All Forum Posts by: Sean Morrison

I think 3% would be cash flow after all expenses, including mortgage payments. I thought cash-on-cash was supposed to be calculated without mortgage, which would be about 14%. Am I calculating that correctly then? Anyway, you're right, it's not a great return without the equity.

As an update, he finally realized that this was essentially a zero interest loan. His new counter puts this way outside the realm of something that would make sense. Thank you everyone for your insightful answers!

@Andrew Johnson, I hadn't thought much about the tax side, and I definitely don't know that side well enough. Would a mortgage interest deduction be more valuable than not paying interest at all?

Of course! This is a free and clear house, with no major repairs needed. Seller bought it for his daughter, who rented it from him for a few years, but just moved away. He simply doesn't want to be a landlord. Just spoke with him this morning and he said he'd do a monthly payment plan (think seller financing at 0% interest) for 20 years at a purchase price of $105k.

You're correct about the options. I looked at 20% down because anything less made it difficult to cashflow. And if he does seller financing, he would like a solid down payment.

At 105k, it would be a $23k down payment and monthly payments of $341.67. Which should still cash flow $60 per month. Does that seem correct?

I'm looking at making an offer on a FSBO SFH in Louisiana. I'm estimating rent to be about $1100. The expenses are:

• Insurance (including flood) = $225
• Taxes = $140
• Maintenance and Capex = $110
• Vacancy = $110
• Management = $110

I thought I would give the owner two options, both with a 20% down payment:

1. I do a typical 30 year mortgage and offer $77k
2. I offer $93k, but pay it in installments to the current owner for 20 years.

My goal is to cash flow $100 after expenses. What do you all think?

I hate to say it, but the fact that you asked this question on a public forum may mean you have already opened the door to problems. I fully understand your question, but these posts would be fodder for an attorney.

@Grace Sunshine, sorry I missed your message. I'd still be interested in talking. Shoot me a message.

I am looking to get started investing in the Slidell / North Shore area. Does anyone have a good referral for a realtor who works with investors? I'd also like to meet any wholesalers out there.

Have you considered buying an option for a few months? The cost would go towards the purchase price and it would buy them time while locking in the deal for you. They could use the option money to get the tenants moving. 

If you do transfer the property to your LLC, which is not difficult, make sure the bank is OK with it. You don't want to trigger the due-on-sale clause in your mortgage, and suddenly owe the full balance.

You're right about issues regarding lenders and LLCs. LLCs are almost always a better bet for property than corps, particularly for small investors. If you do create an entity, it should be in the same state as your property. In your case, Missouri has series LLCs, which means you could create a new one for each property, but only file one registration. Ohio does not, so you may want to consider that in setting up your structure. As @Cody Backus said, this could get complex quick, especially with multi-state. How many properties do you currently hold?