numbers.

3. John - Howdy! The deal would be structured such that he funds it, I do all of the work locating the property, working with and finding contractors, etc. and then upon refinancing we would turn it over to a local property management. Each property would be a owned by another LLC (the "parent") as a single-member LLC (for simplicity of taxes). We would each own the parent 50-50%. Our plan is to each max out our limit of - I believe - 10 residential loans, hold each property for ~2 years (barring any opportunities that arise), and then try and trade up using a 1031 into larger multi-families. He's in his low 50s and is looking to transition out of his career as a salesman into RE. He would provide the funding upfront, no charge. His goal is cash flow, which in the area where I'm focusing is ideal. It's possible to find 1.5-2% Rule properties in my neck of the woods. My (our) parameters are $250/mo. for a SFH and 14% cash-on-cash return. If we were to invest in MFH, our target is $125/unit/mo. Do you think that seems reasonable? I know it varies according to the market, but I'm just curious.

As for your refi calculation, that is definitely good to know. Is 70% the standard? I here anything from 70-80%. So basically anything above and beyond our "cash-in" in money that the bank would write a check to us for? If our cash-in was only $75k and we have a new mortgage for $84k, then what happens with that $9k? Granted there will certainly be fees so the numbers won't be exact.

4. Ryan A - I like your thinking. First, you answered my question above. Second, you definitely veer on the conservative side, and I definitely need that. Every house I look at I see sunshine and roses. I think my explanation above will change your analysis a little bit, but the general premise is very helpful.

Howdy y'all!

First - this is my first post. Yikes! Josh would be more ashamed of me than he is of Brandon when he says " ... really? ... " 

Second - The BRRRR and Rental Property Calculator are awesome. Well done, BP Team, well done.

But, here's my dilemma. So I have a mentor of mine that wants to invest in real estate but doesn't want to do the dirty work, he simply wants to supply the cash. I want to do the dirty work, and I don't have the cash. Naturally, this creates a pair. However, I want to be sure that when I am analyzing these deals that I am doing them correctly and not forgetting anything. Ideally, we would employ the BRRRR strategy, but I want to be sure I understand it correctly - which I don't think I do. As an example, I'll throw in some figures so y'all can correct me as needed.

Purchase property for $50,000. 

+ Repairs of, say, $25,000.

This amount my mentor would be able to supply. No loans are necessary (for now).

Now say the ARV is $120,000 (which, if anyone has some great tools for calculating that / coming to that value, I would appreciate it).

That means my "forced equity" would be $45,000 ($120,000-$50,000-$25,000). 

This is where things start to get dicey. As I understand it, I would go to a given bank, say Chase, and ask for a refi / loan (or whatever it is you ask?), and they would give me a loan for a specific figure ... not sure what that figure is or how to determine that. How do I use the equity that I have created to my advantage? I would like to get as much out of that refi as possible so we can roll the cash forward into another deal. 

Did I just swing and totally miss? Can someone please help me through the rest of this process? All help is appreciated!

I'm a CPA that just moved up here and I'm looking to partner with individuals as well. I would love to get coffee or a beer and talk about your business and investments.