All Forum Posts by: Tyler Gibson

@Indy Smith you would not contact the lender to see if you qualify for the loan. The title would just transfer and then you would be responsible for the payments. 

Yes sometimes the lender does call the loan amount due if the loan documents say they can (which most do) I have heard mixed reviews on this. I know a guy here in Orlando that all he does is Subject to investing. When I asked him if he had ever had a loan called due he said no but he did something very smart. He creates a trust in the seller's name with himself or his LLC as the trustee.

Example ... the seller is named John Smith the buyer has an attorney create the John Smith family trust with equity buyers LLC as the trustee of the trust then does a quit claim deed from John Smith to John smith family trust. The bank may get notice of the title transfer but sees it going from what looks like the owner to the owner's trust. the buyer then makes the repairs he needs to get the property to where he can refinance and change the title straight into the LLC.

Caution with subject to because at least here in Florida if you fail to make the payments on the loan you could go to jail. If the loan gets called and you can't cover it you could go to jail. 

@Derek Markowicz Have you tried using the property analyzers here on BP? I don't have a pro account so I don't use them. I have an Excel sheet I use that I actually found on BP. For me to calculate the ROI and cap rate I would need to know more about your mortgage. For example, I would need to know the interest rate on your mortgage and if you had any money down.

I ran some numbers with some assumptions. 

Purchase 111,000.00

Mortgage 104,000.00 6% interest 30year

2%vacancy

1800 annual cap ex

based on your mortgage/taxes/insurance and what the rent is I determined your annual cash flow would be about $3,232

that would be a 10% cap rate and your cashflow / initial investment would be 46%.

again it is hard to get some of these numbers accurately without all the information. 

based on the numbers you have given me I would say this is a pretty good deal. 

@Edwin Gutierrez An LCC has the benefit of sheltering the asset apart from yourself but could also provide some tax benefits. The LLC makes it so that if you are sued for say a car accident they could not go after the properties in the LLC because that is a different legal entity apart from your self. Vice versa if someone got hurt on the property they could not sue you only the LLC.

As for the Tax benefits, I would talk to your accountant. But I would think that if you are going to be doing it as a business that you would want to form an LLC to operate the business under.

@Eric Charles are you confusing house hacking (buying a property where you can rent one or more of the rooms or attached units) with the BRRR strategy (Buy, Rehab, Rent, Refinance)? If you are house hacking then you would need to put all the rental income you make towards the mortgage principal or improve the property so that you could have it appraised at a higher value and have the required amount of equity to refinance.

It could be challenging to pay down the principal enough to qualify for a refinance. 

@Derek Markowicz Sounds like a good financial situation. I would suggest putting $150 in a savings account or something like that for CAPEX. Are there any other expenses like yard maintenance? If not it sounds like you have $300 a month in cash flow and that is pretty good. Any time you can buy a property and have someone else pay for it it is a good deal.

@Svend W. Will the one unit really generate $3300 a month or is that if both units were rented? I also noticed that you have $100 for insurance. That seems like a very small number unless it is already accounted for in your mortgage calculation. The taxes also seem to be low but I am not familiar with the area. If you haven't I would look up the property on your counties property appraisers website. The taxes for the previous year should be posted and part of the public record. If you can afford the mortgage on your own then it is probably a solid investment but only because you don't need the rental income to be able to live there. If you NEED the rental income in order to pay the mortgage then this might not be the one as I think you will get into trouble if you have a vacancy for any extended period of time. If you are desperate to get a tenant because you have to have one then you could end up selecting a tenant that is not high quality and create more issues for yourself. 

@Josh Wallace it is the home sales exclusion Section 121 exclusion. https://www.irs.gov/taxtopics/tc701

@Josh Wallace I think the term you are looking for is Capitol Gains Tax.

@Frederik Lamote Maybe you could allow people to park RV's or a boat on a trailer on it and they pay a monthly parking fee. 

@Tyler Fields The only benefit I see is that you would not have a mortgage. I would suggest buying it with a mortgage I would try and get a traditional 15 or 30 year fixed rate with 20% down. That should put you in a position where the unit will cash flow and you should have cash left over to either make upgrades if need be or buy another unit.