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All Forum Posts by: Jeff Copeland

Jeff Copeland has started 14 posts and replied 1737 times.

Post: What to do about mortgage rates negatively impacting cash flow?

Jeff Copeland
Posted
  • Real Estate Agent
  • Tampa Bay/St Petersburg, FL
  • Posts 1,853
  • Votes 2,075

You literally just described why rising mortgage rates put downward pressure on real estate prices: Consumers do not have as much buying power, so they either need to pay less for the same property, or have the seller offer concessions to buy down their rate (which is almost the same thing from the seller's perspective). 

In your case, owning and living in one side of a duplex for $200/mo out of pocket (after paying your taxes, insurance, operating expenses, and debt service) still sounds like a pretty sweet deal. How does that compare to the rent you are paying now?

Post: STR Insurance & Flood Insurance

Jeff Copeland
Posted
  • Real Estate Agent
  • Tampa Bay/St Petersburg, FL
  • Posts 1,853
  • Votes 2,075

I can't speak to STR insurance, but flood insurance (although there is a separate private market for it) is a federally-backed program, so the premiums are pretty standardized and carriers aren't generally going to cancel flood policies, because they don't pay out the claims. 

I personally had a flood claim in 2020 from Tropical Storm Eta, and it was an interesting (and mostly positive) experience. The insurance adjuster said "Look, I'm not here to figure out how little [big national insurance company] is willing to pay, I'm here to figure out how much FEMA will reasonably pay".

Post: consulting on the BRRRR method

Jeff Copeland
Posted
  • Real Estate Agent
  • Tampa Bay/St Petersburg, FL
  • Posts 1,853
  • Votes 2,075

Sent you a PM. Happy to help. LMK if you have any specific questions. 

Post: Starting a LLC without a property.

Jeff Copeland
Posted
  • Real Estate Agent
  • Tampa Bay/St Petersburg, FL
  • Posts 1,853
  • Votes 2,075

Creating an LLC actually has nothing to do with real estate. You could create an LLC to operate a food truck, sell shoes, or build websites.

The LLC becomes a separate legal entity, which can generate income and expenses, pay taxes, and own assets such as vehicles, furniture, fixtures, and equipment, or real estate.

Whether to hold real estate in your personal name versus holding it within an LLC depends on a lot of factors, such as the type of property, the type of financing used to acquire it, and your tax and liability protection strategies.

If you are planning to acquire commercial property, it often is a good idea to go ahead and get your LLC set up (because you might not have time to create a new one during due diligence on a real estate transaction). 

If you are going to acquire residential properties using conventional residential financing, you may need to acquire them in your personal name (because conventional Fannie/Freddie financing is for individuals, not for companies) and employ other liability protection strategies (such as insurance). 

These are all strategies to discuss with your CPA, attorney, and lender. 

But note they will often give you conflicting advice! For example, an attorney will often tell you to create an LLC for liability protection, but your mortgage broker will tell you that you can't buy properties in the name of your LLC if you want to lock in a 30 year fixed rate with conventional financing.

So you have to take all of their advice under consideration and figure out what works best for you.

They advise, you decide

To answer your original question: Yes, you can generally transfer assets into or out of your LLC at any time. Joe Smith the person would simply transfer ownership of the asset to Joe Smith Enterprises LLC. You would do this with a deed for real estate, or with the title for a vehicle, for example. 

Post: Owner finance offer on my property

Jeff Copeland
Posted
  • Real Estate Agent
  • Tampa Bay/St Petersburg, FL
  • Posts 1,853
  • Votes 2,075
Quote from @Ben M.:

Would a seller finance hurt my credit or loan approvals in the future?

 The seller financing itself would have zero impact on your credit score (if anything your credit would probably improve when you pay off the existing mortgage)*, and it would increase your income. 

You would be the owner of a "performing note" - a mortgage note that pays you a monthly amount in principal and interest for the next 5 or 8 years in the scenarios you outlined. 

Side note: You could actually sell the mortgage note if you needed your cash sooner. There is a market for note investing. 

*This is assuming you got a down payment large enough to pay off your existing mortgage. If you did a subject-to or a wrap, the existing mortgage would remain in your name and remain on your credit, and you'd be relying on the buyer to make the payments on time, so there is some obvious risk to your credit in that scenario. 

Post: Owner finance offer on my property

Jeff Copeland
Posted
  • Real Estate Agent
  • Tampa Bay/St Petersburg, FL
  • Posts 1,853
  • Votes 2,075

How much do you owe on the existing mortgage? Unless you can pay off your existing mortgage with the down payment of $37k or $45k, you can't really seller finance this deal (at least not without a much more complicated wrap or subject-to arrangement). 

Check out https://www.biggerpockets.com/... for a detailed overview of seller financing. 

Assuming you could pay off the existing mortgage and seller finance it, you would no longer be responsible for the taxes and insurance, because you would no longer own the property

Post: Tenant Can't Pay Rent Until November 18

Jeff Copeland
Posted
  • Real Estate Agent
  • Tampa Bay/St Petersburg, FL
  • Posts 1,853
  • Votes 2,075

1. Trust by verify. Ask her for documentation from her employer, doctor, etc. 

2. Start the eviction process (which usually starts with the serving of a pay or quit notice), but have the notice expire on the 18th or 19th if possible (Note that if it is a CARES Act covered property, it will still require a 30-day notice anyway, so the sooner the better). 

The point is, don't wait 18 days to see if the tenant follows through on their word, because they often don't. Start the process now, so you aren't almost three weeks behind the curve if she still hasn't paid by the 19th. 

Communication is also key. Don't just post an eviction notice and leave her confused (because then she almost certainly won't pay). Tell her "I understand these things happen, and I'm sorry to hear about your injury. I'll give you until the 18th, but I also have to serve you this pay or quit notice so if you don't pay, we have the option of moving forward with an eviction or an early termination of your lease. But as long as you do what you say you are going to do and pay on the 18th, this will all go away".

Post: Does Credit Score Requirement Need to be Put in Lease?

Jeff Copeland
Posted
  • Real Estate Agent
  • Tampa Bay/St Petersburg, FL
  • Posts 1,853
  • Votes 2,075

Only qualified applicants should be signing your lease, so the credit and background check comes way before the signing of the lease. 

You need to have published tenant screening criteria that address not only credit score, but also your income requirements, eviction records, criminal records, etc. 

And then you need to screen every tenant the same, using the same criteria, in order to avoid Fair Housing and discrimination claims. 

Note: Although I mentioned criminal records above, this is a very tricky subject. Make sure you understand the HUD guidance on the use of criminal records as grounds for denying someone housing. There are groups out there that will literally call you up and ask if you rent to convicted felons. If you say no, they hit you with a lawsuit. This is just one example of the many potential pitfalls associated with tenant screening. 

If you insist on self-managing, you'll need to learn a lot of stuff about a lot of stuff. I highly recommend a website called EvictTV.com - They have hundreds of explainer videos about landlord-tenant issues (and I'd recommend watching every single one!). It's produced by a Florida-based attorney's office, so some of the info is Florida-specific, but 80% of it applies across the board. 

Post: Sellers are trying to keep deposit HELP!!!!!

Jeff Copeland
Posted
  • Real Estate Agent
  • Tampa Bay/St Petersburg, FL
  • Posts 1,853
  • Votes 2,075

The timelines are key here. 

Were you inside the timeframe specified for your financing contingency? Or had that expired?

And, as noted by others, most contracts also have a clause stating that time is of the essence and the buyer/borrower shall provide timely information to the lender for the purposes of meeting the financing contingency deadline. 

If you are in default, the seller is being generous by offering you half of your deposit back. 

Post: What do you wish you knew about multi family 4-12 units BEFORE?

Jeff Copeland
Posted
  • Real Estate Agent
  • Tampa Bay/St Petersburg, FL
  • Posts 1,853
  • Votes 2,075

There's plenty of free sage advice here on BP if you spend some time exploring the forums, bookstore, podcasts, etc. 

It struck me that 4-12 units is an odd range. One of these things is not like the other. 

2-4 Units = Residential property for financing purposes

5+ Units = Commercial property for financing purposes

You might consider spending some time exploring the difference between residential and commercial financing options, and researching/interviewing lenders and loan product options for both. Then you may end up with two different sets of search criteria, for example:

3-4 Unit Properties in a certain price range/location/property class (which will require a relationship with a residential lender), or

5-12 Units in another price range/location/property class (which will require a relationship with a commercial lender, and possibly even a different real estate agent/broker, depending on your market etc)

Having both options lined up in advance will allow you to pull the trigger on either if/when the right deal comes along, rather than having to start from scratch if one piece is missing.