All Forum Posts by: Dave Rav

Got it.  Since he will be getting institutional financing secured by real estate, odds are the bank will want his name/entity on the deed to the home. I will caution you, if the LLC is very young, the institution may not loan in that name (some banks are already funny about loaning to LLCs to any degree).

On the other hand, if he gets a non-mortgage loan (more difficult, as the bank wont have the security of the property), this allows much more flexibility for you.  Essentially an unsecured loan is what I mean here.  

First step for you is determine what type of financing he plans to obtain.  I would also make sure he's "bankable" so as not to waste your time.  You dont want to get knee deep into this deal, then find out he cant be funded.  

Any of those options will work.  

I think what you need to do is figure out to what capacity you both want to be involved.  Is he strictly a money partner?  If so, you may consider just pay him a nice return on his investment.  (I understand he is taking a loan out, but you could still pay him a monthly payment over and above his loan payment).  That way, only one person holds ownership (usually less complex)

The thing about partnerships is, you really need to have a strategy in place for when/if the partnership dissolves.  If not, things can get ugly.  Sometimes its just easier to not have an official entity partnership, but just a working business partnership where roles are defined and folks work together.  

Welcome!

Like @Bill Pate said, maybe just eat it. Unless you can get something *in writing* from prev owner preferably with pictures and notations with dates you will lose. You can alw review your leases and be more aggressive wIth protectons than prev LL (with legal confines). Expect pushback from current tenants. I’ve been thru this, trust me. But stick to your guns. Once you get them on a new lease, they follow your rules.

@Mike Day Ah yes, good old PMI. Biggest waste of money for the consumer in the banking industry. I’ve paid it before. Basically, the insurance in “to protect the bank in case I default “ even though my credit is 800 and I haven’t missed any payments to creditors in years! What a scam. The least they should do is refund that darn money, once you hit 80% LTV (78% in some instances). After all, many banks are subject to bailouts and write offs on properties they take back anyways. Rant over. To answer your question you may need to write them a letter informing them of your 80% LTV. Some banks wIll still (scam!) requIre you to keep PMI if your loan Isnt seasoned 3-5 years. In some cases, you may also need to pay for an appraisal (aka, a barrier they put in place to keep you paying PMI - after all, can’t they just run some da*m comps to get the value?!? ) Summary - PMI is a joke. As a consumer, can I get some protection against my bank too? Say in case, they get bought out or possibly go out of business?!? It should go both ways.

@John Dickerson are you asking what information OR property furnishings you need to provide the tenant? Please be more specific

You could do the 70% formula, that is one way.

However, it’s noteworthy to also take into account the cash flow potential of the property.  There is value in that.  Especially for the end buyer who’s strategy is using the property as a rental.

For instance, if you have a property that CF +$500 per month, maybe it doesn’t matter whether you buy it for $80k vs say $95k.  That difference of 15k may or may not significantly impact the monthly cash flow.  All depends on the terms ($15k spread out over 20-30 years at low interest is like $50 per month)  If it doesn’t affect the CF much, then who cares- it’s still a deal!

For rentals, things like NOI and Cap rates may be worthy of calculation. That may help you determine value and price. (Search BP for more details on NOI and CR)

Yes @Doug Haisten there are no dumb questions.  As long as adequate thought is put forth, any question is game...

Bird's eye view here - I would find out how long he/she has owned some of these properties. After that, I would strongly suggest going after seller financing on those properties.  Since you are new, I would suggest buying only one or two.  Dont get overwhelmed.  Pick the best ones that work for you.  

Then look for seller financing.  One method I try is putting into perspective how many months rent equals my downpayment.  This helps as some tired landlord sellers dont want another monthly payments scenario.  Further explained, say they are selling their rental for $100k.  If their rental earns them $1000/mo in rents and I put down $10k that is TEN months rent in their pocket from day one.  Then I try to get them to finance the other 90k on favorable terms.  For some, I may put even more down to entice them.  

I agree with the previous.  But yes, there are amazing values and opportunities in that region and the greater Charleston area as well.  I currently own property in N. Charleston as well and have been pleased with my experiences.  

@Jeff Bridges thanks so much!  I am going to look into this.  

I like your strategy.  A complicating factor is I am not local to the defendant - they and the subject property are roughly about 600 miles away from me.  Though no longer at last known address, I strongly doubt the DB left the state.  At any rate, I wont be able to personally check out any addresses, and I am a little skittish trusting a process server to take the whole process and run with it.  Plus, the court only offers two ways to service:  mail and constable.  I will likely just get a county constable to personally serve it (plus this adds nice effect, doesnt it!!).  But I do need that address, so I will check out your recommendation.

Thanks so much!