All Forum Posts by: Tim Joyce

Hey Matt Hoyt thanks for the wisdom. Do I take your point to mean that, even for long term buy and hold plays, a serious investor may be going back to refi every couple of years anyways? Does it change the calculus at all if the property (admittedly our first home, so we didn’t buy for income potential) will just barely cash flow without it, but might earn enough “extra” to pay for the points before a typical investor-refi?

If my intent is to convert our current home to rental when we upgrade and hold indefinitely (i.e., long past the break even date), is there any reason I wouldn’t want to consider purchasing discount points from the refi lender? On paper it seems like a can’t lose, if we assume the property will be cash flowing on day one. Wanna help me pick apart the logic? (For the time being, lets ignore the opportunity cost of burying 8-10K for purchasing the discount during refi instead of investing elsewhere. Let’s also assume adequate cash reserves on hand for personal and business emergency.)

^Obviously this is a plan I’m personally betting as the potential buy and hold person. I figured it would be a good way to get my feet wet, and a way to entice the flipper folks to take me along for the ride. My thought would be that I would bring a relatively small cash contribution but give most of the overall appreciation to the flipper, in exchange for the experience/knowledge that I would be earning and the promise to be the guaranteed first offer with predetermined price range when going to refi (maybe even with private hard money on family-member-terms).

Anyone (especially in Minneapolis-St Paul or Fargo areas) ever seen or done a partnership where you are the (novice) long term buy & holder going for cash flow, and they are the short term flipper interested in appreciation upon refi? Any good or bad experiences to share? Seems to me like the agreement and numbers would have to be very clear up front, at the very minimum. But after that, the win is on both sides: the flipper has a built in buyer to cash out their appreciation on refi, and the buy & hold person gets expertise during the rehab, then already knows the property and cash flow potential and doesn’t have to constantly “mine” the network for more deals. Clearly, this is high level, so I’m wondering (1) if that has worked or not for you, (2) what I might be missing there (eg, too much hassle for a pro flipper?), and (3) if anyone in these areas wants to brainstorm with me about how it could work.

The businessperson in me sympathizes with the desire to negotiate with the tenant and shift blame to upstairs tenant. The lawyer in me reminds everyone here that landlords have certain statutory and common law duties to provide habitable premises. NY law is not my thing, but a NY real estate lawyer would be able to run these down for you no problem. You did the right thing by acting immediately, of course, and in the end you probably have a claim against the upstairs tenant (for breaking lease terms), for most if not all of what you would owe the downstairs tenant. But your responsibility to downstairs tenant doesn’t go away just because the pipes burst in another unit. You should be making sure you are dealing with both issues in tandem, or you might risk losing the rights to pursue remedies.

It’s not a scientific or researched comment for sure (state veil piercing laws vary quite a bit, and particularly with LLCs as they are relatively new entity form), but here’s a comments: I literally have never heard of a case where the decisive factor in veil piercing is that its single member instead of multi member (studied mostly MN and DE law). Not once. The far more common argument is that there really wasn’t a separation of the business from the personal accounts. Since you’ll need an entity level accountant’s eyes most likely anyways, the filing of a return doesn’t seem to be (to my eyes) a hugely important factor one way or the other.

My client was on the ball today, so here’s the recap (sanitized to protect confidentiality): - lender said transfer would absolutely trigger the clause (not a surprise to me), and that they wouldn’t allow it (surprising to me that it was such a hard line) - client’s contact at another lender said he sees this often, where folks risk the acceleration under the due on sale clause, a d transfer anyways, and the bank doesn’t find out - this other contact said they just make people transfer back before allowing them to refi - outcome is an hour of lawyer time to draft deed to transfer and LLC written action to accept the property, plus deed tax (negligible if your attorney does it right in Mm), and recording fee ($46 I think?) So I stand corrected.

@John Woodrich Yeah, I can get on board with that. I would honestly prefer to focus on NE, even if the CoC numbers aren't the sexiest, because it's close to my current home, my future upgrade home, my office, and tons of stuff I just like doing.

@Jordan Moorhead was super generous with a few hours of his time yesterday and I feel somewhat more comfortable with the idea of leveraging against our current home to fund something like a BRRRR or flip.

Maybe you'd be interested in sharing some of your time (or your inbox) to share your experience? If you're into flipping, and I'm into dipping toes into long term self-management, maybe there's a sweet spot here for our interests to overlap!

Caveat that I practice in Minnesota, but my sense is that national banks probably have similar policies. I am doing this process (transfer loan and mortgage responsibilities to LLC) for a Minnesota client right now. Our assumption going in is that the bank is generally fine with this, so long as the creditworthiness of the LLC owner (presumably the original buyer) has not materially changed. If the bank wouldn’t write you a new loan on the original terms now (for instance if you DTI ratio has changed substantially or if other credit actions have impacted your credit in the meantime), then that might complicate the matter. That being said, we are having the client request the consent of the bank. This loan’s due on sale clause (I think this is a version of Fannie or Freddie, can’t remember) says you can’t transfer or sale “without the lender’s consent.” The paperwork to make that happen is very straightforward, in Minnesota at least. We are expecting the bank to pass along its legal fees for our client to pay, but after that it’s typical deed drafting and filing work, entity formation work, and some written actions. The bank will absolutely (we’ve never seen otherwise) require a personal guaranty, unless you have super strong balance sheet for another business or something. It needs a human to go after if the mortgage payments stop coming. I’ve never done this personally, but I intend to in the next few years when we upgrade. As an attorney, it’s absolutely worth the costs in my mind to get the asset protection for our other personal assets.

I’m not aware of an iPad specific app, but I assume the iOS app will work on a larger screen.