All Forum Posts by: David Morgan

Thank you, @Brent Coombs.

I'm wondering the best way to handle the money in the LLC. If Friend B funds 100% of the LLC, but both friends have equal share, is it just that Friend B has a greater basis? Can that basis be drawn down over time? Or is it better for both friends to pony up $1000 so they have equal basis, then Friend B loan the rest of the money to the LLC at the lowest rate his CPA will allow? Any suggestions?

Friend A has found a motivated seller of a small apartment building and negotiates a price and an outrageously good owner financing arrangement. But as the closing date approaches, he sees that he's not going to have the money to close, make improvements or have a rainy day fund. 

Friend B has the money to make it happen.

They decide to form a multi-member LLC. Friend A will manage the property with help from Friend B. Friend B will provide 100% of the funding for the downpayment, closing costs, and initial improvements.

Exit plan is 1031 to a bigger building in a few years.

Does 50/50 between Friend A and B seem fair, and should Friend B invest the needed capital in the LLC or loan it to the LLC? How would you structure the deal between the two friends?

@Soleiman Bolour

I have people fill out the Cozy application before I will show the property, which has cut out no-shows completely. If they like the property and I like them, I check the references they provided in the application before I send them the link for the credit and background checks, which cost money. I take a paper check for their security deposit to put in a separate account, but I let Cozy handle the rent. Cozy also makes it easy to post your rentals on Facebook and elsewhere. And if you want, you can pay to receive the ACH funds faster. I just use the freebie delivery method.

@Thien Luu

1) I don't refund the application fee.

2) My lease states that the only ways to pay rent are to pay at my bank or electronically. I don't specify Cozy, just in case I have to switch services for whatever reason -- they shut down, change names, or a better service comes out. But by the point you're ready to receive rent, your tenant already knows Cozy from the application process.

I'm late to the party (and not an attorney), but some of the info above is outdated.

Title 45 Chapter 13 of Tennessee Code Annotated is known as the “Tennessee Residential Lending, Brokerage and Servicing Act,” as mentioned elsewhere in this thread.

Under § 45-13-201 License Required -- Exceptions (links to LexisNexis), you can see who is exempted from the requirement for a license. Many of them are new. Of relevance is this addition:

So, you can actually owner-finance five properties per year as a "person."

Fortunately the act also defines what a "person" is under § 45-13-105 Chapter Definitions:

Again, I'm not an attorney, but it appears to me that you can owner-finance five properties per year without a license, and you can do it with an LLC or any legal entity.

Keep us up to date!

A quick Internet search of "Costa Rica Mortgage Loans" turned up a couple of brokers and private equity offerings.

You could also try to get the seller to finance part of the purchase price.

Or borrow it from your 401K, if you have one.

Depending on your credit score, it might also be worth looking at rates from a local credit union, bank, or even Prosper or Lending Club for a personal loan rather than a real-estate secured loan. The rates are usually higher, unless you secure it with a CD or stock portfolio or something. Both Prosper and Lending Club offer loans big enough to cover your 50% down payment.

Something I would never recommend to most people, but as a last resort -- if you absolutely knew you COULD pay it off any time you wanted, you could put the down payment or at least a big chunk of it on a credit card and float it between 0% balance transfer offers until you get it paid off. Discover, for instance, will deposit the money for your "balance transfer" directly into your checking account, and often has specials for 0% financing for 12 months with 3% up front transfer fee, or 5% financing for 18 months with 0% transfer fee. Chase Slate also has good sign up offers for balance transfers. Again, this is risky, and maxing a card will ding your FICO until you pay it down, and also increase your DTI -- if those things are considerations for your next home purchase. And if something happened that kept you from paying it off, your interest rate would shoot sky high. It's too risky for most people.

@Bill S. Thank you, that is great advice. 

Thank you, @Bill S.

I searched list source for 0% equity in the three counties around me for purchase dates pre-bubble, and there are hardly any. 

How do you use list source? After digging around some, it looks like some people are using it to find absentee owners with equity...

Any success with finding short sellers using listsource? What parameters did you use?

@Sam Priddy, if you found someone you can recommend, please send me info. I hope that if you bought in Sevier County that your properties -- and the people in them -- are safe and sound!