All Forum Posts by: Evan St. George

@Dave Rav. @Kenny Dahill Thanks for your replies. I should clarify that this is our first home and only investment/property right now. So, thankfully, the only real debt we have is this mortgage payment and the rate we got was pretty favorable. But good to keep those options in mind. I definitely plan to keep the rental income and expenses separate from our personal funds, so it's good to hear different methods people use to do that. 

Kenny - what method(s) are you using to collect rents from your 5 rentals?

@Dennis M. - I sure hope to have that opportunity at some point in the future!

@Christopher Phillips, Thanks very much for the quick reply. I made sure the new accounts were fee-free, so I won't get hit there. More just trying to streamline things the best I can without a bunch of accounts. I see what you're saying about doing the tracking separately in a spreadsheet for a maintenance fund, etc.

I'll plan to pay off the business credit card every moth with the rental income and (fingers crossed) will hopefully avoid any larger expenses on the property until I've built up some rental income reserves.

*With apologies for how basic this probably seems* I wanted to ask for general advice on where rental income should "live" in the short and long term, and make sure I'm handling things correctly. My wife and I just moved into a 3-family property a few weeks ago (our first home) and have collected our first month's rent from the two other tenants - a very good feeling.

Here's what I'm doing right now: I have both security deposits sitting in their own distinct checking accounts untouched. I opened a business account at the bank I use most often, and have a business credit card to track expenses related to the property (Home Depot on repeat). I have set up a business Checking account that I've deposited the November rental income into. I plan to pay the monthly mortgage payment and taxes from my own personal account, but the common utility bills (we pay gas for the whole home) from the business account. Is this the best way to handle things? 

Other questions: Should I be paying off the business credit card (home improvements, etc) with the rental income from the business checking account rather than from my personal account? If there are large expenses right off the bat, I'll obviously need to tap all that rental income. Or should I leave the rent alone for now and just pay off the business card with our "regular" money? 

Should I be setting aside a % of rental income every month into another account (like a business savings) for Cap Ex and Repairs? I know these need to be accounted for, just trying to avoid having dozens of new accounts.

I'm a ways off from this, but what about when the rental income builds up to, say, $10K or more? It seems wasteful to have it sitting in a checking account with zero interest. Can that money ever be moved, for instance, into my personal investment account and invested in something safe like a bond fund, or a high-yield savings account. I know there must be rules on mixing business income and personal accounts, but I'm not very familiar at this point.

What else should we be thinking about before year-end? I know I need to look into transferring the property into an LLC. Any other obvious things I'm overlooking?

Thanks!

@Benjamin Burket, @Scott Smith, Thank you both for the good feedback here. It is our first property, and we're buying it as owner occupied. Ben - I'd likely be looking to transfer the property into an LLC oce we close, rather than buy it with an LLC.

Scott - really appreciate the thorough reply, and that makes sense to me. Do you have any insight on whether I should create my LLC in NY (where property will be) or explore other states. I've read that LLC incorporated in DE and NV can be more beneficial for tax and privacy reasons, but admittedly am just beginning to learn about our options.

Thanks!

Thank you both. @Jake S., yes it's a 3-unit home and we would occupy one of the units while renting the other two. Hope to move out at some point and rent the whole thing, but still worried about moving IN first...

My wife and I are in the process of closing on a multi-family in upstate NY (our first property) that we plan to owner-occupy. I know the strong advice is to set up an LLC and transfer the property into that LLC once we close on it, to limit our personal risk. Does the LLC need to be established in NY, where we will live? Can anyone strongly recommend an alternative, or provide any other LLC-related tips for someone just starting out? Thanks!

This is all great info - thank you everyone! @Dennis Callaghan I will give Fairport Savings & Loan a call tomorrow to see what they might be able to offer. Many thanks for that recommendation.

One issue is that our pre-approval (and contract) was based on a conventional mortgage, and now our realtor is suggesting that to try and switch to an FHA might give the seller pause, or even potentially cause the deal to fall apart. Is this a real concern? I fully understand that from a realtor's perspective, any potential hiccups are not ideal at this point. But, I would think that the seller is happy to get the property sold, regardless of what our mortgage looks like. And if we could get an FHA at <4% with less money down, that is appealing. Though certainly don't want to lose the deal over it.

FWIW, we have no major debt and 800+ credit scores. With existing rents, I expect we can bring in about $1,500-1,600 gross monthly rent from the other two units that we would rent out.

@Jaysen Medhurst, @Bob Okenwa Thank you both for the quick feedback, and the additional suggestions. Jaysen - what did you mean by "the pay-back period to recover your down payment money with the conventional loan." Just want to make sure I understand what you're referencing.

Hi everyone,

I'd welcome advice/input on this situation, if anyone is willing. My wife and I are in the process of finalizing an agreement for a 3-family home (our first) in upstate NY (Rochester area). Based on conversations with a couple lenders and a mortgage broker so far, we haven't been pulled strongly toward either an FHA or Conventional Mortgage. We have the money to put 20-25% down on the property, but that would be $80-100K and would chew up a good chunk of our investable cash. Because it's our first foray into ownership (and being landlords), I want us to have a cash cushion of some kind if we run into unforeseen expenses early on. More than that, I'd like to use some leverage when possible, leaving additional capital for other potential investments down the line.

Because we will be relocating from out of state, our pre-approval was based on it being a 25% down Investment Property (i.e. NOT owner occupied), but our intention is very much to owner-occupy. The Investment loan would carry a 5.5% interest rate, at least a full percent higher than if we went conventional or FHA with it as our primary residence. A Mortgage Broker has told us he could get us a rate under 4% on an FHA Loan with 10% down.

Currently working on securing NY jobs and/or an agreement from my employer that I can work remotely. Setting that aside, do people feel like there's a clear winner between the two: (1) FHA with 5-10% down, leaving us more free cash but a higher monthly pmt; or (2) putting 20-25% down with a conventional (or Investment) which would lower our monthly payment and avoid PMI, but tie up a lot more cash up front?

Appreciate the feedback as we begin/continue along with this process.