All Forum Posts by: Erick C.

I am in the process of setting up an LLC (with 1 partner) for rental investment properties. However i'm unsure of which tax classification will be best suited for my needs. Pass through partnership Or S corp.

I'm a bit unclear on the pros and cons, does anyone have any advice or literature on the subject?

Thank you in advance

Hey Bill, thanks for the advice. I was not totally informed on the matter and wanted to be sure of the required 1 year occupancy requirement. Hey Rich, i haven't closed on any 'subject to's yet... wanted to do my due diligence and make sure i cover all basis before i jump in that area and acquiring properties in that fashion.

Excellent guys, thanks for your quick responses...

Everything you said makes perfect sense @Joe P. & @Dave Payerchin. You have got to have some kind of capital in order to do "sub tos" That is the first thing i learned while educating myself on real estate investing: You just won't get a lot of "sub to" deal with up to date mortgage payments. Even if we do manage to find a few there's the matter of the monthly expenses (whatever they may be). So raising capital is the very first thing i looked at to get started, flips or wholesaling etc...

However i managed to speak with a family member who gave me about 20K to get the ball rolling. It's not much to most but there's a lot of ways to use that 20 grand to get my foot in the door. (by the way, i don't have to get this money back). It's good to be creative and work with the seller, as a newbie you just don't know what you don't know. So i figured I'd challenge some BP minds and see what you guys would do in that situation. That said I'm not so much looking to raise capital as much as I'm looking for a cashflowing home.

Now, I'm prior military and here are my thoughts... With this bit of cash, i may either use a VA Loan to get 100% financing on a home and then use my capital to cover for any expenses which may come up.

OR

I could Proceed with a "Sub to" deal and use my cash in a similar fashion (catch up on late payments, cover current expenses until renters are in).
-What do you guys think of those acquisition plan??

-Are there any other ways i can go about acquiring property that i may be overlooking in my current financial position??

-Finally regarding the matter of a VA Loan, @Rich F asked a very important question which i've wondered about many times as well: Is a person required to live in a home in order to assume a VA loan? or Is this at the lender's discretion?

Thanks again.

Hey @Account Closed Thanks for the advice, and quick response. I'm aware of the Due on sale clause as well as making payments on the seller's mortgage.

That's a simple and understandable compromise between seller and buyer in each of their situations, the investor wants to buy with as little money as possible and the owner wants to sell due to his current financial status (among other reasons) some sellers may not ask for anything out of the deal, some may even end up paying the buyer for whatever reason to have the house taken off of their hands.

I am a reasonable guy but i will try to get the best deal for me as an investor and also make the seller feel that he has good deal as well. Like you said "What's in it for him?" that's the question I'm endeavoring to find the answer to. I will be buying and holding properties for cash flow which pours cash in at a slower pace than flipping or wholesaling etc...

The question remains for those sellers who require some kind of settlement, are there any ways to satisfy them without resorting to capital gains by selling the home?

Is using the home's equity the one and only option out there, if i have not cash on hand?

Thanks again.

Hey bigger pockets nation,

My name is Erick Castelin and I am a brand new investor (also new to Bigger pockets) i'm located in Clermont, Florida... it's on the outskirts of Orlando, Florida. I'm looking to buy and hold properties acquiring them through the "sub to" method. I'm getting the part where you purchase the home (take ownership of the title) subjected to the seller's existing financing and doing so i understand a buyer would be helping the seller out in some aspects.

But there's also the part where some sellers require some type of cash from the process. I've read one of Josh Dorkin's posts/articles somewhere here on BP(unless i'm misunderstood) that he doesn't favor writing a check to the seller or using the property's equity for that purpose, instead he rather give the seller a promissory note stating that he will pay the seller within a certain period of time after the property has been sold.

The thing is I'm planning to buy & Hold so i won't make any substantial gains to pay the seller with and i don't have money handy to just write checks... So my question is, Should i acquire a home through "suject to" what are my options to come up with money to satisfy a seller wanting cash out of that deal???

Thanks in advance.