All Forum Posts by: Jeff Bridges

You are speaking to the acquisition costs which typically include make-ready costs on a home that has deferred maintenance. These initial renovations/ make-ready costs should not really considered part of your cashflow projections even though that initial investment will certainly subtract from your bottom line/ profits. I typically harden/ replace any items that need to be taken care of prior to putting a rental in service to avoid future headaches. Others might tackle those issues when those units finally become vacant if they were occupied to begin with, then raise prices on that unit if it was under-market. It really depends if you choose to take care of the deferred maintenance all at the beginning or tackle it piece meal. It also depends on the level of deferred maintenance on where you'll see your actual cash flow change. You essentially need to be analyzing the up front cost to acquire and renovate to be make-ready and divide by the projected cashflow to see your cash on cash return, hopefully beforehand to see if the needed renovations are worth the cash flow and how long it will take for you to break even, percent of return on your cash investment, etc. to see if its worth your time.

Its a long winded way of saying, it depends on how neglected the unit has been beforehand and how well you estimated your maintenance costs. Perhaps work on being proactive in taking care of that deferred maintenance so future years don't have as high maintenance costs...

Still confused here: what would the total of the note be? the purchase price? how would you be able to create a note secured by the property when its already secured as collateral for the first mortgage?

If you tried to foreclose on them, your forclosure would have to be subject to existing liens, and you would be a junior lienholder to the bank that holds your original mortgage. All parties with a lien on the property would have to be made whole before a foreclosure court would allow you to take back ownership. The bank will demand the full amount due once they found out you no longer own the collateral for the loan. How would you get out of that situation? It looks bleak for you in that scenario....

All I see is fuzzy math. 2 loans for twice the appraisal value of the property= someone will get screwed.

People transfer properties into LLCs at times, but the fundamental idea is that it remains in control of the person via the LLC structure. You are losing control of the property by selling it off. Also, just because you've read about this, doesn't mean its a wise idea for everyone.

Can you get a short sale specialist and see if you can sell for less than your loan balance? Continue marketing it and don't do this owner financing deal. It looks grim based on what you presented.

@Curt Davis

I'm still confused. The buyer would not be assuming loan, but you would also be keeping an mortgage secured by an asset you no longer own after the sale? Is he writing up a subject-to contact? I've never seen it done where seller keeps responsibility of the original mortgage while the buyer gets a totally different owner finance note for the full value. It's like there are 2 notes for full value backed by the same asset. You can't foreclose and make both notes whole.... someone is going to be left holding the bag if someone defaults. Why would you keep a mortgage on an asset you no longer have control of? Maybe I'm missing something.

We can't do all the work for you:) You're going to have to call BOA customer service and find out.

Also. Download genius scan for iOS. Snap a photo of a receipt and it converts to PDF and sends it to your favorite software. you can add unlimited receipts to the same PDF at anytime. very convenient and helps convert to paperless...

It looks like @Dave Toelkes  is correct. BOA looks like they are trying to add additional income stream by charging for the direct connect service for quicken software. So if you want quicken to auto download for you, you'll have to enroll with BOA for a monthly fee. Or you can log in to your bank portal and manually download the transactions once a month or any frequency and they will export as a download file into your software the same way. Plenty of options still.

There are no fees for quicken download transactions. that's included and offered by your bank. You simply enter your online account ID and password for the bank into quicken and it logs in on your behalf and pulls in all of the latest transactions into your database. All major banks including BOA will interface with quicken software, however some require you to let the bank know you give permission for quicken to download transactions directly and have a section in your online bank account website somewhere such as financial downloads or something like that. Your bank can help you find this section.

Quick tip: you don't need to download new software for quicken every year just because its not titled for 2014/2015 etc. It will separate your transactions for each calendar year and continue downloading data as directed for 3 years after your purchase so a single software purchase should hold you over for a couple of years before you might need to upgrade to a new version. Most of their upgrades each year are not huge or worth the benefit or purchasing the upgrade.

I too am a fan of Quicken Rental Property Manager but I cannot provide an adequate comparison to quickbooks since I have not used. I already have a bank account/ debit card per property so that allows me to not have to worry about splitting up the costs per house on a single bank account or credit card and geting confused. I setup quicken rental property manager to download transactions from the bank via online account info on a periodic basis directly into the software so no or very little manual input of transactions is needed (quickbooks does this auto download as well I believe). Once every few weeks or as needed, I open the software and categorize the transactions by type of rental expense, then tag the property that expense is associated with. You can set it up to remember that all expenses on credit card "A" or bank account "A" are to be associated and tagged with property 1234 and just review them to make sure they are accurate. its a pretty nice time saver, needs only a couple of minutes a month for my 2 properties and then churns out a handy Schedule-E sheet for me at the end of the year for me to provide to my CPA. Not too technical or difficult...

The excel spreadsheet seems like it would work, but more manually intensive and the more properties and expenses you incur, the more unwieldy this becomes. Auto download of transactions from your property bank account is a huge time saver and is easily scalable to adapt as your grow a larger portfolio of properties... 

All I can say is that you are gutting a house where risks for fire, collapse, plumbing leak or other issues associated with construction are high. You won't get prices competitive with homeowners policies because they reflect much lower risk holders in finished homes. but you should still get several quotes to find the best rate.

DC independent insurance broker will check various companies for you for the best rate:

http://www.cbcinsurance.net/business-insurance/bui...

I have not used them however since I havent yet needed this for DC....

regular homeowners/ landlord policies require the unit to be occupied within 60 days or they could deny claims. Other construction based claims could be denied under homeowner policy. Further, If there was a fire or incident as a result of major construction, you wouldn't be covered if you didn't have a construction/ builder policy in place beforehand, which calls for having insurance before work start. I'm sure you could get a policy in place within 24 hours so this shouldn't hold up your construction.

If I read correctly, you are renting a room in your house so this is a roommate situation vs. renting out an apartment. With roommate situations you are allowed to be much more subjective with your tenant criteria because they are applying to live in your house and they should meet your normal criteria, but also need to be compatible with your lifestyle. You have to weigh the benefits of income to having to share a house with someone you might potentially resent or be unhappy with. You need to be asking them all about their habits, routines, work hours, do they have weird hobbies or loud instruments. I put my roommates through a stringent interview that I can't do with actual SFH applicants because those are subject to discrimination rules/ laws etc. You are allowed to decide exactly what type of person you want living in your house and being left alone with your belongings. 22k in credit card debt looks a little intense so thats a flag. more importantly, unless you are in desperate need of income from the room, I'd wait for the right person to come along with a compatible routine. So little you know about this guy.... You are asking the internet if you should be living with someone, that's highly subjective and I would only do it if its a good fit, not just because it makes you money...

http://lifehacker.com/how-can-i-spot-a-horrible-ro...