All Forum Posts by: Jeff D.

I need one!   I have a 12 unit and would love to tap into some of the equity without having to do a cash back refi.   

Hello!    Can anyone suggest an insurance company that is comfortable and used to insuring vacant soon-to-be-remodeled, mixed-use, older brick apartment building? 

As in, comfortable with the vacant part,  AND comfortable with the full building remodel part.    Both parts.   My current broker makes it sound like there are very few options for such a thing.  Kind of hard to believe.

There is an existing policy on the building.  But it was obtained in a hurry, at the last minute, and its very expensive.    Time to shop for something cheaper.   

Thanks!  

Ok so my thoughts (ie confusion) are about how it seems like the money can't possibly be a taxable thing because it's not "profit" income for LLC-A, it's a cash back refi loan to LLC-A. There will be now be an additional amount added to the existing loan that LLC-A pays each month. So at that stage, the money is a loan, not profit.

But when I move that money from LLC-A to my personal account, now i guess all the sudden it becomes a taxable thing. Kind of makes sense. But then I'm the sole member of LLC-A, so it's disregarded for taxes. Which circles back around to the same thing......it's seems like it shouldn't be taxable to me either.

I've heard (from my loan guy) that the bigger players often times have a holding company. So the money moves from LLC-A, to holding, the to LLC-B. And it never goes into the owner's hands. That sounds kind of intriguing. Anyone have input on that??

Hello,

I just did a cash back refi on property A. Property A is held in an LLC and has an associated biz checking account. The bank put the cash back straight into that account. Now I am needing most of that cash for a down payment on Property B. Property B will soon be held in an LLC, and already has the biz checking account set up. I checked with a lawyer about how to properly move the money. They said take it as distribution to me personally, then move it to the new LLC account as a capital contribution. Makes sense for liability. However they said that distribution to me would be a taxable event. Which means I am going to be taxed on a cash back loan - which doesn't seem right.

It's a pretty common technique to take cash out of one property and use it to buy another.   
So I'm curious to see how others do this transferring around to avoid the tax ding.   If it's even possible.    Thanks! 

Phew - lots of posts on this one.  (Sorry if I repeat anything)  Ive been absorbing everything possible the past couple months - webinars, podcasts, articles, interviews,  boots on ground stories.   Not to shape my own sentiment, but just to gauge sentiment.  And I agree that it's kind of all over the map - from doomers to boomers (as in economic boomers not baby boomers, although some are both :) 

Here's my 2 cents, based on info and intuition.   Too much economic theory can weigh you down.  Human psychology/behavior has to be a big part of what you think will happen.  Because consumer and investor confidence is what ends a recessions, not economic theory.    

Unemployment?    This isn't the last crash.   This is a temporary hiccup.  Most of the layoffs have been restaurant and small biz retail workers, not the higher salary middle-management home owners from 08/09.  Its mostly renters this time.    And many if not most are getting paid more in unemployment pay than they got working their jobs.  (Yes, many people haven't got their UE pay yet. But will soon when states catch up).  And they don't have to pay rent, they can't be evicted anytime soon, and they know it.   And they have been cooped up in their houses for weeks.  And things are starting to open.  Coinciding with summer.   Can you say pent up consumer spending?   So if unemployment stays strong, it will stay artificially strong until the UE runs out (namely the Gov'ts weekly $600). If anything there might in fact be a retail/restaurant worker shortage very soon.  Im not worried about the high unemployment number.      

Forbearances? People are taking advantage of it. Not in a bad way, but because its there. Again, judging by all the renters that actually DID pay in Apr/May, I don't feel like the homeowners doing forbearances are necessarily in trouble - unlike the 08/09 crash. Back then middle-managers had cash back refi'd their ARM's 3 times in a row and spent the money on vacations and jet skis. Then lost their jobs. I think the legit need forebearances happening now are likely small biz owners who didn't get any PPP. They are in a real bind. But I also think many of the forbearances are in the "because we can" category. In fact having been through the last crash, forbearance wasn't really a thing. It was loan modifications. And you had to jump through many hoops. And your credit got dinged. This time, thanks to the CARES act, banks are mandated to make it extremely easy for people to skip 3 months of house payments without any credit ding. Vastly different. I don't see too many forbearances going 6 months. I think banks are going to put the kibosh on that.

Foreclosures?   Yeah, technically the entire 3 month forbearance period is due with 4th month's payment.  Yeah a recipe for foreclosures.    But banks are going to allow people to payback the forbearance period for 12-24 months.    OR loan modifications.   Likely streamlined by goverment mandates.   Esp since lessons were learned from the crash.     So if anyone forecloses, it's because they can't afford the additional 1/12 or 1/24th tacked onto their payment,  or for some reason just can't qualify for a loan mod.  So I'm not seeing a high volume of foreclosures coming out of this.   Maybe some crappy credit scores, but not a lot of foreclosures (relative to 08/09) 

So i guess I'm a boomer not a doomer.   With one giant caveat.   If people are careless and there's a 2nd virus wave in Fall  - all bets are off.   

Does anyone know if Schedule E income can be used (instead of Schedule C) for determining payroll income (owner) for PPP?

Yeah it's definitely encouraging,  but are those 100%'ers  duplexes and 4-plexes?    If so, then it's alittle less encouraging.    Or is it over 20 units?   etc.  That's very encouraging.   The breakdown is important and would be interesting to see somehow.   I agree,  hard to have 100% even during normal times.  

Just a suggestion - it would be great if BP could actually put out some sort of legit but simple online survey on this question. It was posted on the 2nd, but many LL's didn't really know what rents came in until about now. Im sure a lot of people would love to see the compiled results. Hard to scan through 16 pages of replies to try and get a feel for things :)

91% paid.   33 of 37.   

2 probably legit,  2 not so legit.  No documentation from anyone.    

Next month who knows.   But if UE,  PPP and EIDL kick in before 5/1, and perhaps Covid calms down a little - hopefully things will be ok for next month.   As long as tenants don't try to milk the moratorium situation.       

A full time min wage earner getting UE + $600 weekly gov't contribution will actually be earning much more than they did before being laid off.   Just the gov'ts $600/wk alone is more than full time min wage pay in any state.    

No more online applying as far as I can tell.   Mail in only.  And it asks for a PFS to be submitted with app.  Which means schedule of real estate, which means show your total equity.  Which means on paper you look rich.  I am nervous about this part.   I am cash poor (like very), but asset rich.    Won't this be a problem to qualify?    I guess given current conditions,  property values have plummeted, so maybe it's actually zero or negative equity!  yay!