All Forum Posts by: Zachariah Tuck

Quote from @Eric Noble:

@Carl Fanaro - Interesting possibility. I've heard of L/O, but do not understand how to manage. Can this be professionally managed (outsourced) ?

 I am actually curious about this question.  Incredible thought to even think of it.  I imagine there are fees involved whether this has to be through an attorney or property manager as a representative.  I imagine that their would need to be some kind of PoA to do this hands off with little exception.  If their is anyone with more specifics whether it be nationwide or California specific I would love more information.

@Eric Nobile

I am enjoying your thought process unfold in the creative dissolution of your properties, specifically your diamond in the rough.  As for thoughts.  I am not entirely certain hands off will happen.  At the local comps.  It does not seem like local comps specifically exist.  I think at this point you need to make your sale target specific to the buyer you intend to sell too and ask yourself and others how to sell to "them."  Know what it's worth and ask for that.  Someone that realizes the same "Diamond in the Rough" and is willing to pay for that .  Think about how do you target that buyer, who do you need to bring on to your temporary team to make your sale to your target buyer?  I am no specialist, but I love this process.  If a realtor seems apprehensive or negative to your desired result then I don't think they are right for you.  Local realtors will know the market, however as a friend I know a realtor in Washington State that sells massive amounts of real Estate even in this downturn that is invaluable to the the buyers and sellers that she represents.  I suggest you diligently seek out someone that has a respect and appreciation for the value of your home.

Quote from @Gary Chapman:

Quote from @Owen Dashner:

Couple thoughts. So you are putting $70K down and putting $70K into the property? Are you going to leave all $140K into the property, or are you going to refinance to get your money back out? If you are leaving that much money into the deal, it is a terrible COC return. If you are doing a refi, you didn't list any debt service payments or refinancing costs.

Vacancy, lawn care, snow removal, property management fees, principal, interest - these are expense items I did not see listed in your post.

What is the "other" income item for $300 that you listed?  

I'm looking into a HELOC but haven't pulled the trigger yet.

I didn't include all my numbers in my post so here is a more detailed breakdown. 

Purchase price $236,000. 

Down payment $70,000, 

Reno $70,000. 

Vacancy $2,160,

Total yearly expenses(taxes, insurance, utilities, maintenance, lawn/snow care) $13, 350.

Monthly rent $3,600, Other income(pet fees) $300/year. 

I took a property management class and used their operating budget chart, it doest not include principal and interest payments. My total monthly payment is $715.00, am I supposed to be deducting this amount to get an accurate cash flow?

Yes you need to be including all real expenses and CapEx in order to get accurate numbers. BP has some great calculators the allow you to see all of your returns. 
It’s important to know your goals and reasonable returns. If cash flow is priority, or if pulling out the equity is your priority.  A goal involving a fixed 1 year COC return can be far different than a long term “Cash flow.”

Quote from @Danny P.:

These answers are great and very much appreciated. What makes me nervous about going with the LLC for my first deal is that I understand this will require me to use a DSCR loan for the refi and then I need to be sure that my rental income will cover the DSCR rate that the bank requires (I understand this will be like 1.2-1.4?) If it wasn't for this requirement, I would be willing to have a lower cash flow at the start and just count on the long term benefits of the investment. Hopefully this makes sense…like I said, I'm new, but I'm studying hard and asking all the questions I can think of now instead of when I'm in the middle of it lol

Are you trying to buy a fixer upper? As for an LLC it's often stated that you don't really need one until you have significant assets. I personally prefer to be protected, which slowed my journey, but we all progress at our own pace.
2cents. Unless you’re house hacking the numbers should always pan out before you buy. Outside of acceptable risk then walk away. There are a ton of calculators for this. practice with them and use real numbers from doing real research. 

Do your coupon clipping up front you make more money when you buy!!

Any other questions?

My experience is that Hard money lenders do work with individuals outside of LLC's. As a third party to most deal, I have seen them lend to both, usually hard money to individual comes with a level of personal trust. We can all see things happen outside our control and a hard money lender is investing in people. They need to protect themselves. Certainly not impossible, but make calls, network, build a portfolio of current success/projects. And don't be afraid to show it to people.

Quote from @Eric Noble:

@Zachariah Tuck

Yes, I've consulted an array of advisors, and I want to leave landlording altogether. S.ooner is preferred, but not to my own financial detriment.

This thread has been valuable in forming my strategy, thanks to all.

Do you have an preferred timeline?  I’m no specialist in any department, but good on you looking out for ways to get creative to quickly leave without hurting yourself financially. Where are your properties located. All in California?

If you don’t mind keep or informed or maybe just message me at some point when you have a plan. I’d love to hear how you plan develops and why you choose that path for yourself

Quote from @Gregory H.:

Hi Michael, it appears you bought it in 2021 for $535K then listed it less than a year later for $590K with an agent then pulled the listing two months later. In the listing, the three units together rent for approximately $4,400 a month. That is not the cashflow, you need to throw in a host of expenses in there. What happened with the listing in 2022 and what are you hoping to get for it?

 Did he list the property on BP or am I missing something?  An answer to this leads to host of other questions that I may or may not be able to answer on my own. 

I guess I see a gap. Maybe I’m wrong, but do you have a timeline. Have you talked to your financial advisor, tax consultant.  We can all offer bits and pieces and I am no expert.

However what at the end of the day is your goal?  Is it to entirely leave “landlording” when you move?  In one swift move or are you ok with a 2-5 year plan to reap tax benefits/protections?

my phone doesn’t like scrolling back but someone offered great suggestions on staging and using a great realtor. I have heard a number of people having incredible luck without good comps to use staging/ home decorating to start bidding battles when the market is a bit bearish.  Even listing below original list price and the bidding goes well above list price following that process. A GREAT Real Estate agent will make a great deal. 

You have an awesome start. Brrr does sound like a great next step. And you have your numbers in a great place. If you have a high risk tolerance.  I say it depends on your personal skills or what skills you would like to pursue next. If your duplex will generate income after you move out of the second unit then your doors are wide open.

Would you like a fixer upper or to do a larger multi family? Or even simply another duplex. DSCR financing may be an option. Especially if you can find a fixer upper multi family with private or hard money up front. with a fixer upper likely hard or private money may be required. But it could stretch you a little bit. Are you capable, willing, or have the time to put the work in yourself. Or do you have the knowledge to run the numbers, and manage contractors to do the work for you in the time frame you need to meet your financial requirements. Value add is incredible in the way of numbers. And if you can find a property yourself or buy a great wholesale deal you could easily be on your way to owning your third property with cash flow after 6, 12, or 18 months with no cash out of pocket.

If you have cash on the front end to sweeten the pot or make it easier for private or hard money it only makes it better for you. 

If you sell can you use a 1031 to avoid taxes while being able to reinvest if All cash properties?  Can anyone clarify that?  I seem to remember some ratio of sale price vs. new purchase price?  

What credit issues besides the bankruptcy are keeping you from pulling equity. It may be worth it to solve those problem with the cash flow you currently have. Unless that is your only income. If that is the case maybe get anything besides the bankruptcy taken care of so you can use your credit to use equity in the future.

Are DSCR lenders turning you away? Or are you not wanting to work with them? Not sure I understood your statement there. You have held a multi unit for over a decade it looks like. So it might be time for you to stretch and look for private money or seller financing or subject to. It appears as though you have only had one hiccup and you handled it, and have been responsible otherwise. Stretch grow if credit is the issue can you find a way to circumvent that? Is there someone you know and trust or someone else that you can partner with?

Quote from @Chris Davidson:

@Zachariah Tuck the RE-21 and RE-17 take care of it in Idaho. If you are working off market deals might be worth paying an agent a flat fee to write them/ send them and make sure all the T's are crossed and the I's are dotted. Title and Escrow can handle the LT escrow. At least in Idaho it is much simpler than most think.

Best of luck, and feel free to reach out if you have any other questions

My phone doesn’t seem to like the website so I am unsure if my private message went through to you however, I am curious if those are state statutes or real estate regulations for the state of Idaho.  Any clarification would be awesome.  Specifically for the state of Idaho which I’s and T’s are you referring to?