All Forum Posts by: Account Closed

@Demario Scott consider turning to the MLS for your first deal, just to get your feet wet. Once you do one deal, then all the others are easier to jump into.

Also, Clayton Morris addresses Analysis Paralysis in one of his earlier podcasts by saying "You don't have to be 100% sure, only 80% sure and the rest will follow." This helped me TREMENDOUSLY overcome my personal analysis paralysis. 

How about adding free access to BP Landlord forms first?

@Barbara Hlavaty Why not go BIGLY with a $400,000 multiplex? You can put 25% down ($100,000) and possibly pay closing out of pocket.

Just to make sure, you used an 1031 intermediary for the sale that yielded the $100k, right? Because if not, you cannot 1031 exchange into a new property. 

@Todd Dexheimer I agree with you. I figure the way they probably get around the SEC rules is by introducing you to the potential partners so you may become "friends." Then, as you and the broker are now "friends" you bring him into the deal at a % or pay him in an advisory capacity a dollar amount. Fine lines to walk for sure. 

Just finished Grant Cardon Podcasts #071. In it, he casually mentions that, if you find a great deal and need funding partners, you can reach out to a broker to put together funding from their contacts. The Broker may charge something like $30k, but in the end you will get your funding. Can anyone elaborate on this process? Is he referring to Commercial Broker? Thanks. 

Hi everyone, I closed on a property last week, listed it for rent the day of closing, and am performing some minor changes before it is rented. Based on my understanding of @Brandon Hall BARRRR stategy,  since the property was made available ('For Rent' sign in yard - and yes, i got a time stamped photo) and ready (it is move-in ready), most of the changes I am making can be expensed instead of capitalized. However, I started thinking and realized that - per my understanding of de minimis safe harbor - most of my projects under the $2,500 cap would be expense-able ANYWAYS! For example:

$1,000 - Paint Kitchen and Bath Cabinets

$500 - Refinish the Bathtub and Tile Surround

$1,000 - A/C Maintenance and cleaning

$1,650 - Replace breaker box and run grounds to Kitchen/Bath for GFCIs

Here is the primary question: Does de minimis safe harbor apply to each project (making all of this expenseable) or is it the sum of applicable projects UP TO a $2,500 max?

@Nick B. I underwrote the income according to similar market rents (rentometer.com) and estimated the expenses from the hip. The rent is adjusted down since renters can get similar sized properties at a community with nice amenities - and more - for $1165 on average. I've learned that 40% to 50% is the norm in conservatively estimating expenses. What do you use?

@Kyle Jean Good point on the set-aside. I had figured the following expenses: vacancy/credit (8%), Property Management (8%), Property Taxes (4%), Insurance (3%), CapEx (10%), and Repairs (5%). I thought I was being pretty conservative at 38%

On a side note, the reason I used ProForma numbers is two fold:

1. No T12 was available for the property nor any other information (NOI, CAP).

2. I'd like to buy the asset at a price that conforms to how I expect it to perform, at a minimum. 

Any other thoughts or suggestions?

Hey Everyone, my goal is to analyze at least 1 MFH deal a day for the next 30 days. For Today's Deal, I am analyzing a 24 unit complex I found on Loop Net (Address: 11519 Pecan Creek Pky). Below are the details:

Ask Price:   $2,595,000

25% DP:   $648,750

Monthly P&I (30 Year Amor @ 6%):   -$12,897.15

Annualized Market Pro Forma Numbers

Pro forma Rents (24, 2/1 units at $995/month):   $286,560

GOI with Vac/Cred at 8%:   -$24,357.60

Pro forma Expenses at 30%:   -$85,968.00

NOI:   $176,234.40

P&I:   -$154,765.80

Cash on Cash Return:   $21,468.60

Deal Metrics

Cap Rate:   6.79%

Debt Coverage Ratio:   1.14

Cash on Cash Return:   3.31%

Cost Per Door:   $108,125

Adjust Rent/Price Ratio (per door basis):   0.9202%

My MFH investing education is still on-going, but it looks like the seller is trying to sell this as a stabilized asset. Personally, for a complex built in 1979, the price seems a bit reach. The numbers do not seem to work for me either as, at a minimum, I'd like to be at 12% cash on cash with a DCR above 1.25. Also considering that market rents are near $995, there doesn't seem to be a value-add play here. To make this deal work, I would need to pick it up at $1,975,000, which would be a CAP Rate of 8.92%, providing me with a Cash on Cash ROI of 11.84%. The cash flow would effectively shift from $74.54 per door to $202 per door making this deal more attractive.

What are your thoughts? 

@Nicole A. My apologies, I should have been a bit clearer. I am leveraging this property personally, not under an LLC. I simply wish to quit claim it to the LLC and manage it accordingly. I can add the LLC as a 'Covered Persons' to the current insurance policy and my lender advised me not to be concerned about the 'Due on Sale' clause - I have it in writing.

@Tom Gimer It will be a zero consideration transfer. Would I still be in the clear if the LLC was my wife and I instead of just me? I'd like to add language to the OP Agreement that prevents forced transfer (subject to partner approval).

Also, just to be even clearer, I have title insurance for myself personally (the purchaser). I've been advised that once the property is deeded to the LLC, then that LLC would need to buy Title Insurance as mine would not cover the LLC and would be essentially void.

Hey there BP Legal Community. I recently closed on a SFH, am under contract on two others, and am looking forward to buying 3 more before year's end. Aside from adequate Landlord/Liability/Umbrella Insurance, I am also working to title each property in an LLC all it's own for added asset protection. Luckily for me the cost to do this are very low given the state I am invested in (Louisiana). I thought I knew all there was to know on how to properly execute this strategy (i.e. no co-mingling of monies, 'due on sale' clause, etc) but at closing, I was informed by my title company that doing this will invalidate my title insurance as it only covers myself, not the LLC. first, is this true and second, if so, is there anyway around this?