All Forum Posts by: Greg Scott

In my experience, extra liability coverage is a cheap add, plus you benefit from the additional protection.   Why do you not want to change coverage?

Yes.  The main reason is probably that they want the property tax assessor to see the property value as $481K not $641K.   However, this only works if the buyer has a lot of cash.  Banks won't want to lend against the personal property in the mortgage.

For about 10 bucks you can get an ESA letter off the internet from a licensed therapist.  (Licensed in what?  Who knows.)  Most of them are just ploys to bring a pet into an apartment.   There are legal ways to push back on this activity but you will probably want to consult a real estate attorney, especially because you live in California.

Since you are acting as a landlord, California laws basically assume you are at fault unless you can prove otherwise.

Eric:

It is unusual to try to negotiate on home loan.  Usually people just shop around.

If you do find a bank that can provide you a longer amortization, you probably won't like the interest rates.   Why? The 30-year fixed loan that most people get is subsidized by US Gov agencies Freddie and Fannie.   If you get a non-conventional loan, interest rates will almost certainly be higher.

Painting brick turns something that is maintenance-free into something that must be maintained. The added expense drags down your annual NOI and therefore destroys value in your property. Most apartment owners I know dislike painted brick for that reason.

Is there another way to make it pop?   

Congrats on your acquisition.

Have you looked into getting a standard mortgage rather than a HELOC? Qualification may be easier.

Until I got into real estate investing I maxed out my 401K every year.   Now I regret it.   (I've been with my employer for 22 years so have no access to those funds, save a $50K loan.)   You can make soooo much more in real estate.

If I had not been so diligent about funding my retirement account, I WOULD ALREADY BE RETIRED!

William:

If you want to get wealthy, you don't want to talk to a CFP!   Most of them only know how to sell stocks and mutual funds.   Those are terrible vehicles for growing wealth.    You have no control, there are high fees (often hidden) and you get crushed by taxes.   Have you heard the joke about how to become a stock market millionaire?  "First, start with 2 million."

You have plenty of capital already to get started in real estate.    Take the plunge!    The water is fine.

Niko:

Here is how I have done it before:

 - Buy the property in your name

- Form and LLC

- Quit claim the property into the LLC

 - Record the deed

- Change your insurance policies to reflect the LLC as the owner.

Doing this you do run the risk that the lender will call the note because of the due on sale clause.  Realistically, it seems a very rare that it happens.

To avoid all the brain damage from the above, another strategy is simply to beef up your insurance coverage.   I have $500K liability on all my properties and a $2M umbrella.   Those two things are going to cover 99.99% of potential issues.

Chris:

Selling would create a taxable event for you.   Unless that property just makes no sense for you any more, it is probably not the best financial decision.

A cash-out refi will likely give you $1M or more to go buy more real estate and you won't pay taxes on the loan proceeds.  It is a far better solution.

It is worth noting that on a commercial loan the property finances are much more important than your credit score.  Actually your tenant's credit worthiness will likely be more important than yours.   I would see if you can get a 25 year Am to maximize cash flow.

Consider getting a cash-out refi on your personal residence too.   If you can borrow at 5% and earn at 20%+ it is a no-brainer.

Good luck