All Forum Posts by: Account Closed

@Spencer Gray

Great suggestions. Do you find it challenging to meet that 8% return in the first year given it’s a value add property? I’m reviewing a deal with almost exact metrics as you’ve stated but I run into the problem of seeing how the 8% is achievable if all the units are being renovated during that first year causing vacancies to spike. Does this assumption include renovating units as the tenants turnover? If so, does that first year have a dry period for the first quarter or two?

Tyler Mulcahy

@Matt Giordano

To start, you’re in the right place to be discussing all of this. I think it’s a little premature for someone to solicit any advice of what to do without knowing exactly what your plans are with real estate. What is your long term goal; passive income through rentals, fix and flip, maintain as little debt as possible (Dave Ramsey way)?

If you want to start investing, I would say interest rates are as low as they've been in the past ~11 years and would lock in a low rate via FHA; this also allows you to build more credit for future rentals. If you're wanting to see the best return on your cash invested, a levered situation would be most favorable for you and your wife. If you have other loans like student loans, car payments and hoping to not see another payment every month then deploying your $80k would be optimal. I'm in a similar situation as you, less the $240k inheritance property. I think in order to maximize any sort of scalability you wish to achieve, levering via a Fannie/FHA/conventional loan would be your best bet.

Tyler Mulcahy, MBA

@Ryan Harvey

I'm sure you'll hear this from a few others but banks technically can call the loan due when you quit claim the deed (due on sale clause) if you purchase in your name then transfer to an LLC; however I have yet to see anyone on here have that issue where the bank actually call the loan. Just a heads up for starting out. Also I've lived in Florida for 26 yrs, and there's some good market opportunity for SFH, I would say on the MFH front there's mass commercialization that's snatching up most of the market share especially in south Florida. FL is a great market for natural appreciation and you can likely force it as well with a good value add find from a broker. I'd also throw caution on flood insurance down there, hurricanes have been relentless the past season. Hope this helps.

Tyler Mulcahy

@Johnny Awwad

Rent collection: Apartments.com (f.k.a. Cozy), Appfolio, Buildium

Accounting software: QuickBooks

Vera,

As Mark pointed out and as you're aware, Michigan has some quirky zoning ordinance issues that don't plan on going away anytime soon.  Our family has a summer home in Glen Arbor, and we've noticed growing demand in that area, due mostly to the National Lakeshore park as well as growing tourist franchises (CR, M22) with plans of expanding to more towns.  Back of the envelope math of Leelanau County will show you relative cap rate compression over the last two-three years, which is a little odd given the circumstances of rising demand near the Upper Peninsula (~11%).  One observation I will note is the immense growth in vineyards and wineries in Traverse City - I feel as though that'll be fruitful in the long-run.  My two cents - any town within a Petsokey stone's throw away from the Lake should cash flow a modest return. My top three - Traverse City, Charlevoix, Glen Arbor.

Tyler Mulcahy, MBA

@Chris Larson

Hey Chris,

I'll be moving to South End next month and starting out in REI as well. Let me know if you want to chat.

Tyler Mulcahy

@Shiloh Lundahl 

Is the initial loan of $48k collateralized by the property? And if so, how is the second $37k loan securitized? When setting up the second LLC, is there still potential for yourself to be personally liable for the second loan or would you have to take a second lien on the property? I'm starting out and understand the importance of one LLC and I'm convinced about the second, I'm just wondering how it's backed. Thank you.

@Steven Lemoine

If your long term goal is to flip and fix, it might make sense to stay in the house and securitize any loans via a HELOC on your current home. If your goal to invest via a BRRRR strategy then you could roll it into a 1031 exchange and trade up to a MFH or unit and claim owner occupancy for some tax breaks. I'm new at this too but just might be a few suggestions

@Curtis Prince

Do you have them under your personal name? Is it a commercial loan? If you quit claim the deed then with transfer of title lenders can, but very unlikely, will pull the “Due on Sale” clause where it’s supposed to be paid in full within the time period of exercising that. Again, very uncommon but wouldn’t want you to be in a situation where you have to default on the loan so approach carefully

@Ali Alzayadi

Congratulations Ali