All Forum Posts by: Troy DeLong

@Kevin Howard 

I would be upset with that change as well. Mini-splits have their time and place and I don't think their place is in your new build 3 bed / 2 bath duplex units in Florida. If you're contract and drawings state traditional HVAC then that is what I would expect to get. 

My best suggestion would be to 

1) Request a sit down with your builder and the HVAC tech / owner and discuss the situation as a whole. Why can't you do a traditional system in the attics? What is the major differences between the two? What is the performance and cost difference?

2) Discuss a cost reduction or compensation from your builder if these mini-splits end up being cheaper than a traditional system (it's 50/50 if I were to guess). 

3) Don't let this hold you up from getting the build complete and rented out. Majority of tenants won't care about this. This is more of a future maintenance / resale issue. 

At the end of the project, if you're still not happy with the way things turned out then you can just make that clear to the builder and hope they realize referral business from you will be a no-go. 

Best of luck on getting this squared away! 

- Troy 

@Joey Gorombey I agree with Richard's answers above completely. 

Never leave an adult off of the lease if they plan on residing at one of your units. If you end up renting to them, just have a straight forward conversation with about 'what happens if they split up'. Like Richard said, a simple one page addendum is usually the answer. 

@Gavin Kercher

I like where your head is at (minimizing liability and looking for tax advantages), but you don't want to overcomplicate things. 

Transferring the deed into your LLC while keeping the mortgage in your personal name will most likely default on your lenders 'Due on Sale Clause'.

All lenders will be slightly different, but in my experience, lenders are able to count your properties rental income towards your DTI ratio after 12 months of solid rental income, whether it's in your personal name or LLC. And with most business (LLC) financing you still have to personally guarantee the loans.

Most insurance policies will be more expensive for businesses (LLC) versus in your personal name.

Hope this gets you close to answering your questions! At the end of the day, talk with your lender, CPA and insurance agent about all of these things before making a decision. If you're just starting out, you may want to "JUST DO IT" in your personal name and worry about all of this 'LLC vs Personal' discussion for when you get several properties under your belt.

Best of luck! 

@Nick Tarantino

Lansing, MI (Capital City) would be a great spot for you to entertain. The prices here are MUCH more affordable than most around the country and we see good amounts of cashflow. Appreciation isn't the best, but there are good investments that pop up regularly. 

Would be more than happy to chat with you if you'd like to research the area. 

-Troy 

 I would love to hear what lender / program you got setup with to use your Solo 401(k) with NON-recourse financing. I've only been able to find traditional recourse, which they don't allow with a 401k (My understanding). 

Affordability and value-add smaller multifamily can all be found in Lansing, MI. Government jobs, Universities, two major hospitals, General Motors, new Amazon facility, and so much more. 

@Tzvi Keisar

That is absolutely an option for a DSCR loan. As a newer investor, the 80% LTV might be a stretch. Until you get your portfolio built up and build a relationship with some lenders, you might be looking more at 65%-70% LTV. But, that's for the lender to decide when you speak with them.

I highly recommend you reach out to Greg Huegel with Lima One Capital (Hard Money lender). They've got great loan options across the board for what you're wanting. 

Greg Huegel  /   864-249-7020

@Mike York I agree with Joseph on this. Sounds like there might be more to this... 

Whether or not they can find the leak is irrelevant after NINE days with no water. The landlord should have licensed plumbers there fixing the problem and they should find suitable housing for the tenants in the meantime. The landlord should be sub-leasing them another unit or putting them up in a hotel until the problem is solved. Read through the leases if you can and see what the Landlord's responsibility is as far as 'Maintenance & Repairs' go. 

Or, sounds like it's time to call a local lawyer and get the ball rolling on some legal recourse. Nine days with no water would make a property 'Uninhabitable' in my eyes.  

-Troy 

@Vincent Lattuca 

First, you're gonna be bound to whatever their lease states. Maybe they just renewed their lease and they have 10 months left at the current rent. Maybe it is a month-to-month lease and you can give them a 30-day notice. Maybe they don't have a lease at all, in which case you might want to talk to an attorney to see what legal issues (eviction rights / squatter rights) you could face as the possible new owner. 

Second, take into account what type of tenant they are. Most (not all) long term tenants are LONG term because they are good tenants and pay. Maybe they take really good care of the property and don't cause extra hassle to you or your PM. Those are big bonus points in my book. 

Third, you'll want to figure out what your break-even numbers are gonna be. Take into account if the properties current rental income can support the listed purchase price and new taxes/insurance. If they can, then you have some time to slowly raises rents, if you choose. If not, then you know you absolutely have to raise rents right from the start. 

All in all, here are the two most likely scenarios. 

1) Tenants are great and you'd like to keep them. Raise rents 2-5% each year. Tenant is fine with that and stays. 
2) You don't really care whether the tenant stays or not. Raise rents to market value. Tenant moves out. Consider how much you'll spend on a turnover (paint, flooring, touch-up, cleaning, etc) and how long your property might stay vacant for and how long this 'Lost Income' will take to makeup with the new tenant vs. keeping the old tenant at a lower rent. 

Hope this helps. 
-Troy 

@Chi Sastry Whether you accept these terms or not will depend on if you are in a competing situation or not. In Michigan, we call these 'Appraisal Guarantees' and they are very helpful when competing with other Buyers. BUT, they can be very dangerous if you don't know what you are doing. Are you being represented by a RE Agent? 

In our Purchase Agreements ("Offers"), we have verbiage in the contract to dictate what happens to the contract if a property appraises lower than the contract price. See what your lawyer says when they compare it to your Purchase Agreement (Offer). 

As far as your question about losing your EMD... the Addendum they are proposing just states that you would lose your addendum IF you back out of the contract before your 'Due Diligence Period' (ie. Inspections and appraisal).

At the end of they day, seek legal / professional help from someone who has access to all documents and contracts relating to this.