All Forum Posts by: Bill B.

“ cash flow returns” almost always compare horribly to a simple bank CD after you deduct for insurance, prop taxes< vacancy, capex, prop management (or your personal time.) etc etc etc. 

What you’re counting on is even a slow rate of appreciation, say equal to barely inflation, called it 2-3% being multiplied by 4 or 5X because you only put down 20-25%. Getting a base 8-15% return instead of 2-3% before actual “profit” puts you way ahead of the cash buyer. 

PLUS, you can buy 4-5X as many properties. Meaning you get 4-5X the depreciation to defer your income from being taxable. If you’re making a return higher than a bank CD you can support a mortgage. It’s like a built in test. 

Umbrella if your networth is over $500k.

If you’re not worth anything you’re “judgement proof” and don’t need anything. 

If you are worth "something" then you need the umbrella policy. If you searched the forums as stated you've noticed that it's been asked EVERY time this question is asked. Has any BP member ever been saved by their LLC? Not once has one member ever said the LLC saved them when insurance wouldn't have.

Think about it. How in the world would you get sued because of something at your STR that wasn't also your fault? You're going to be personally sued no matter the cause of the loss. PLUS, you are 10x more likely to cause a loss personally from a car crash, a pet bite, an injury at your personal home, etc etc. Cases where the LLC would do you zero good.

If you care and it bothers you, raise their rent another $500/mo for the hassle. (Assuming it bothers you more than the vacancy and finding a new tenant that pays on time for 3 years. 

Personally I’d wait and see what happen. If they pay the new amount on time no problem. If they fail to pay the new full amount send a pay or quit for the missing amount with late fees. This is assuming the way you notified the tenants of the new rent was considered legal notice in your market. 

Foreclosures ar near all time lows. What area ar you seeing all these foreclosures?

Ps. Almost an impossible way to "get started" as you're going to need full purchase price in cash on hand or a HML willing to instantly fund you.

Pps. In today’s market most homes will be worth more than their outstanding loan balance unless they are VERY recent purchases with little to no money down. And that balance is where the bidding will usually start. (Or more likely that balance plus every late fee, penalty, escrow shortages, and anything else the lender can declare owed.)

If either of these homes has been your primwry for anywhere approaching a year. There’s zero chance I would move out. I’d fix it up and list it to sell after I’d been there two years to take the gain tax free. You’d probably end up with a bigger after tax gain if you sold the 2nd property for any amount of money and did that. Compared to fixing them both up and paying full taxes as flips. (Which aren’t taxed as capital gains.)

$280k home for $2,500 rent is a personal choice. Is it better than your alternative uses for your money? How bad is the insurance, how high are the property taxes, is there an Hoa, etc etc. 

But…There’s ZERO chance I would rent by the room for $600/months more. I ASSUME you’re talking $400+ in extra expenses for providing water, power, sewer, gas, internet, communal area cleaning, and exterior maintenance. So you’d be hoping to make $200/months for dealing with 3 x as many tenants, vacancies, tenant on tenant conflict, late payments, etc etc. . 

My GUESS is these homeowners have been tricked/screwed in to signing a long term power purchase agreement, often with no buy out provision. There are some really scummy solar sales people out there that tell homeowners they can get solar “for free”. Then they lock them in to a SLIGHTLY lower initial cost per kWh. But they have an escalation clause every year to eventually put them above market. Many even include a set monthly amount. So if the homeowner saves energy or goes on a long vacation, they still get charged 100%. (They could have a base amount of 1,000kwh for $120/mo. But if they only use 50kwh, they still owe $12-  They’re basically setting up an annuity for the solar company. 

Of course you want to ask why they didn’t apply. Did they find a better place, a cheaper place, a better and cheaper place? Did they see something that disgusted them? Did a neighbor or the neighborhood worry them?

What can it be other than pricing or marketing?

To me 22 days is a very long time. You’re about to be down 8% of your rent due to vacancy. So if lowering the rent 8% would have filled it you would have been ahead. If you go another month then 16% lower would have resulted in more income. 

If you aren’t using a PM have you considered it? There are only a few outcomes. They tell you you’re asking too much rent (you lower rent, avoid vacancy and make more money) ,your marketing is bad (they take new pictures, advertise in different places, change wording, whatever, and get a tenant saving vacancy.)  your pricing is good and your marketing is good, it’s just a slow time and even lowering rent won’t help. (You know you’re on the right track and you insure future leases end between March and July by varying the length of the new lease.)

Good luck. 

Does he qualify on his own? If he does. And if you want to release her from the lease I’d just do it. For all you know it a violent situation and she could get a judge’s order and you pry couldn’t/shouldn’t charge then. 

If he doesn’t qualify alone just ask them to move out. 

Not much to add other than the obvious bit not yet stated. (So I’m stating just in case you didn’t know.). Make sure she doesn’t deed you or your brothers the property before he passing. If she gifts the home to you, you inherit he cost basis and owe all the taxes. If she needs money let her get s cash out refi. But wait until she passes to inherit it. And then you’ll be facing the absolute best time to sell, tax free. It will obviously make a horrible rental at $5M. 

And most importantly!  (To avoid months of probate and thousands if not $10’s of thousands of dollars in costs.)

Hawaii is considered a "TOD deed state," meaning that residents can utilize Transfer on Death (TOD) deeds to designate beneficiaries who will inherit their property upon their death, allowing for a potential bypass of probate court proceedings.

If she is already in memory care center. I'm not sure how you swing this. If someone has been given POA maybe they could sign it. Otherwise find out if Hawaii has a senior advocate division. You're going to want some kind of "official" to declare she is of sound mind to sign such a paper.

We filled one out for my mom last year. Be sure to explain to your mom that she can reverse it at any time. You’re not trying to take her home.