All Forum Posts by: Benjamin Aaker

Sounds like maybe you had a bad experience. Would you be willing to tell it? It might benefit others and this great community undoubtedly can help you.

Your expenses will go up every year. It's natural. A tenant should expect small rent increases yearly. Why not build this into the lease? I have done so. I state that the rent will increase at the landlord's discretion 3-5% each year. It goes month-to-month you say? Sure, the rent could go to whatever you say it is at that point, but having it in the original lease give you an easy reference to remind the tenant. I don't like keeping the rent flat because at some point you will have this tenant you love but the expenses are going up and you need to raise the rent and when you try to do this on year three it's like you just told the tenant the sky is green. I know this from experience. If they expect a small increase every year, it's no big deal for either of you. The 3-5 range is so that you can make it a nice round number.

Hi Jacob, Happy to have you on BP! I use First National Bank of Sioux Falls frequently. I'm happy to talk investing any time.

I recommend to house hack a 4-plex. Go smaller if you don't have enough down but in that range you should qualify for an FHA loan. Start learning how to manage tenants while living rent-free.

Hi Steve and welcome to BP. This is a great place to find answers. I'm not an attorney or an accountant but I do have some experience. I've completed 2 1031 exchanges. You really should calculate how much taxes you would pay right now on the property you are selling. Talk to your accountant about it. That tax liability will be due for the year in which you sell (i.e. right away). That $40,000 or whatever, is worth a lot more today than it is at some point in the future when you do pay it off. Compare that to the < $1,000 cost of doing the exchange. If you happen to die, the property passes onto your heirs, but the tax liability doesn't. So 1031 is even better if you plan to keep the property forever.

There is a cost do doing the exchange. I use @Dave Foster at the1031investor.com and he can give you more information. For me, the biggest risk is that the 1031 encourages you to find a property quickly and you might purchase something you otherwise would have left behind. That's the genius of the 1031 invention when looked at through the government's eyes. It keeps people buying and selling.

I don't think your age makes a difference in your decision. I recommend you at least do some more research.

I agree with @Chris Mcdonald. Separately metering is nice to have, but can be expensive. The installation is a cost but the city might charge you as well (or might not even allow). Consider instituting a RUBS. You can bill a percentage of utilities back to the tenant or even have a flat fee each month that they pay. You won't make it all back but it is a lot cheaper than separate meters.

I recommend to form an LLC in each state. For the most part, you should keep your projects separate. Each filing takes a little more work, but can save a lot of hassle. You will have to register one state's LLC as a foreign LLC in another anyway if you don't do this.

@Ken Alce I'll clarify that a primary residence will always be in the negative! If you are renting it out you can certainly make a profit with the right deal. They are just hard to find right now.

Multifamily properties (over 4 units) are generally underwritten by the income approach. A bank will look at the potential income which you present to it. They will also look at your background to make a determination if they think you will be able to get tenants in. If you can't you won't be able to pay them back and they surely want to avoid that. It also helps if you have other sources of income with which to guarantee the property. Put together a nice pro forma for the bank and tell about your history and the financials of the deal. You are trying to convince an underwriter to back you. The numbers have to be there, but it also goes on their opinion of you, so put together a nice presentation.

Depends on code in your area. A second layer will be cheaper because they don't have to tear off the lower layer. Those shingles are heavy and they put extra weight on the roof. They don't always adhere as well so the lifespan is less. Some buyers don't care, even when the inspector tells them there is a second layer - they just look at the pretty new roof and are satisfied. Other buyers will scrutinize that and you will pay for it on the sale price. In this market, probably not a big deal, others you might take a loss.