All Forum Posts by: Tyler Mullen

If there were permits pulled for the work then as far as I know those permits are supposed to be posted on the worksite.  Are they not there?

Inquire with the entity that issues the permits, if they require the seller authorize a release of info then get that from the seller... if seller wont, just walk away or get them to lower the price by the amount you need to fix +50% as your WMTT, "Wasting My Time Tax".  You do that via inspection as your inspector would call out there's no working power if there are no meters installed, turn in your inspection response with a lower price and a demand they stop doing any more work as you're going to have to undo/redo it anyway.

There are entities that will lend to an LLC, even if this is your first property, you just have to find one. Smaller/local entities, not mega banks. Especially once you have the property in your name, then you xfr it into the LLC and then the LLC gets the cash out refi... of course you'll pay a second set of fees for closing and transferring the title again, but it's worth it to establish a relationships with a commercial lender for your future deals. The next time you start with the commercial loan as your LLC will be up and running, single set of fees and it goes from seller straight to LLC, not you personally in between.

@Eric Fitzgerald

I recommend passively budgeting by saving/investing first and tracking your net worth monthly in Excel.  Don't sweat the small stuff like groceries being $81.17 one week and $114.79 the next.  Concentrate or working, learning and saving/investing.

If you save/invest at least 25% of your income, more if possible, and grow your net worth by an average 1% per month by saving, cutting expenses, generating new lines of income, investment performance and paying down debts, you will build wealth quickly.

Make saving/investing your top line expense.  Every income you receive, make it happen the same day.  It should be as assumed and second nature as paying for food.  You don't neglect or forget that, it gets done no matter what.

Once you start to build little amounts in asset accounts you'll build confidence in what to save/invest in and motivation to save/invest even more of your income.  It's the asset version of the debt snowball. There is no best one saving/investing vehicle so do a few, consider cash, metals, passive index funds, stocks...  Do it passively or hire a manager if you don't have the interest to learn it.

Would be best to get a reputable RE/Eviction attorney in that locality and follow their instructions.  In my locality, with an occupant we want out, that isn't paying rent and the status of a lease is unknown, I've only had to establish tenancy and demand a rent amount in a letter by certified mail.  Generally the rent that is requested is as high as can conceivably be justified for the area, including vacancy, management, maintenance and improvements, and it's basically expected to not be paid.  When not paid the attorney files eviction.  I don't know if this basic process works in your locality so you have to find out from your attorney.

I agree with others mentioning defending your contractor when you trust them, or anyone you conduct commerce with.  Obviously, otherwise why are you working with them?  I only caution everyone should remain vigilant and don't be willingly blind.

In the world of criminology and fraud sometimes people change, they make a bad decision under pressures that didn't exist when you first met them.  The model originally developed by Dr. Donald Cressey is The Fraud Triangle: 1- A perceived unshareable financial need. 2- Perceived opportunity. 3- Rationalization.

Financial pressures change in life, medical care for aging parents, a family member becomes ill, college costs, mid-life crisis, substance addictions and gambling, jealousy/feeling "owed" or wronged, social pressures to "get ahead"...

The biggest losses are always where there are no checks & balances, no separation of duties, no policies and procedures in place.  Blind trust isn't a viable business strategy.

I see the argument on replacing the charger for $15 in this case either way.  There's no way to know ahead of time if this will encourage bad behavior, it could.  Or the tenant could be correct, what then?  Sure, to you the motive to steal a $15 charger makes no sense.  It's not about you though, it's the motive and rationalization of the alleged perpetrator at that exact moment that is at issue.

There's a lot to be said for cultivating and maintaining the very best tenants possible, as you would your team of contractors, agents, attorney, CPA, lenders...  A properties and A performance from you as an owner attracts and retains A tenants.  Sure, there's a strategy for "war zones", but I don't advocate for it.

"I want the very best for myself and my people.  Sometimes people don't give their best and that puts the mission in jeopardy."  Gary Keller or Ben Kinney, unsure

Ive seen it happen, in one case they were satisfied with the title returned to the original name, the other they wanted their money back so property had to be sold as refi wasn't possible.

How about have the LLC get a loan and "buy" it, then title goes with and you're all good?

When you're ready to subdivide/redevelop you will get a new loan, commercial/construction type.  Look for a small/mid size local bank that specializes in this, they will detail what you need, survey, building permit, architectural plans and a builder contracted for starters.

Or when you're ready to subdivide/redevelop you just sell to a builder and have them split the lots and transfer title to you for your smaller lot, he keeps the others and let him mess with the utilities and building.  Or he pays you less (or maybe nothing) and builds you a house on your smaller lot.

How sure are you that this lot is able to be divided as you plan?  Don't just assume or take sellers word for it.

@Michael Cavalli You have a mix of goals here so IMO that's the first issue to sort.  What's most important for you:

• A- providing housing for children to live in while in school?
• B- diving into REI for the possible returns, learning, the challenge and time spend in it?
• A & B?
• C- Lower risk investment returns in a fund so you can spend time/focus on other things?

You didn't specify so I will assume you're not planning to charge rent while your children use the property.  That lost income cost factors in.  Also check with a CPA, I'm not sure you're allowed to depreciate a property that isn't rented, maybe they have a work around.

So you're comparing only projected capital gain on a property (including it's holding costs for utilities, insurance, taxes and repairs) vs the state fund.  Unless your kids leave and it's rented out in years 6-9 or whatever, then the analysis changes...  leaving the funds as is 49k to 85k in 9 years is about 6.5% annual compounded return, or 87% total return.  (Will leave my opinion of that fund for another time) If that is tax free or tax deferred would come into play too.

Well, that's an option some people choose because it's quite safe as long as Oregon funds the pension system.  Personally I wouldn't choose it as that's less than half my ROR (even before reducing the return by the amount of rent paid) and I don't trust any govt systems to be there as promised by the time I'm old enough to collect.

To consider the property potential, it's possible even without rent and depreciation, that you could beat 6.5%/yr over 9 years. The past is no guarantee of the future but pick any 9 year period in the past for properties all around you right now, heck, pick the worst even, 2007 to 2016. IMO the chance 2008 happens again soon is low and even if it does it doesn't effect you unless you have to sell. If you do choose the REI route, if a crash happens have your son take a couple roommates for $400/month, Air BNB it for the summers when school is out, put up solar panels, figure something out. Or it could double like this random house in my city did since it's 2006 sale price:

https://www.redfin.com/WA/Kirkland/134-8th-Ave-980...

So you have to decide if taking on the debt is worth the potential reward, including your specific scenario limitations.  Will follow discussion as I'm curious to find out what you'll choose and how you will do.

Something that might change your analysis is considering a property with more than 1 unit so you can rent out all but the unit your children are occupying.  PM me if you'd like to discuss in more detail, I always enjoy kicking around a spreadsheet on interesting questions like this.

Tyler Mullen, CFE

I'm sure not a comprehensive list but:

HELOC advantage is you don't pay interest on it until you actually draw on it. This means you're not paying interest while you're looking for a deal. Also it should have lower closing costs and be quicker approval than a refi.

HELOC Disadvantage is the interest might not be deductible, check with CPA. Also the rates are usually adjustable and term shorter than a 30YF.

Refi possible advantage if you favor + cash flow rather than being debt free sooner, depends on your equity and amount you're looking to pull out, you might be able to take out the cash you need and still end up with a lower pmt than currently because you're re-upping for a new 30 years.  If you're in year 29 it's less likely than year 25 or less, but run the numbers to check.

also refi, as long as it's primary res and loan bal isn't over the recent tax change limit then interest should still be deductible.  again, I'm not a CPA so check with one.

Refi disadvantage is you're paying interest as soon as the loan is funded, don't let that push you into a bad deal.