All Forum Posts by: Daniel Dietz

@Carl Graff from a layman's perspective, I think you are on the right train of thought. @Michael Plaks has an excellent thought that this could *maybe* be a good time to do some ROTH conversions. I also strongly agree with his thoughts of using service providers that I have found here on BP. I have had nothing but good results with those I have used. Im my mind, they all seem to 'get it' more as to the whole processes we go through in the real estate field. 

Just out of curiosity, is most of your loses from rental depreciation? I have a potential private money partner for rentals who is very interested in maximizing 'his tax loses'.

Dan Dietz

@Josh Stack have you inquired as to the 'why' of why they dont think they want to do seller financing? 

I have been talking to a few individuals in similar circumstances, and that was their general feel too..... until I stated 'educating' them about the potential benefits of it :-) , partially trough sharing posts and blogs from here at BP!

The ones I have been talking too did not fully, or in some case at all, know about the benefits of no taxes on 1031s (and we are working on helping them reinvest with US as partners to fulfill the 1031), or how the spreading out of taxes can work with seller financing with only enough down to cover their 'recapture tax' which is due in the year of sale no matter how much is used for a down payment. 

I guess what I am saying is don't count them out until you, and they, are SURE that it is not for them. 

Dan Dietz

@Michael Glaser it depends a lot of what the family member (or friend in my case) is doing with those funds also, IMHO. 

I did a rehab loan on a property that I was flipping, with both the primary loan for purchase and the rehab loan coming from 'private money'. 

The purchase was from another flipper that I did construction work for. He had too many homes at once. He sold it to me for $0 down and interest only payments of 6% annual rate. He borrowed HIS money to buy it at 3% from his family members. They were happy to get that as they were retired farmers with hundreds of thousands in CDs at less than 1%. He was happy to make a 3% spread selling it to me, and making 10K on the deal too over what he purchased it for the week before. 

The fix up funds came from a family friend who is retired and a former landlord in his younger years. An extensive portfolio of investments with a good portion in CDs as Bonds. He was glad to loan the fix up funds at 3% also. These were both individuals I had known for YEARS and we had total trust in each other, and EVERYTHING was in writing. 

Last year, we borrowed from one of them again on a rental house we owned free and clear. He got a first position lean and 5% interest on a 5 year repayment schedule. Similar to bank rates but a whole lot simpler. 

These were both individuals that were more looking for a 'better ultra safe return' on the conservative part of their portfolios than someone looking to make an 'better return than the stock market returns'. 

Both can be the right answer, just depends on their needs. 

Dan Dietz

@Megan Hirlehey or others, 

I am particularly interested in hearing what details people have included about dissolving a partnership/LLC.

I am wondering about specifics of one partner buying out the others if they 'want out early'. Would this be 'at full value'? What would be the time frame? What would happen if unable to obtain financing, etc?

I like the thoughts on the surviving heir NOT having voting rights but just economic rights. 

Thanks, Dan Dietz

I have both partnered with my parents where they put up the funds and we (brother and I) do the work of the rentals. It works great, but everything is in writing and we have worked together in our 'day business' for years, so are used to business together. 

We have also borrowed 'private funds' from a close friend (and are working on several other similar private lenders right now too) who is of retirement age and had funds to loan. He is a former landlord in his younger days, and very wise with money. In his view, our loans are part of his 'safe funds'. He is essentially putting funds with us that would otherwise be in ultra safe investments like CDs or Muni-bonds.

The first one in 2014 I offered to pay 6% and he said 'he could only take 6%' (4 times CDs at the time). The most recent in 2017 we did at 5%. Both were 5 year amortizations. These were both first position loans on paid for properties and we were using those funds for down payments on additional places. Essentially almost ALL of the cash flow on the first paid for property had to go to pay off the notes that quick, but it allowed us to buy another 400K worth of good rentals for 'nothing down out of pocket' (just the equity we already had). 

My advice is put it ALL in writing, including 'what ifs' and have multiple exit plans. 

Dan Dietz

Hello All, 

We are in the very early stage of developing a 'Tenant Satifaaction Survey' to use in our rental home business, and looking for ideas or samples of what should, or shouldn't, be in it, and general feedback on your experiences for those of you who have done this. In general we feel we take GREAT care of our tenants from the verbal feedback we get from them. 

Our thoughts are to use this in several ways; 

• To know what we are doing 'right AND wrong' with our current tenants and what we could do to keep the good ones longer.
• To use the results when we are looking for new tenants to help persuade them to choose us over the competition, especially when our better quality properties are a little more expensive than much of the completion. 
• To use the results to convey to both our bankers and potential Private Passive Investors that we would be good to partner with - We have superior properties, management, and overall company culture to stand out in the rental property space. 

Thanks for any feedback you can help out with, 

Dan Dietz

I have found exactly what @Dmitriy Fomichenko says to be true (he is also my plan provider and I highly recommend his firm). 

I used NASB. If I remember right, there limitations were: no pre 1950 buildings, no houses converted to duplexes, minimum 100K of value and 50K loan. Our duplexes were 60% LTV, 4 plex 50% LTV, and SFH 70% LTV. I think their thoughts on LTV are 'how easy can we resell this if we need to foreclose.

We did NOT do a cash-out, but if I remember right, they DO allow it at purchase price. 

Dan Dietz

@Derrick Gordon I think you are getting some good advice here for the most part. I am in somewhat the same position - a partner in a small family business making a modest but decent income, but then I have 'paper loses' from being a 1/3 partner in 25 rentals that takes that down to very little. So as you can imagine, my DTI is not in a strong position :-(.

What we have done so far is 'portfolio loans' through a small local credit union type of bank that goes almost solely on 'the deal' (we do all have 700+ credit scores so show good money management). They will lend essentially as much as we want as long as we come up with 20% down and keep a DSCR of 1.2 or better.

I am also working on a couple deals with new partners who will be bringing the 25% down for FNMA loans and a DTI that has all kinds of room for more 'good debt'. That might be something to look at if you have a proven track record that would attract that.

Dan Dietz

Ill give this a bump, as I am interested in the same thing. 

Dan Dietz

One other questions since there are so many experts willing to help :-) 

Can I refi one of my commerical properties that I already own INTO a FNMA loan? If so, I assume that would be somewhere in the neighborhood of 75% LTV?

Thanks, Dan Dietz