All Forum Posts by: Simon Campbell

All you have to do is to sell the property for market value. The difference between the sales price and your mortgage payment and closing costs is your equity. Since you have a tenant in the property, you will need to market it as an investment property (unless they are on a month to month lease, or no lease at all).

Your mortgage documents should spell out any waiting period. But... that being said, who is to know? It is not like the mortgage company is going to knock at the door to make sure you are living there. As long as you regularly make your mortgage payments and do not plan on getting another primary residence loan, you should be alright. 

I agree with @Aaron Montague here. Depending on the location of the property and the demand for storage in the area, you could effectively rent those garage units out as "storage warehouses." Look into the rates in the area and see if that just might tip your profit and loss statement in your favor.

It is good business practice to make contact with the seller even if there is no deal there. If you just walk away, you will leave them hanging with perhaps a bad taste in their mouth. I would figure what would be a purchase price that would meet your investment requirements (or wholesaling) and make an offer. Pad it with explaining that you are an investor and that buyer/owner will no doubt offer them more, but if they are wanting to sell now then this is your offer.

If they get desperate, they just might give you a call. 

@John Chapman You are correct to say that most foundation issues can be fixed if you throw enough money at it. But, if the buyer is looking at homes for investment purposes, the amount of money put into fixing a foundation issue could destroy the investor's return and any potential for profit on the project. The main reason is that buyers know there is a cost to repairing the foundation but they are unwilling to pay you back for the full amount. 

George makes a good point here. You will need to think about the exit strategy. A long-term buy and hold for income (especially if you move to purchase a SFR for yourself) would favor the 4-plex. In addition, it should be easier to sell the 4-plex down the road as an investment properties. Duplexes are a little more difficult to sell because the income potential is not as strong.

Our website generates a great deal of income for us. I personally favor newspaper advertisements. It seems like an old school method, but there is a large population that still reads the newspaper. In addition, most papers also have an online classified section as well. 

Much depends on what caused the crack. If you have a tree root problem than fixing the crack is not going to fix the problem. If the crack was caused by settling then there is a bigger issue here. Figure out what caused the crack and get firm estimates from professionals and then you will know what to do.

All the research that I have done on the subject of a LLC indicates that it is not the protection that investors think it is. The primary reason for placing properties in a LLC is to reduce owner liability. Well, if you and your wife are the only principles, it won't take long for an attorney to link the LLC back to you and figure out some loopholes to get their fingers on your assets.

Another reason for a LLC is to reduce buyer/renter liability caused by a lawsuit. The best way, in my opinion, to protect yourself is to have a large umbrella liability insurance rider. This is perhaps a better way of protection.

Now, you may want to look into forming a S-Corp. This can be a great tax/income shelter and would provide the corporate protection as well. You would need to talk to a tax consultant to see if it would help you. Also, forming a corporation could affect your ability to mortgage.

I ran the figures factoring the actual property taxes and estimated 5% for HOA. This created an expense ratio of 68% (not including mortgage or property management). If you figured a 30 year mortgage with 20% down at 4.25% then you are looking at a payment of $236. This would leave cash in hand at the end of the month of $111 based on a purchase price of $60K.

So... if seller will not budge off the $60k then this is an investment property but with little wholesale potential. It looks good enough to make a long-term buy and hold as long as the tenant is stable, the HOA is solvent and the rental market is good.