All Forum Posts by: Sylvia H.

Sylvia H. has started 8 posts and replied 140 times.

Hey guys,

I'm in the process of closing on my second duplex and I honestly don't understand insurance as much as I'd like to.

My situation: I'm closing on the property under my mom's and my name and then transferring the title into my LLC - I'm doing this to get a better mortgage rate/terms. Since the property will be under my LLC, the insurance company doesn't provide personal liability coverage on the home insurance policy. Therefore, I'm getting an additional personal liability policy for my LLC, with $300K in coverage.

I was wondering if this is the right thing to do, or if I should be doing something else. I did this with my first duplex as well.

I appreciate your time and help!

You cannot transfer title to an LLC if the home is mortgaged. If the lender finds out you did this, they can and will call the mortgage. Do people do it? Yes they do. If you get caught, don't say you weren't warned. Also you mentioned that you took out a mortgage in your name and your mothers name. If you took out a mortgage and presented to the lender that you were going to owner occupy the property you need to owner occupy the property for at least one year. If you don't, it's mortgage fraud and it's a federal crime. Lots of people tell you that the lender doesn't check or care. Not always true. Ask the cop in Jersey who bought a home as a first time homebuyer and didn't occupy the house. He got a year in jail and a 537k fine. And that was being easy on him. The guideline is 30 years in prison and 1 million dollars in fine. Ouch!

0 Votes

Cape Coral, Florida

Your accountant is correct. We call this "deep pockets". You also have all your cash tied up in one property when you could use that money and divide it into 20% cash deposits and buy other properties. The money isn't working for you in the way it would if you used the banks money. Yes you are paying interest however the interest is tax deductible, along with other expenses like closing costs, etc. Not sure what your end game is but if you are looking to own a portfolio of real estate you might not want to tie up all your money in one building.

0 Votes

Quote from @Ryan Zimmerman:

I recently graduated college and have been working for a year and a half now. I bought a house back in May with a conventional loan, but my parents are co-borrowers because I did not have 2 years of employment. I am wondering if I can still qualify for a FHA loan? Thank you in advance!

Hi Ryan,

Not sure why you would want an FHA loan. The mortgage insurance is higher than conventional financing. Also rates are higher today than they were in May, so you might get sticker shock no matter what you do. If your parents want off the loan that would be a reason but I would go with conventional again rather than FHA. FHA is primarily used for people who have very little money to put down. If you have a conventional you have at least 5 percent into it. Sometimes FHA might have lower rates however the difference in the mortgage insurance premium might eat that up. Speak to your lender and see what they suggest. Good luck.

1 Vote

Quote from @Sam Abe:

We have a house 3b/2b that was damaged and we had to evict the tenants. We made an insurance claim for the damages and are looking at 100K in damages. Looks like insurance will cover the repairs as per our policy. My concern is has anyone made such a claim? What are the downsides of this?

Will the monthly insurance sky rocket if so how much?

100K in damages? Wow what did they do. While you probably will never get it back from the Tenant you should check with your local police dept to see if you could have them arrested for intentional damage. Some states it's a crime to destroy a rental unit deliberately and it sounds like they did that. I think at this point you had no choice but to claim it on your insurance so you will have to accept the consequences of what that claim will bring unfortunately. Best of luck

0 Votes

Los Angeles County, California

Quote from @Ash S.:

At the time of screening, he had a credit score of around 600-615. 94% time on-time payment and one collection. I took a risk as this tenant has a family. Tenant was more than willing to get into the property(as he gave holding deposit even before seeing the property in-person). Mine is a brand new single family home in a very growing area so it's very much in demand.

Unfortunately within 1 month, enough things has happened with this rental, like

1.Tenant is plain simple rude/arrogant in tone, expect all their problems to be fixed by me(i called the electricity company to get connection in their name, called city to get water/trash/sewage in their name. Tenant was expecting that i should pay for all the utilities even when it's clearly mentioned in the lease.

2.Not following lease and have at least 10+ violations in very first month.

3.When repairs has to happen expect contractors to come on weekend or during late evening only so contractors are not happy either.

4. Making calls after 8:30 pm for trivial issues.

5. Neighbors and HOA also complained to me about the tenant.

In the past, when i tried calling the previous landlord(high rise multifamily residential)-nobody responded to my voice mails. Employer gave above average feedback.

Though tenant is paying rent on time but overall attitude is an issue. What can i do? Tolerate the tenant till the lease get over?

How I can put this in the rental history of the tenant so that this high maintenance tenant become reasonable and doesn't behave like this with any future landlord?

Can landlord provide inputs to some tenant's rental history? How?

Welcome to the landlord world. ha ha. Sorry couldn't resist. First you should never rent to anyone who is in a rush to rent and is giving you money before ever seeing the unit. That is a big red flag that they are being evicted or have not paid their rent and are eager to waive a fist full of dollars in your face in the hopes you won't notice the stink around them. The score is not good and the collection account should have been addressed. Did you check references? Did you ask for proof of payment? Have you spoken to the previous landlord? Always talk to the landlord before the last because that landlord will tell you the truth. If you could not get a reference you should not have rented to him. Second SET BOUNDARIES. If you do not want them calling after hours tell them not to do so. You could also get a virtual number for your tenants. That way you can make an announcement that this number is for emergencies only. Tell your tenant you will not fix anything on the weekend, unless there is water leaking or something more serious. Lastly I don't know what your lease says but in my lease if there is even ONE violation I can terminate the lease. You send them a certified letter and call out the violation with a time frame to correct it. If they don't they are gone. This is YOUR property not the tenants. Be respectful but be FIRM. This is after all a business. Best of luck with this one. We've all been there, but I find drawing the line in the sand at the beginning helps in the future.

4 Votes

Fort Worth, Texas

Quote from @Frank McGovern:

Well. This is…

https://blockclubchicago.org/2022/10/12/woman-killed-and-dismembered-her-west-ridge-landlord-2-days-after-getting-eviction-notice-police-say/

I never tell tenants where I live so there's that....

0 Votes

Quote from @Tamara Herman:

I have this duplex in Oregon I’m looking at purchasing. It’s a 1 bed 1 bath on both sides. The problem I’m running into is there is a long term section 8 tenant in one side but I’m thinking of turning both sides into short term rentals for travel nurses or Airbnb. Oregon is tenant friendly and The realtor acts like the tenant is only evictable if I or a close friend moves in or I update the unit(which I’m hoping to since it needs it)but wouldn’t they just move back in? I’m not in position right now to live there but maybe a few months down road. Does anyone know anything about getting inherited section 8 tenants out? They have been paying $600/month for the past 15 years and it just doesn’t make sense to keep them. Would cash for keys be legal for section 8? Any help would be great! Thanks

You don't mention if the Section 8 tenant is on a lease. Assuming they are month to month you can evict them for "lapse of time." That means you no longer want them in your unit and they are not on a lease so they have to go. That is pretty much straightforward and Section 8 will continue to pay you throughout the eviction. Usually section 8 pays a portion of the rent and the tenant pays 30 percent of their income. Section 8 is a federal program and they cannot dictate that someone stay in your unit forever. I have many section 8 tenants and have evicted them for lapse of time because I didn't renew their lease. Check with a local attorney and get that person to start the ball rolling as soon as you close. You do not have to keep a tenant in your home if you don't want them there. It is YOUR house, not theirs. Keep it friendly but keep it moving. Time is money. Best of luck.

0 Votes

Quote from @Andy Kolb:

Hello All,

This is my first post and I just started investing in single family, long term rental, homes at the beginning of the year.

At what point am I responsible for paying, or paying part of, an excessive water bill? Up until a couple of months ago, the water usage was typical, I think around 8,000 gallons but then it spiked to over 64,000 gallons. The tenants are a couple of young brothers who I'm finding are treating the house as an apartment an do not realize they have some responsibility in maintaining the yard and reporting any leaks or damage. I investigated for any water leaks and only found two sprinkler head pipes were broken. This is a small yard so there are only 3 zones and probably around 15 sprinkler heads. I also found they had adjusted the timing on one zone to 1.5 hours 4 times a week, all of the others are where I set them which was 4 minutes. I made the repairs 2 days after they told me about the broken pipes but they are still asking me to help them with the water bill. I have had a plumber investigate and he found no leaks in the house or meter. 64k gallons is a lot. My only other scenario is the neighbor with the pool may have been borrowing water although I have no proof.

What else do you recommend I do? I think I have done my part and a landlord but I could be wrong, please advise.

Thanks for any advice,

Andy

Wow, that's a big jump. It sounds like you might have a leak underground because that seems odd that the same tenants have lived there with no problem then all of a sudden there is a big jump. You should probably contact the city and tell them you have checked the house for leaks and found nothing. They might be able to have someone from the town come and check it out. You might have a leak in the water coming from the street to the house. There are ways to test this so I would definitely check with the town. If it turns out that it is a leak it would be your responsibility to pay I'm afraid. They are not the owners of the property therefore any leaks as a result of a broken pipe would be your responsibility. Good luck

0 Votes

Houston, Texas

A word about FHA. Don't be afraid to do an FHA loan. The only inspection that is done is the appraisal. It has to be an FHA approved appraiser and your lender will arrange that when the time comes. FHA is only concerned with safety. You can't have a home that has peeling paint or a big hole anywhere. Also no peeling paint or they will condition for it to be repaired. FHA does also offer a rehab program that will allow you to incorporate up to 35k to the loan to do home improvements if you do want to buy a home that needs minor work. Keep in mind the mortgage insurance on FHA is higher than conventional financing. I don't know if prices will come down that much in 6 months so if you find a property that meets your budget I would go for it. Best of luck.

1 Vote

Worcester, Massachusetts

You really should consult with an attorney as none of us here on this forum are attorneys with expertise on the laws in your state. I would think that "as is" means just that. That the buyer is buying the house warts and all. Doesn't seem fair for you to have to start the process again but that is life I guess.

If you have a nice home you should try to mitigate your damages and put the house back on the market. You state you had two other offers so that tells me you have a nice home to sell and should have no trouble finding another buyer.

0 Votes

Indianapolis, Indiana

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All Forum Posts by: Sylvia H.

Sylvia H. has started 8 posts and replied 140 times.

Post: Does my LLC. need a personal liability policy?

Post: Litigation when there is no lien on your property

Post: Can I qualify for a FHA loan?

Post: Damages by Tenant - Insurance claim

Post: Non compliant, rude and arrogant tenant

Post: Woman Murdered, Dismembered Her Landlord After Eviction Notice

Post: Inherited Section 8 tenant

Post: Am I responsible for tenant's excessive water bill?

Post: First Time Home Buyer - Finally moving out of the sidelines

Post: Should I sue for earnest money?