All Forum Posts by: Stephen Chittenden

That ARV seems low to me. If the house needs $10,000 in work, either it isn't worth $119k now or it should be worth more than $130k later. A house in need of updating/repairs should generally produce some equity from the work. (I'm not talking about just making things nicer--replacing a fine kitchen with a really nice one, but replacing dated/nonfunctional with updated functional.)

How is the cash flow from the Bahamas completely tax free?

Looks good.  I like the design choices you made.

I imagine the private inspector approach is designed to avoid the need for the city to hire inspectors. I don't see any fourth amendment problem with city employees doing the inspection.

You do not have to live in a home purchased with a 203(k) loan right away.  You do have to intend to live in it when you purchase it.  I would assume she made the home habitable before moving in with her kids.

@Zach Zander  That's great.  That's definitely on the high-side for what I've seen in Edgewood.  

@Jessica Powers @Zach Zander In case neither of you found it already, the final product and numbers are all here: https://www.biggerpockets.com/forums/223/topics/31....   

Zach,  where are your townhouses in Harford County?  We ended up at $1,475 per month.  In contrast, a smaller townhome we rent in Bel Air rents for $1,600.

I disagree. I proposed a clear distinction between business assets and personal assets and required they be properly recorded on the books. Funs are never intermingled. The only personal assets at risk would be the money invested in the business (which is no different than the loaned funds being attached as part of a judgment against the business leaving the business with no way to repay the loan). In any event, he's not likely to get sued for anything other than his personal activities as the manager of the business, which would allow a plaintiff to sue both him and the business. The LLC won't protect him from personal liability for his own actions.

From a tax perspective, assuming you are the sole owner and the LLC is disregarded, you and the LLC are one and the same. Rather than doing a loan, you could record the transaction on the LLC's books as a capital contribution. You can then have the LLC make the payments on the loan from the bank. Just document what you're doing, make sure the loan proceeds go into the LLC's bank account, and then record each payment as a reduction in your capital account.

Are you the sole owner? If so, there is no issue provided the bank is willing to loan the money to you for that purpose. You should document the loan and loan terms between you and the LLC well. Treat the LLC as separate from yourself. You don't want to be seen as intermingling funds.