All Forum Posts by: Corina Eufinger

The only thing I can think of is whitepages.com but I don't know how reliable the phone numbers would be. 

1. I don't think you should consider it a myth.  Its unfortunate they backpedaled.  You may want to continue to shop around with local banks. Avoid Chase, Wells Fargo, etc.  I like to use banklocal.info (I believe that should be a direct address).  It shows you what size banks are around you and if they do loans, etc.

2. PMI might not help your situation with the bank. They are concerned with the down payment not your overall ability to pay it sounds like.

3. If he is a seasoned REI he may be more willing to entertain seller financing but you have to understand what his concerns would be and how you could alleviate them. He is taking a huge risk by accepting seller financing. From his perspective if you default and don't keep up with the property he could get the property back in worse shape than it was before and be out more money. One strategy you could approach with is short-term owner financing. Ask for 18-24 month seller financing, use 10% down payment, and give him interest higher than a CD rate, but lower than what the bank may have charged. At the 16 month point, begin the process again to get the bulk financing to pay off the loan to the seller. At this point you will have equity in the property and banks may talk more, as well as require less down.

4. Banks don't want to wait years between loans that is how they make their money. The rule of thumb is a minimum of 12 months between loans, but you are maxed at the number of loans you can get. I believe....8.  You will want to have decent equity in property loan #1 before moving on to #2. If you take the strategy I outlined in answer 3, it would be 2 years before you could get a second loan from a bank.  After you have exhausted conventional mortgages ( or in between loan availability) you start looking for PML and owner financing for long term loans.  So use this time now to build connections so that you aren't limited by number of loans to grow your business. 

Some extra pieces of advice. Have your considered FHA loan? As low as 3.5% down, PMI required. Can be used on rentals 1-4 units in size. You can only have one FHA loan out a time though. Buying properties that are less than 5 units, the bank is looking at it as personal loan. If you venture to 6 units, they begin to look more at the property and less at your credit and you. But your downpayment may go up because the price tag likely will.

You will want to get home owner's insurance on any property you flip. Its a must.  

You will want to get professional liability insurance for the LLC. A professional liability plan would not cover the home. It covers you and the LLC in an event that a buyer makes a claim against you.

I'm not sure there are tax advantages to consider between an LLC and DBA ("doing business as" which it sounds like what you are doing now). If you are taking money out of your rental its an owner draw and is considered passive income. Its not taxed like an LLC self-employment rate at the Federal level. As for business deductions, again I don't think you gain any more by switching.

I would consider switching though for legal purposes. If you move the 4-plex over to an LLC it removes it from being drawn into any personal lawsuits against you and it also prevents any lawsuits filed against LLC affecting your personal assets. I operate multiple LLCs for my rentals because I want to be sure they are isolated from each other.

I would definitely reach out on BP about accountant referrals in Des Moines. Especially for one who is "investor friendly". 

I use Buildium myself.  I find it very user friendly and easy to use.  My only complaint is that it may be too easy to use because if you have staff its actually very easy to make changes almost inadvertently and have no record of who did what that you can easily trace if you happen to find the error.  You do got a lot services for the small fee though, so it is still a wise choice. 

I know people that use Appfolio as well and they are extremely happy.  I have not used it all either in trial form or reality.  But its abilities seem very similar to Buildium. 

Your type of financing will depend on they type of property. Keep in mind that single family homes and duplexes loans are treated like personal loans, they look at the person not the entity. If you are considering a small business loan then the LLC would have to have collateral or cash flow sufficient to limit the banks liability or loss. Collateral could be an owned office (that isn't part of your home), tools, vehicles owned free and clear, or other property owned free and clear.

While i don't know the specifics of your deals and situation, I am concerned by the fact that you need to consider financing after doing two deals, especially to help pay for purchase and rehab.  Usually the need for financing decreases, not increases with each deal made. 

I don't feel this approach would work to entice someone to seller financing.  When an owner contemplates the terms he/she isn't looking much further than the first 3 payments, so offering more for a total price might not be as big of an enticement as you think.  

Don't underestimate the liability the owner is incurring. From his perspective there is the possibility you pay for 3 months, let the place go to #$%^, default, and now he has an even worse situation than just your defaulted payments.  Unoccupied units (or non-paying tenants), deferred repairs, etc. 

I know you said you lack the money for a down payment and can't secure bank financing (which I sympathize with).  Focus your offer more on things like the down payment, and monthly payment that the owner can expect.  Offer them some means of making sure their property is being kept up  and properly maintained (semi-annual inspection where financing owner is present, monthly reports of cash flow, monthly bank stmts, etc). Acknowledge the large risk they are taking on and offer to ease their fears with it by any means you possibly can. 

If it were me I would take a different approach. I would say something like "I'm sorry you' find yourself upside down on your home.  I have the ability to help make your situation better. Please call me at...."

The fate of the property depends on your comfort level with the situation.  There is no rule to help you out with the big decision.  Are you comfortable owning a property that you cannot easily drive to and check up on?  There are investors that acquire property a different state, and never go there.  The key is to find boots on the ground to help, and trusted boots. You can seek a recommendation on BP here for a property manager or property management company in CT.  

If you are feeling you would be comfortable with it, then I suggest consulting a CPA or attorney (probably at CT one) and inquiring about gifting the property while your mother is still alive or making yourself part of its ownership.  If you decide to keep but inherit it after her passing, you are stuck with "death taxes" on the property.  Those will not be cheap.  

Repair Price Sheet, failure to permit entry clause, improper and unauthorized changing of locks clause are some general ones I have. For SFH's I have a clause where they responsible for fines from city for unkept lawn and sidewalks; winter heating requirement (maybe not a concern for you), and utility agreement for water, sewer, and energy.