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All Forum Posts by: Vicki K.

Vicki K. has started 5 posts and replied 37 times.

Post: Short sale process

Vicki K.Posted
  • Investor
  • Livonia, MI
  • Posts 37
  • Votes 13

Great response, everyone. I really appreciate the guidance. 

@Reginald Perryman - What you are talking about is the main reason why I think this may be a tough deal to get through the bank. The guy doesn't really have a good reason to walk away. He is upside down on the house big time. Any rent he gets won't help him much so he is essentially throwing money away with this home. He recently bought another home - far from this one, so taking care of this one is a pain in his neck and a burden on his pocket. I really want to give it a shot so I created the opportunity by expressing interest in the property. He jumped all over it and engaged a realtor with experience in short sales. He also pulled the house of the rental market and is filling out the required paperwork to start the process officially with the bank. We signed the PA as well and I have talked to him about discussing the ramifications of the short sale with a CPA. He said he is not worried about that and he has done this already and understands the consequences. He is very interested in working with me. I just hope the bank is too.

We will see.

Post: One LLC or Many LLCs?

Vicki K.Posted
  • Investor
  • Livonia, MI
  • Posts 37
  • Votes 13

You will not get traditional financing in the name of an LLC. What I do is this - I get conventional loans in my name to purchase the properties, but then I transfer the property into a LLC using a quitclaim deed. Many have told me that the bank has the right to call the note once the title is transferred, but that hasn't happened yet, and from what I hear, it's unlikely to happen as long as you are current on your payments. After you acquire 10 properties under your name though, traditional financing won't be an option any longer with most banks out there.

I am also a huge proponent of not paying off the properties. Having a mortgage against them and having them in separate LLCs gives you extra protection. If someone sues the LLC and all that LLCs owns is one home, they can technically go after the equity of the home. Well, if it is mortgaged, what will they get? Probably not that much.

In any case, consult with an attorney and yes, get a good umbrella policy.

Post: Fourplex crisis

Vicki K.Posted
  • Investor
  • Livonia, MI
  • Posts 37
  • Votes 13

I am confused - is the city saying THEY made disclosures??? I have never heard of that. I was thinking seller disclosures.

Post: Fourplex crisis

Vicki K.Posted
  • Investor
  • Livonia, MI
  • Posts 37
  • Votes 13

Can you go after the sellers for nin-disclosure? I know they will probably say property is "as is", but by law don't they have to disclose significant known issues. This was a known issue you would have never discovered during a walk through unless the problem was active at the time. Would an inspection have caught it? Will sellers be liable for not disclosing the issue in this case? Does the city have any records related to this?

Sorry to hear you are having all these issues. Terrible situation. :(

Post: best way to protect myself???

Vicki K.Posted
  • Investor
  • Livonia, MI
  • Posts 37
  • Votes 13

@Jonathan Twombly and @Charles Press - thank you both for sharing your legal setups. I will definitely look into the "holding company" concept next time I meet with my attorney. I also have never head of a land trust before, so will dig into that a bit more as well. Learning something new every day. 

Lastly, the most dreaded task I have is to figure out what to do about insurance. I do not have an umbrella policy and that scares the daylights out of me. I hate dealing with insurance companies because I don't understand their business and always feel like I am getting scammed. I don't know where to begin when it comes to researching insurance, nor do I know what to ask/look for and what is a good product that will really protect me vs. something that makes me feel good but will be worthless if something was to happen I need to use it. I will poke around BP to see if there are some posts on that, but if you guys have any insights on that as well, I'd love to hear them.

Post: Short sale process

Vicki K.Posted
  • Investor
  • Livonia, MI
  • Posts 37
  • Votes 13

Neighbor down the street from me puts a "For Rent" sign in his yard. We look online - no MLS listing. Property up for rent by owner on Craigslist. I email the guy and ask him if he has considered selling his home. He tells me he would absolutely love to but is way up side down on it to make it happen.

He owes:                         $184K or so

Property market value:    $115-125K

Loan is though:                Bank of America

I have spoken to each other in the past. He knows I am own rentals so he came by to ask me for some advice about being a newbie landlord.  I told him to think about a short sale instead as this is a losing proposition for him. No cash flow; just headache. 

How is the bank calculating an acceptable sales price? Is the market price of the home the determining factor or the amount the person owes. Will an offer of $80K be acceptable? At that price point this house is a phenomenal deal. Depending on how updated it is (I haven't seen the inside yet), I'd be willing to go up to $90K even. The seller is very motivated. Has considered walking away, but doesn't want to ruin his credit. I own 5 homes in this specific subdivision and they are fantastic rentals.

Any advice on the pricing as well as how short sales are structured would be greatly appreciated.

Post: best way to protect myself???

Vicki K.Posted
  • Investor
  • Livonia, MI
  • Posts 37
  • Votes 13

@Charles Press - question for you... You mentioned that you have all your properties in single LLCs and then all LLCs are owned by a holding LLC. Can you please explain why you roll up the individual companies to a larger one? Doesn't that defeat the purpose?

I have all my properties in individual LLCs and then have a separate LLCs for the property management company that is the face of the business for tenants. The property management LLC does not own any real estate. There is only a checking account associated with it. I like the protection that having everything separate provides. Wanted to understand your rationale for the holding company. Thanks in advance.

Post: Just Bragging!

Vicki K.Posted
  • Investor
  • Livonia, MI
  • Posts 37
  • Votes 13

Wow, looks awesome!

No, I would not. I generally consider a tenant's offer to pre-pay a huge red flag. In my mind they are waving the cash in your face in hopes that you will overlook things when it comes to their screening. If the tenant is unemployed, you should expect the worst - that they still don't have a job at the end of the six months and that there are no more cash reserves to pay you rent past that point. Now look at the timing of things. You won't be able to initiate anything for the 6 months they pre-paid. So let's say they stop paying at the end of month 6, it may take you months to get rid of them which means you are out of rent income. Not to mention that they may still trash your place which will cost you time and money to fix before you can re-rent once you manage to get rid of them. In the end, the 6 months rent you collected upfront may be wiped by the additional expenses you could incur if you ended up with a bad tenant. 

Post: Use an attorney for LLC formation?

Vicki K.Posted
  • Investor
  • Livonia, MI
  • Posts 37
  • Votes 13

Hi Dan, you really don't need an attorney to form a LLC. I don't know the exact paperwork requirements in your state, but go online and get the Articles of Organization form - http://www.sos.mo.gov/business/corporations/forms.asp

Call and confirm what are the required filing fees and if any other paperwork is needed for filing (e.g., cover letter, etc.) Check also what kind of options exist for filing. In Michigan, you can fax your application and get your certificate back next day as opposed to weeks of you mail it. Let me km