All Forum Posts by: Jeff Copeland

It really depends on how much equity you have, compared to the closing costs and rate/terms of the new loan. 

$30k isn't a lot (because you can only access 75% of it on an investment property refi), and capex such as roof and HVAC usually don't impress appraisers in terms of adding value to the home (these are just things that all homes have that need to be replaced at certain intervals, they aren't really much of an improvement in terms of appraised value). 

For argument's sake let's say you paid $300k, put 25% down, financed $225k of the purchase, it appraised for $330k, and it's now worth $350k. 

You could pull out $262,500 at 75% LTV (75% of the current value of $350k)

After paying off your current mortgage balance (let's assume you now owe $220k after making several months worth of payments), you'd have access to $42,500 in equity. Minus closing and origination costs on the new mortgage. 

If your closing costs are $7,500, that's 17% of your available equity eaten up by the refi costs. It might make sense to wait until you have more equity. 

Then again, it also depends on what you plan to do with the remaining $35k. If that enables you to invest in something else that is a home run, then it might be worth it. Only you can decide. 

But, as you can see, the closing and origination costs are a huge factor when you don't have a ton of equity to pull out. 

A couple of other factors to keep in mind:

1. Rates are in the low 6's right now, so getting a lower rate is unlikely (at least not low enough to justify the costs or save you any significant money). If/When you can get a lower rate, this often justifies the closing costs on the new loan (if you can recoup them through lower interest payments within 2-3 years, for example). This does not appear to be the case for you right now.

2. Your old appraisal is irrelevant. The lender will have to order a new one, and not only has the market changed a lot since last year, appraisers also tend to be more conservative on refi appraisals. So it's possible you end up spending $600 or so on an appraisal only to find out you don't have as much equity as you thought. 

You'll have to set the permissions on the link in Google Drive to "anyone with the link" can view.

Unable to see the video. But to he honest, it's not going to be possible from a video to tell if a shower pan is cracked all the way through. If it's leaking, it probably is. And if multiple contractors have told you it is, it probably is. 

Your approach to your other questions will likely depend on whether it's the only bathroom in the house. 

If it is, you'll likely have to abate the rent or provide temporary lodging for your tenants. 

If it isn't, it's not unusual at all for contractors to work in an occupied home. If you were remodeling your own bathroom, would you move your family out of the house?

There might be some quicker/cheaper options, such as Bath Fitter (no affiliation, and not event a huge fan...but any port in a storm, right?).

As far as financing it, there's no secret solution, but here are a few commonly used options:

Credit Card

Home Depot or Lowes Card

HELOC

Trade Credit such as Hearth, Joist, or Dividend Finance (these are often offered by the contractors themselves). 

You can use it. But you'll most likely have to pay capital gains taxes on it if you do. 

Your QI will distribute it, and report it to the IRS, as "boot". The tax hit on $25k shouldn't be too excessive (and you may be able to offset it with other losses). 

Tagging 1031-Guru @Dave Foster to see if he has any other creative solutions for you. 

How much does she owe on the property? That will dictate how little she can accept as a down payment.

Check out https://www.biggerpockets.com/...

Airbnb is simply a platform for listing short term rentals. Everything on Airbnb is a short term rental. 

I don't understand the question.

An eviction is a lawsuit where the landlord sues the tenant for possession of the unit. You would/could only file an eviction lawsuit if the tenants were violating their lease (such as not paying the rent), not because their rent is too low. 

Your options will depend on a lot of factors, the main one being the lease. If the lease is for a specified term (and there is time left on the term of the leases, meaning the lease expires at some point in the future), then you generally have to either honor the remainder of the lease, or negotiate to buy the tenant out of their lease. You do not have any grounds for an eviction unless the tenant is in violation of their lease contract. You can give them a notice of non-renewal letting them know their lease will not be renewed after it expires. This is not an eviction, it's a non-renewal. 

If the tenants are month to month (either their lease specifically states they are on a month to month tenancy, or their original lease has expired and they remained in the unit on a month to month basis, or they had no written lease in the first place), then you can terminate their lease or raise their rent with proper notice (proper notice will be defined by state law, and/or the original lease). This is not an eviction. It's a termination of their month to month tenancy. 

In either of the cases above (non-renewal or termination), you would only have a need (and grounds) to evict the tenant if they refuse to leave after their lease expires or is terminated. This is referred to as a holdover eviction: http://www.evicttv.com/episode...

Eviction lawsuits can be costly and take a long time (especially in California), another option that is often faster and cheaper is Cash for Keys: http://www.evicttv.com/quick-t...

This is different for everyone. 

Some people prefer to be in a class where they can ask questions, feed off the energy of the group, and be kept on track by the instructor. 

Others prefer to read a book, so they can go back to re-read and review topics as needed at their own pace. 

Which are you? 

For what it's worth, there is a ton of educational material right here on BP - Be sure to check out the podcasts and the boosktore!

Out of curiosity, who is your lender? This should have been figured out before they issued you a preapproval letter!

Quicken/Rocket and other big national names are notorious for doing things like this, to the point many real estate agents won't work with them (or at least we advise clients not to work with them, but many insist and end up getting bitten like this much later in the process, when it matters). 

1. Is this legal? 

Yes, but it will likely violate the terms of your mortgage and could trigger the due on sale clause. You will also have to update your insurance to reflect the new ownership and maintain an insurable interest in the property (which can, in turn, can tip off your mortgage company since they are a named insured on your policies, and usually also increases your insurance costs).

2. Would we both gain 50% ownership once rolled into the LLC? 

The LLC would own the house. Your ownership percentage in the LLC and your LLC operating agreement would dictate how distributions and capital gains are handled. 

3. Can we refinance under the LLC or would we have to roll it back under the personel (sp) name?

You could refinance into a commercial loan. But not into a conventional mortgage (these are for individual persons, not corporate entities).

Here's the thing: You can always take out a 30 year fixed loan and pay it off in 15 years. You can't do the opposite. 

The 30-year term improves your cash flow if/when it's needed, and gives you more flexibility.