All Forum Posts by: Michael S.

Hi,

Wanted some guidance on where to start. I'm looking to make a purchase of a portfolio of homes (15+) in a different state, but would like to do so under an LLC / Small Business with limited $ down. What are the best next steps for me to take? Do I talk with a local bank or look for a portfolio loan lender? What material should I prepare to present myself in the best light?

My background: Currently own 15+ single family investment properties and have been investing for about 8 years now. Each home has appreciated in value, so I do have a track record of success I can point to. Currently fully employed in a W2 job.

Hey @Dave Foster

I really appreciate the reply and insight!

Hi,

I'm looking to possibly sell my house in New Jersey due to an out of state job relocation. The house is a 2-family duplex that I live in as a personal residence while also renting out a unit. I have almost lived in the house for 2 years, but the relocation will likely take place a month or so before I've been there for 2 years. Profit post-sale after accounting for all expenses may be around $30-60K. A few questions:

* I know profit for homes that are lived in 2 out of the last 5 years are tax free up to $500K. How would this apply for a mixed rental / primary residence?

* Is there a 1031 exchange possibility with this home?

* Do I have an exception to the 2 year rule due to me being relocated to another state due to a new job?

Thanks!

Mike

Hi @Ligia Ulloa

I can't really caution against certain areas, but I would recommend looking into what Bayonne leaders "would like" to do. http://www.bayonnenj.org/Articles/Read.aspx?id=925 is great reading for the city's master plan and will give you insight into the future of Bayonne to allow you to buy into areas of progress (if that is your desire).

What I like about Bayonne is that there are areas for just about anyone. The progress I've seen to date has bee positive (Costco, luxury apartment builds, bike share, park improvements) and the progress announced has been exciting (ferry, additional luxury complexes, trolly, commercial development for higher streets, warehouse jobs, connected parks). For renters working in Bayonne, there will be warehouse, commercial and medical jobs to name a few. For those working outside of Bayonne, the light rail and bus system are robust for easy access to Jersey City, NYC, Newark and more. On top of this, it is a very walkable city with great parks and access to water (Hudson River or Newark Bay) and a cruise line.

As a heads up, Bayonne will be going through a tax revaluation shortly. Depending on the results, prices and profitability ratios may change slightly depending on how each house's appraisal has appreciated vs. the average. This doesn't scare me off, but it might for others depending on levels of risk aversion.

Hi @David Hald

My primary residence (two family) had a tenant in place in one of the units. After bumping up their rent, they are still living in the unit and it has worked out beautifully. These tenants were on a month-to-month lease, which gave me the opportunity to adjust rent rates. Your situation may vary based on this home's lease status. If you don't know the lease status yet, this would likely be step #1 for you.

Depending on your goals for the home, having tenants in place may be a positive for you since tenants scare away some buyers, leading to less demand. Ask your agent to help you view the interior of the units to make your own judgement. Assuming tenants are home, you will also get a sense of the tenant-landlord relationship. Finally, tenants are also more willing to share actual details of the home if you ask, providing you with even more value.

Best of luck with your analysis!

Hi @JJ Bliss

Thanks for the suggestion. I'm not interested in going through a refi at this time, but your idea is one that intrigues me for later in my investing life. At this point, the HELOC isn't urgent, but would be nice to have in case I needed it for a future opportunity. I had to pass one home up earlier in the year due to a lack of available funds, so don't want to encounter this situation again.

I feel like there must be a HELOC option somewhere for those with a higher # of rental properties, no?

Hi @Robert Rubel

It really depends on what you are looking for. I live in Bayonne and have seen progress towards positive change since moving here (luxury apartment complexes, ferry, Costco, Military Ocean Terminal redevelopment, bike share, park improvements). If I were to buy another home in Jersey, I would likely buy in Bayonne again, but would make sure it was in a pocket convenient to the light rail. For me Bayonne was a good mix of an area I was willing to live (near NYC, walkable, good parks for kids) and invest in (relatively high rent to purchase ratio and reason for appreciation).

Happy to provide more info on the area if you have specific questions.

It really depends on the property manager and your communication with the property manager. The ideal property manager will have contractors lined up to view before or right after the move out. From your description, the work should be done within a week.

Depending on the PM operation, you may need to be more hands on by reminding them to get this work coordinated ASAP. Waiting for bids 2 weeks after lease end doesn't sound right to me. If you reminded them before the lease ended and they are still dragging their feet to get the work done, you may want to start looking for someone else.

To limit the impact of this delay, can your PM get the home on the market now? This would allow you to show and get work done at the same time.

Hi,

I have been rejected on two occasions for a HELOC on my primary residence because I own too many rental properties tied to mortgages. Do you know of any banks that offer checkbook HELOCs that don't require withdrawals, have low annual fees, and have no restrictions around how many financed rental properties are in your name?

Thanks,

Mike

@Greg Scott @Edward B.

Thanks for the info. It sounds like the key is to work with the an investor friendly lender and bank so the HELOC isn't counted as 1 of my 10.