All Forum Posts by: Todd Rasmussen

Investment Info:

Single-family residence buy & hold investment in Clarksville.

Purchase price: $59,974

Cash invested: $25,000

Bought at auction sight unseen and renovated using "cash" from HELOC. 92% of initial financed out leaving $192 in monthly cashflow after PITI and management fees.

What made you interested in investing in this type of deal?

Ability to scale

How did you find this deal and how did you negotiate it?

Found on online auction website.

How did you finance this deal?

HELOC

How did you add value to the deal?

Complete Rehab of property

What was the outcome?

92% of capital invested refi'd out with $192 of positive cashflow after PITI and management fees.

Hi @John Williams! My husband and I are also buy and hold investors in Clarksville Tennessee (and a few other areas). We have a few properties out that way and plan on moving there in about 3.5 years. Oh, and we just completed our first BRRRR in Clarksville

Totally agree and foot in mouth, TN isn't.

Originally posted by @Zachary Bohn:

@Todd Rasmussen that's fine for you but that isn't a true statement in other states. Just don't want people starting LLC's with their spouse only to find out they have to file an additional return they weren't expecting

Originally posted by @Zachary Bohn:

@Todd Rasmussen what is the point of having the LLC if the properties aren't in them? That kind of defeats the purpose of having the LLC

We do.

Originally posted by @Zachary Bohn:

@Todd Rasmussen an LLC owned by a husband and wife is only disregarded if you live in a community property state otherwise you should be filing as a partnership

Does quitclaiming property between personal names and the LLC provide the same piercing effect as commingling funds? In my situation, I have to have the properties in my name for financing, but once that action is complete I'm fairly confident I could quitclaim the property into my LLC without financial consequence.

Thanks in advance,
Todd

Originally posted by @Weston Couch:

@Ben Satterfield @Grant Rothenburger Full disclosure, I work with an asset protection organization, but I hear that "probably only worth it for big investors" rhetoric a lot, and I think LLC's are surprisingly affordable if you get the right services(comparable to insurance). I also think using LLC's are worth it even if you even if you're not a bigger investor for a couple other reasons. 

First, they do provide effective protection that insurance doesn't as long as you avoid mixing money, etc. They can prevent a court from stripping you of your investment properties if there's a large judgement from a car accident you were involved with for example. They also compartmentalize what's at risk in any given lawsuit meaning that if a lawsuit comes from an accident at a property, you can't lose more than that specific property.

Second, they're more about being proactive in protecting yourself. When used appropriately, they prevent you from ever being low hanging fruit for a lawsuit. If you only have insurance and own everything in your own name, when or if there's an accident on your property, you'll be a clear target for a lawyer looking to collect.

Feel free to connect with me if you would like more information. I can provide a lot of resources on the subject.

We have an LLC we handle all the operating expenses in, but it's a single member llc so all the financials flow through to our personal tax return. Properties are in our name so we can finance them conventionally (for now). My vote is for a substantial liability policy. For most people starting out tax differences are negligible or worse filing corporate tax returns on top of your personal. Husband/Wife owned LLC's are considered single member and as such is disregarded by IRS so you could get one if you wanted without upsetting your tax experience, but don't think it's necessary to start.

Hi Hollie,

Strategic view on this property looks great. I think your expenses are leading you astray though. Repairs and Capex seem low, insurance and property tax sound high. Also interest rate at 5.9 seems extra conservative. I don't see why you'd be paying PMI if you put down 20%. This property looks like you can run it through the BRRRR calculator and get a large portion of your initial investment back right away. Look up the property on the local assessor's website to see what the actual property tax is. Call and get a quote on the insurance policy as well. Hopefully you are pleasantly surprised. As long as the purchase, repair, and ARV work out this looks like a great find.

Hi Chris,

First of all, bummer. Haven't had the pleasure of your particular experience, but I think you are going to end up disappointed. So insurance does not typically cover replacing what broke, just the damage it caused. If you picture a leaking roof, your insurance company won't replace your roof because it's leaking, but they would repair damage that was caused by the roof leaking. In your case, I expect that you can expect that they will pay for the water remediation efforts to the basement and the repair of your porch, but the repair of the water line sounds out of pocket. You might be able to talk them into covering the portion of the pipe that's required to be replaced by the city and not due to the rupture under an ordinance or law coverage if you have it, but that might be a stretch. You'll only know by reading your policy carefully. Also, the porch settling might be excluded from your policy, but if you recently had a home inspection you might be able to articulate that the porch separating from the house happened due to the water leak and not over time from the ground settling. Timing might have worked out for you on that one. Good or bad, make sure you share your experiences. We'll be rooting for you.

@Alejandra Roca

Lenders will typically always require replacement value, however some insurance companies will give you an option to determine your replacement value (Coverage A amount) using either similar construction or common construction methods. The common construction valuation is less and therefore less expensive for you, but instead of replacing "exactly" what you had, you'll get a 4 plex built using common construction techniques and materials.