All Forum Posts by: Brad Hammond

I think it depends on who your target buyer is going to be.  If it is a seasoned investor/flipper, they won't have an issue with it.  If it is going on the retail market, that will be a huge red flag for most people.  Either way, it is going to be a headache in addition to holding time so that should be factored into the deal. 

Hey @Anthony Conrad, if your rental property takes a loss you can deduct the loss off your W2 income depending on how much you make.  If you (and your household if filing jointly) make under $100k, you can take the whole loss.  If you make between $100k-$150K, you take it on a sliding scale.  After $150k, you can't take any of it.  It does rollover in the future till you can take it which will most likely be when you sell the property.  

Since these are cap-ex projects, you will need to calculate the deprecation schedule of the items.  Even though you paid $900 for a fridge this year, you can only take 20% of that since it has a 5-year schedule for example. 

Hey @Rohme Williams, the confused investor (or person) will always say no.  Make sure you are explaining the process to them as you explain it to a small child.  Make it as simple as you can for them.  You can tell them you will give them XX% interest on their money or $XX back in 5 years, depending on your investing model.  If they are interested and want to hear more, then you can tell them a brief overview of how you are going to do that.  Don't pull out the spreadsheets and graphs yet though.  Keep it simple stupid!

Or you can find some experienced investors who don't need hand holding. 

Hi @Nate Lee, sounds like you have a solid plan! For the most part, you have everything right. To the best of my knowledge, you don't need to be a first-time homebuyer to get an FHA loan. You will want to use your FHA loan for the multi-family since that will get you a 3.5% downpayment and a conventional owner-occupant for the single-family house. You do need to live in the property for 1 year for each option to satisfy the terms of the loan. I don't think it would make financial sense to refi out of that loan just to escape the 1-year timeline.

Hey @David Lyons, this could be sticky so I would try and get everything buttoned up before closing.  You should have another contractor come out and give you a bid and double-check all damage.  Obviously, once you start taking up the flooring, you could find more damage.  The insurance company should pay even if they aren't the current company.  If you can get them to pay the contractors directly, that would be best.  A couple of other thoughts for you.

1. Extend closing till everything is done (not ideal for anyone)

2. Do an escrow hold back, where the escrow company will release $XX to the seller or a contractor after the work is complete.  

Hey @John M., if the lender requires a Phase 1, they should be ordering it.  Usually, they will want to use a current one from their preferred specalists.  

Hey @Kenneth Hynes, that is quite the pickle.  I was just toying with the idea of 1031ing two properties into one myself but decided against it.  You are really going to need to thread the needle on this one, but it is possible.  I would start looking at possible properties ASAP.  

To answer your question, I think the sooner you can put them on the market, the better.  I keep hearing about people thinking the market is going to crash when the eviction moratorium is over but I don't see that all.  There is so much demand out there that decent properties will be gobbled up.  People have too much equity in their homes to be foreclosed on. 

Hey @Craig Anderson, congrats on your upcoming venture, that sounds really exciting!  If there is an issue, homeowners insurance will only cover your property.  I would recommend you have everyone have their own renters insurance.  It would be nice if you could do all the legwork for them by finding a good company and policy so all they need to do is contact the insurance company and sign the forms.  

Hi @Carolyn Emberley, you will go through a lawyer to set up your LLC. They will be the ones that fill out and file your paperwork for you. Before you do that, I would look into doing the process yourself. I'm not a proponent of LLCs for most investors so I've never done it but from what I hear it is easy to do online.

If you do want a lawyer to do it, I would document their process so you can easily replicate it if you decide to open another LLC down the road.

Hi @Christina Williams, to me that sounds like the best path forward.  However, are you planning on doing any (or very many) transactions in WA?  Maybe you don't even need to get your Washington license.  There are a lot of costs associated with holding your license in another state.  You could use this time to market in CA and get a jump start on your business there.