All Forum Posts by: Erick Garske

Generally, what is the range of turn over cost for preparing a property to be rented again in Baltimore City for a 3 bedroom one bath townhome?

@Ned Carey I ended up changing title on these loans from the LLC to my own name. The process took about thirty days and was actually the most trouble free loan process that I have yet experienced. And on the upside I was reimbursed the cost of the title transfer for one of the properties since a mistake was made when the title was recorded.

@Parag Dave The one lender that I originally was going to recommend to you does not lend in Nevada.

@Mike Waltman I ended up changing title as a condition of closing with the same title company used to originally close the loan

I would like some feedback on what Property Managers and Investors use to track their financials.

Over this weekend, I have talked to a couple of accountants with property management experience. One accountant preferred to use QB online, while another preferred the Windows desktop version, and yet another completely dismissed the use of adapting QB for property management in favor of using another SaaS offering like folio and even going so far as to insist that you need one bank account per property in order to best track the individual transactions.

I am also interested in a free online educational reference that can be used to instruct me on the details of recording a HUD-1 statement for purchasing property, recording a closing statement for the sale of property, and the technique used to record both types of transactions within a 1031 exchange.

Thanks,

Erick

I have a question in regards to the replacement property and carrying over a mortgage. I believe that the rule is that you need to carry. over at least the the same debt service from the relinquished property. In my case the prior debt service is minimal, about 28k. I would simply like to use both cash from the relinquished property and my own cash. Is the doable? Would this still be within the guidelines of the exchange? Thanks, Erick

@Russell Brazil That's interesting that you managed to get your properties reassessed to the purchase price of the property. That is what is really it should be in the first place once it is purchased as a baseline.  How soon after your initial purchase did you get the properties reassessed? 

Also, have you tried any of these resources to lower your property taxes based on the length of vacancy:

http://www.baltimorehousing.org/homeownership_tax

I have already completed one 1031 exchange this year, and in the middle of another exchange. 

The issue that I have is how to precisely record the exchange in Quickbooks 2015. Since the premise is that there is no financial gain to a 1031 exchange does it need to be recorded simply by closing one fixed asset for another fixed asset? 

Having searched the archive here, I have not isolated this topic before. Th.at said I've heard varied opinions from both sides of the spectrum. Can anyone shed some light on this subjective subject?

Originally posted by @Mike Sattem:

@John Calcanis,

The delayed financing exception is a route to Fannie Mae/Freddie Mac financing. These basic guidelines are thus: If you purchase a property for all cash, you can finance the property within 6 months of original purchase using a Fannie/Freddie loan for up to 70% of the new appraised value, not to exceed the purchase price. because you are buying for cash, and most likely doing some form of remodel, I always plan on just receiving my purchase price as the financed amount. Additionally, you can finance your closing costs onto the loan above and beyond the 70% LTV/Purchase price amount. Below are some examples of the way I have done this.

1602 Monroe Ave, La Grande, OR 97850

Purchased for $58,650 in August of 2015, all cash

Had rehab costs of $6500 (paint, carpet, and some minor electrical)

Financed the home using the delayed financing exception in January and received a mortgage of $61,000 (Purchase Price plus closing costs)

I then rolled this cash into another property, and repeated the process again, closing that loan in March.

I eat my rehab costs out of pocket, but it's a method that has worked well for me, and I have purchased four homes in the last calendar year doing it. As a side note, I actually purchased all of these with "cash" from a line of credit, so in reality I was able to get all the benefits of a cash purchase, (quick closing, solid offers) without using my own money. The delayed financing exception will require that the lender source your funds, and if you use borrowed money like me, they will require it to be paid back with the financing money, but I always pay off the LOC's when not in use anyway.

Hope that is helpful,

 Thanks Mike. That's very useful. I hadn't considered the financing of the closing cost. I'll check with my lender about that option to see if it is available for me.

Originally posted by @Percy N.:

If you keep the property in a LLC, you have a few financing options:

1) Do a "delayed" financing, which will give you around 80% Loan to COST. They can be done within 6 months of purchase.

2) Go to a portfolio lender, who may require the property to season (6-12 months) but will finance for a slightly higher rate (around 5-5.5%) for 80% LTV

3) Get a commercial mortgage

4) Get a commercial LOC if you need the money short term but do not want to pay for debt service over the long term

5) Get private financing (terms will vary greatly but usually much higher than bank)

I ended up changing the title and doing a delayed financing. 

All of the other options are extremely valuable. Thanks for the reply.