All Forum Posts by: Benjamin Aaker

You are actually looking for a Business Line of Credit or a Commercial Line of Credit. These products are still available and it might be that you need to ask for it by name. It won't be a good of deal as the HELOC but it is a great way to have money available for deals.

The due on sale clause is another mechanism the bank has to control what happens with the mortgage. They don't want the borrower to sell the place and transfer the loan to someone who cannot pay back the loan. It's simply a clause and not a law. These get executed frequently in the background. In fact, whenever you sell a property you have a mortgage on, you will be paying off your mortgage with the proceeds.
You can certainly sell the property and transfer the mortgage to someone else. If the bank believes the new borrower will pay on time, they will not execute the clause. If they, do, you'll have to pay it back immediately. Have a contingency placed in your purchase agreement to mitigate for this. If the buyer wants to assume your mortgage, he or she will be happy to sign. Then the deal dies if the bank objects and you are back to square one.

Depends on the market. Right now, there are buyers around every corner. Sellers of commercial properties are much more likely to require a signed purchase agreement before going to the pain of having a possible tire-kicker marching around three units and disturbing tenants. This request is not a big deal right now. Put in the contract that your offer is contingent on your personal satisfaction of the property on your walkthrough to be done before earnest money deposit. Cancel the contract if the place isn't to your liking after walkthrough. Sure, it's more work for you, but it weeds out the looky-loos.

Hi Erik,
I understood your question to be whether to use money from a line of credit vs cash. What do you plan to do with that cash if not to purchase your new investment? Using cash carries no interest rate so certainly would be better then the line of credit. If you've been here long enough, you'll know I'm very big on lines of credit. They are cheap, as @Kerry Baird says. They are low cost to maintain. They are ready with the money when you need it. Much like cash. Once you withdraw the money, unlike cash, you have to pay it back with interest. If you have that in cash sitting around, then pay cash. Get the HELOC set up, though, so it is ready when you find that next smokin' deal.

One option is to find a deal and bring it to an investor in the hopes that they will become your partner on the deal. You'll have to give them a significant chunk of equity in the deal, while you do the work, but you'll learn a ton and get another deal under your belt with hopefully a modest profit. 

Hi Francisco, Thanks for asking the question. I see a bunch of posts on here asking for a mentor. Usually there are no replies. What they are really asking for is another person's time for free. Many mentors are willing to give away their time, but they are selective about to whom they give it.
Mentors don't know whether the mentee is actually interested in learning and will put the knowledge to good use or if they are simply thinking about real estate and will move on to the next interesting thing quickly. A good mentee can prove that they have done research on their own first. They have read up and have an idea where they are looking to invest as well as a plan for the next few years. The mentor is a guide but not someone to build this plan for someone else. A mentee is great if they add something of value to the mentor (but this isn't required). Maybe the mentee can do some work for the mentor while learning the ropes? They should also try to learn as much as they can about the mentor before asking to find out if they will be a good fit.

I'm the owner of The Davis, Short and Long Term Stay, in Garretson, SD. It's a 4 room motel attached to what was formerly the owner's house plus a trailer home. I AirBnB the motel units and long term rent the other two. The only real issue is who pays for what utilities. The LTRs need to be separated from the motel. We also provide garbage service for the whole parcel because it would be a headache to split them up.
Your Property manager might not be set up to do short term rentals. If this is the case, then you can separate both management. LTR manager can manage the garbage and lawn and the LTRs and the STR shop can do the rest.

In my area, the attorney will charge about $10,000 to set up the documents for a syndication. The amount of units doesn't really matter, but I won't do a syndication unless it is $1M in value or more. The only exception would be if you are looking to gain experience on a smaller deal, you might be interested in paying that amount if the deal was right in front of you.

Hi Sheeva, congratulations on getting an accepted offer! Assuming this is a short term rental:

1. Rent it out now and do the full rehab when the vacancy is up.
2. Get the place cleaned up first, then get the professional photos, then put up the listing.
3. If the two queens fit in your second bedroom, you can go for it, but if there are two beds, most likely will be two siblings / friends in the room and they won't need such large beds. If the room is really that big, then you could consider a third bed or another pull out sofa.

New windows will add some to the home but you'll likely get less added value than the cost of the windows. If they are not leaking or ugly, I'd defer.