All Forum Posts by: Ty Coutts

Hello, Scott Deetlefs, here's what I would pay attention to:

Legal Considerations:

Passive vs. Active Income: Generally, passive income from real estate investments, like rental income, is allowed even if you are on an H2B visa. Active management, however, can be seen as employment, which you might not be permitted to do.

Forming an LLC: Forming an LLC itself is not typically considered employment. However, managing the LLC actively could be problematic. Passive ownership might be acceptable.

Hiring a Property Manager: To stay compliant, consider hiring a property management company to handle the day-to-day operations of the short-term rentals. This way, you can remain a passive investor.

While starting an LLC and running short-term rentals can be feasible, it's crucial to structure your involvement as a passive investor to stay within legal bounds. Consulting with an immigration attorney is essential to navigate this process correctly.

There are plenty of alternative ways to start investing that take very little work. If you are interested or just curious, shoot me a message and I'd love to chat over the phone. I hope this finds you well!

Hello, Matt Hubert, It's a significant decision, and weighing the emotional attachment against financial goals is never easy. Here’s a detailed analysis to help guide your decision:

Initial Costs:

Purchase Price: $260,000
Down Payment and Closing Costs: $60,000
Monthly Cost: $400 for several years

Market Value:

Current Value: $540,000 to $600,000
Immediate Equity: $280,000 to $340,000 (based on the market value minus the purchase price)

The substantial equity in the farm can be a powerful tool for your investment journey:

Home Equity Line of Credit (HELOC): You could use a HELOC against the farm's equity to fund other investments. This allows you to leverage the farm's value without selling it.

Cash-Out Refinance: If you refinance the property, you can pull out cash based on the equity, which can be used for down payments on BRRRR properties.

Collateral for Loans: The farm can be used as collateral for obtaining loans for other investment properties.

BRRRR Investments:

Immediate Cash Flow: BRRRR properties will likely generate some positive cash flow right away.

Faster Turnover: BRRRR allows you to recycle your capital more quickly, aiding rapid portfolio growth.

Initial Investment: $60,000 can potentially fund multiple BRRRR properties, providing diversity and multiple income streams.

Farm Investment:

Emotional Value: Maintaining the farm within the family has intrinsic value that cannot be quantified.

Long-Term Appreciation: The farm's value may appreciate significantly over time, providing a substantial future asset.

Monthly Cost: The $400 monthly cost needs to be factored into your budget, as it’s a non-cash-flowing asset in the short term.

Decision Points:

Emotional vs. Financial Goals: If keeping the farm in the family holds significant emotional value, this can justify the purchase despite the initial lack of cash flow.

Investment Strategy:

If immediate cash flow and rapid portfolio growth are your primary goals, BRRRR properties may be the better option.

If you can leverage the farm’s equity effectively, it could still serve your investment goals while preserving the family legacy.

Ultimately, the decision hinges on balancing emotional value and financial strategy. I’m here to help you explore financing options and further analyze the potential impacts on your investment journey.

What are your thoughts on leveraging the farm's equity for future investments? Please message me a good number to contact you with if you're interested in discussing further. I am a licensed loan officer and would happily help you navigate this situation to the best of my abilities. I hope this finds you well!

Hello, Katherine Van brocklin, welcome to the group! It's great to have you here. Your background as a licensed property manager in the greater Asheville, NC area is impressive, and your proactive approach to finding property managers looking to retire and sell their book of business is commendable. 

Investing in residential properties is a fantastic way to leverage your property management expertise. Here are some steps to get started:

Education and Forums: Join forums such as BiggerPockets, Real Estate Investing Subreddits, and local real estate investment groups. These platforms offer valuable insights and a supportive community.

Local Real Estate Meetups: Attend meetups and local REI (Real Estate Investors) clubs. Networking with local investors can provide practical advice and potential partnerships.

Research and Planning: Start by researching the Asheville market thoroughly. Understand the neighborhoods, property values, and rental demand.

Financing Options: Explore various financing options. As a mortgage officer, I can assist you in understanding loan products that suit your investment goals, such as conventional loans, FHA loans, or portfolio loans.

Property Management for Self-Owned Properties: Leverage your management skills to maintain high occupancy rates and maximize ROI on your investments.

I am a loan officer licensed in NC, feel free to reach out if you have any questions or need assistance with financing options. I'm here to help you succeed in your property management and investment endeavors. 

Hello, Guillermo Kennedy, have you considered a loan officer position? I understand the desire to streamline operations and avoid unnecessary paperwork and fees. As a loan officer, I'm always keen to support efficient and effective solutions. I would love to discuss further over the phone if you have a time as I am interested. Hope to hear from you!

All good man! Here to help. 

Hey James,

I completely understand the concern, I would want to work with someone who understands the guidelines well, as they are extensive. Rest assured, we have done many of these loans in the past, and I am completely confident in my ability to help your future buyers. Lets schedule a call for sometime this week. Feel free to message me directly or get my email/phone number from my profile. 

Hi,Joe S., here's what to know:

Legal Framework: Commercial lease options are governed primarily by contract law and the terms agreed upon between the landlord (lessor) and tenant (lessee). There isn't the same level of regulation or scrutiny as with residential lease options, which are subject to specific tenant protections.

Flexibility: Lease options can provide flexibility for both parties. They typically involve two agreements: a lease agreement that outlines the terms of the lease (rent, responsibilities, etc.) and an option agreement that grants the tenant the right (but not the obligation) to purchase the property within a specified period at a predetermined price.

Negotiation Power: Lease options can be attractive to tenants who may want to secure a property for their business while potentially benefiting from any appreciation in property value. For landlords, lease options can attract tenants who are committed to the property and may take better care of it.

Commercial Property Considerations: When considering a lease option for a commercial property in Texas, ensure that:
The terms of both the lease and the option agreement are clearly defined and legally binding.
Both parties understand their rights and obligations, including maintenance responsibilities, payment terms, and conditions for exercising the option.
Consult with a real estate attorney to draft or review the lease option agreement to protect your interests.

Here are some things that may help you form a pros and cons list going forward:

Advantages:

Potential for higher rental income due to the option premium paid by the tenant.
Attracts long-term tenants who may eventually purchase the property.
Allows flexibility for both parties in uncertain market conditions.

Considerations:

Ensure the option fee and terms are fair and reflect the property's market value.
Understand the financial implications and tax considerations associated with lease options.
Be clear about the tenant's ability to exercise the option, including financing requirements if they decide to purchase.

Lease options can be a viable strategy for commercial properties in Texas, offering flexibility and potential benefits for both landlords and tenants. As with any real estate transaction, it's crucial to have clear agreements and legal counsel to navigate the process effectively and protect your interests. Hope this helps!

Hey Sumit,

Yes, it is possible to take a loan against the equity or ETFs you own without selling them outright. Here are some options and considerations:

Loan Against Equity/ETFs:
Margin Loans:

Description: Margin loans allow you to borrow money using your investments (such as stocks or ETFs) as collateral.
Pros:
You retain ownership of your investments.
Generally quick access to funds.
Interest rates can be relatively low compared to other types of loans.
Cons:
Your investments are used as collateral, so if their value declines significantly, you may face a margin call (requiring additional funds or securities).
Interest rates can vary and may be higher than traditional loans depending on the lender and your creditworthiness.

Securities-Based Line of Credit (SBLOC):

Description: Similar to margin loans, SBLOCs use your securities (stocks, ETFs) as collateral, but they typically provide more flexibility and may not trigger margin calls as easily.
Pros:
Allows for ongoing access to funds as long as your collateral remains sufficient.
Interest rates may be competitive.
Cons:
Similar risks of potential margin calls if the value of your securities drops significantly.
Terms and interest rates can vary widely among lenders.

Comparison with 401(k) Loans:
401(k) Loans:
Description: Borrowing from your 401(k) allows you to access funds without selling investments, using your retirement savings as collateral.
Pros:
Typically low interest rates.
No credit check required.
Interest paid on the loan goes back into your 401(k) account.
Cons:
Usually capped at a percentage of your vested balance (commonly up to 50% or $50,000).
If you leave your job, the loan may need to be repaid immediately or could be considered a taxable distribution.
Potential opportunity cost of missing out on market gains if funds are withdrawn from investments.

Other Alternatives:
Home Equity Line of Credit (HELOC):

Description: If you own a home with equity, a HELOC allows you to borrow against that equity at typically lower interest rates than unsecured loans.
Pros:
Lower interest rates compared to other types of loans.
Interest may be tax-deductible if used for home improvements (consult a tax advisor).
Cons:
Your home serves as collateral, so failure to repay could result in foreclosure.
Personal Loans:

Description: Unsecured personal loans can be used for various purposes, including investing, but typically have higher interest rates than loans secured by collateral.
Pros:
No collateral required.
Funds can be used for any purpose.
Cons:
Higher interest rates and stricter eligibility criteria based on creditworthiness.

I am a loan officer and we do some of the loans stated above. Please feel free to reach out if you have any questions or you would just like some further advice. Hope this helps!

Hello, Juan Mazo, given your situation and goals, here are some thoughts and steps you can consider:

1. Utilize Your Equity in the Multi-Family Property

Cash Out Refinance: Since your multi-family property in CT has significant equity (around $200k), consider doing a cash-out refinance. This would allow you to pull out some of that equity in the form of cash to use as a down payment for another property. The cash flow from this property ($1,300 profit after expenses) can also help support your ability to qualify for a refinance.

HELOC (Home Equity Line of Credit): Another option to access equity is through a HELOC. This gives you flexibility to draw funds as needed rather than taking a lump sum upfront.

2. Financing Options for Next Property Purchase

10% Down Payment Product: Since your lender has now suggested a 10% down payment product instead of the previously mentioned 5%, consider this option seriously. With a 10% down payment, you can still leverage your savings effectively while keeping some liquidity for reserves and future investments.

FHA Considerations: If you're considering another FHA loan, keep in mind the FHA rules regarding primary residence occupancy requirements. Since you're house hacking in Las Vegas, this should align with FHA guidelines as long as you continue to occupy one unit as your primary residence.

3. Investment Strategy

House Hacking in Las Vegas: Continue with the house hacking strategy in Las Vegas, as it allows you to live in one unit and rent out the others to cover a portion or all of your housing expenses. This strategy can be financially advantageous, especially with FHA financing.

Remote Ownership Opportunities: Explore opportunities for remote ownership if you're open to investing outside of your local area. This could involve hiring local property managers to handle day-to-day operations.

4. Addressing Tax Issues and Investment Readiness

Amending Taxes: Address the tax filing issue promptly by amending the 2023 taxes and ensuring correct reporting moving forward. This will help in applying for new financing and showing accurate income for loan qualification.

Investment of Savings: Invest the $40k savings strategically once the tax issue is resolved. Consider options such as adding to down payments, reserves, or investing in other income-producing assets aligned with your financial goals.

Next Steps

Talk to Lenders: Discuss your financing options with lenders, including the possibility of a cash-out refinance or HELOC on your CT property, and explore the 10% down payment product for your next purchase.

Real Estate Market Research: Identify potential markets or properties that fit your investment criteria, whether for house hacking in Las Vegas or remote ownership.

Consult Professionals: Engage with a real estate agent, tax advisor, and possibly a financial planner to ensure your investment strategy aligns with your long-term goals and financial health.

By leveraging your existing equity, navigating financing options, and resolving tax matters, you can position yourself and your girlfriend to successfully expand your real estate portfolio this year. 

I am a mortgage lender and can help give a lot of clarity and insights to you, so please call me at the number below if you would like to discuss further. 

Hey CJ,

Yes this is possible. 

Transferring Your LLC via Will:
Review Operating Agreement: Check if your LLC’s operating agreement addresses ownership transfer upon death.

Update Your Will: Specify in your will that you intend to transfer ownership of the LLC to a named individual or individuals upon your death.

Consult an Attorney: Seek advice from an attorney specializing in estate planning and business law to ensure your will is legally sound and compliant with state laws.

Consider Tax Implications: Understand potential tax implications of transferring LLC ownership through your will and plan accordingly.

Notify Your Successor: Inform the person named in your will about their future role in the LLC and provide necessary documents.

Please feel free to reach out if you need any further assistance.