All Forum Posts by: David Floyd

Im building a second home by refinancing some of my rentals that are paid off. Just a quick background. I have about 20 rental units with all but one property paid off. I need to fund a large second home build in Colorado and rather than get a construction loan, Im using my real estate assets to finance it. I first refinance my primary residence since rates are cheapest, next I refinanced a house I own. This loan was a royal pain in the *** with so many questions and required documents. We do have the majority of the properties in an LLC with a few just in my name since I just inherited them. The mortgage company wanted everything from reasons why my wife had a short break in employment to requiring a profit and loss statement for our property management LLC. It looks like this loan will close next week and I am needing to cash out on one more property. The question of debt to income ratio came up during the last loan so Im trying to improve my position. Since I have only 2 loans now and no other debt to speak of, Im guessing the problem comes from a lot of credit cards I have open but rarely use them all. Before I apply for the next loan, should I cancel some cards? My credit score is in the 800s so I can take a hit by closing cards. Also should I transfer the properties I own individually into an LLC or jointly with my wife? The property I plan to refinance is in my name only. Thanks.

If you pay the electric and can get the math to work why not.  Solar is getting cheaper although you cannot take advantage of the federal income tax credit since it is not your primary residence.  You can write them off as a business expense though.  If you are in a hot climate they also shade the roof and provide savings to AC costs.  I have though about it but since I don't pay for electric it would be difficult to pass on to tenants.  Considering how volatile the stock market is, it is a great investment for a private residence.  I paid mine off in 7 years and now have $11 electric bills!

Originally posted by @Micah McCombs:

@David Floyd

What county in Florida if I may ask? Brevard

@Mindy JensenI had one started back in January in Florida and the judge issued the writ of possession but Sheriff called me to say that they could not post it. Luckily she moved out today.

I inherited some rental properties in Fl and also own some of my own. All of the properties that I inherited never had insurance and were in my fathers name. Some of my properties were insured and after hurricane Irma and a few close calls with tenants threatening to sue, I decided that I needed asset protection and began looking at Anderson advisors and Companies Incorporated for advice and strategies to protect current assets and avoid losing substantial portion of the inherited trust due to a tenant threatening to sue because a cabinet fell on her. The property was recently transferred to my sisters name and it appears that the tenant and her lawyer are no longer pursuing this. During this threat I set up several LLCs to quickly move the properties into and was prepared to do equity stripping through another LLC. After reading discussion on this I now feel that I may be better off just having good insurance and doing what I can to mitigate any liability risk through good management. The problem I most have with the LLCs is all the tax implications. Seems much simpler to just insure them and get an umbrella policy. The drawback is some properties are difficult and expensive to insure. I have also been told that even if I have LLCs I should also carry insurance. If I do use the LLCs is there a way to avoid filing tax returns on each one? I also have a property management LLC that I formed. aTdHvAaNnKcSe

Im trying to sell two investment SFH in Florida on the coast that are only returning about 5% (net income/property value). Both are totally paid off and Im looking to do a simultaneous like kind exchange for a property in a ski town in Colorado. We are currently looking at Telluride and Crested Butte. The plan is to sell either one or both and buy either a lot and build or a preexisting SFH. From what I have been told there are two feasible ways to do this:

• Option 1: Sell Property #1 and within 45 calendar days, sell Property #2. This will allow both properties to be part of the same exchange. You would still need to close on the property by the 180th calendar day that you sold Property #1. 

• Option 2: Sell Property #1 and Property #2 outside of the 45 Day ID window. ID the replacement property within the first 45 calendars of Property #1’s sale. The key here would be that you could not close on the replacement property until both Property #1 and Property #2 have sold. You would have 180 calendar days to close on the replacement property after Property #1 was sold. 

The plan would be to use this replacement property as an investment and then turn it into a second home or a primary residence after we sell our current home tax free.  

Getting both properties to close within that time frame seems difficult so we may just end up selling one, buying a lot and building ourselves.  Any advice from the 1031 experts?

I second Kitchen Cabinet Kings.  Ask for a discount.  I get 17% off now since I have bought so many from them.  I actually prefer real wood fronts in espresso color since white shows dirt easily and is painted wood.  I know its not as popular now but seems to work for rentals well.  Just make sure you will not have any leaks under sink.  I also would not spend the extra money for crown moulding.  The additional panels and trim add significantly to the cost.  They also have good designers that can help you but I always go back and remove things that they add on.  

Tough decision.  Granite looks great and should help sell the house but there are some laminate that looks decent too.  If the kitchen is small then shop around for granite.  Here in Florida I have found it as cheap as $25/ft2 installed.  I have even put it in my rentals since it is more durable and attracts a better tenant.  Look at your sales competition.  Do equivalent properties in the area have granite?  

I have a large property containing 4 duplexes that I need to split with my sister. I tried breaking off one duplex but the properties are located too close to each other and would violate setbacks and require a variance. So I’ve decided to create an LLC where I would be a 25% partner with my sister and she could by me out as in the future through monthly rents or when she inherits more property in the future. She cannot get a mortgage easily due to low income and credit. My plan would be to have her aggressively pay me off in two years or less. Does anyone have experience with such an arrangement and where would I go to set up this operating agreement?

In my experience in Fl. small one or two bedroom duplexes work best.  To give you an example I rent a 450 sq ft one bedroom apt (half of the duplex for $850). My 1000 sq ft 3bd/1.5 ba townhouse with garage in a slightly less attractive area rents for only $1050.  The townhouse, also a duplex, has way more maintenance, more wear and tear due to children and roommates.  I doo get good returns on larger multifamily 4-plex but more problems with noise complaints and turnover.