All Forum Posts by: Anna Laud

@Jeremiah Lewis

Hi Jeremiah!

It seems that you're right in an RV not being an ideal fit for your family's size, so I too would scrap that thought. In having six months of cash reserve saved up for mortgage payments- that's a good plan to simply set aside as much as possible. 

If you know current rent rates in your area for the home you're thinking of renting out, you can probably project rental income vs. mortgage payment amount. Now, with this in mind, you should be able to tell how much of a loss you'll be at each month. 

Meaning, if you're renting for $900/mo and your current mortgage is $700/mo, you're $200 ahead, minus another rental for your family's needs of $900 (assuming you'll be renting same-ish size as one you're looking to rent out now) = -$700/mo so this would be pulled from the cash reserve amount or monthly income amount. Obviously a loose projection, not taking into account rental expenses, assuming you'll serve as PM, you second renter's insurance etc. 

One thing I would advise against first is moving forward without getting in touch with your current lender and insurance providers- renting the current property out may change terms in some cases and you need to be fully transparent in plans. 

If you're set on building on this land, it seems you may want to get pricing figured out in a more for sure approach (as you can, I realize material pricing right now is not 'normal') to get an idea of how much you really can afford to build. IF it turns out that building is simply out of budget you may need to look at already built homes. 

I think your first step should be getting in contact with your current lender and seeing what you would qualify for in terms of financing at this point, then delve into the realm of new construction loans pre approval once you have a ballpark of how much a new build will cost. 

From here, assuming you get pre approval for a new construction loan, moving into a cheap rental would be one option- I would be cautious of where if you have school age children; in some districts the mailing address must match the home address for the children to attend the same schools as now, and I doubt you would want your tenant receiving anything from the school as it pertained to your children in terms of privacy if you tired to get around this by listing current address as home and mailing address. This will also impact bus routing, and it's not unheard of for a driver to radio in that children were dropped off at bus stop, not coming from house and we've dealt with superintendents following cars home from bus stops to verify actual home addresses in highly sought after school districts. Not a mess you'll want to deal with. 

Once you have financing in place, and it's determined affordable, it seems the rental would work as an 'in the meantime' home until the new build is ready. 

If it turns out that it will be more affordable to purchase a preexisting home (again, financing in place), then it may eliminate the need for the rental altogether, simply by moving and then renting out your current home.  

One suggestion here would be to maybe consider the placement of a modular home on a portion of the 10 acres not needed to build on. If you're taking into account the ballpark number of $900/mo (or whatever you're planning on paying in rent) x 24 months (just an average based on new build timelines and playing the waiting game with material pricing etc) that would be about $21K ish- or about half or 1/3 of the cost (this will be area specific to you of course) of a small modular home maybe. 

If you have this kind of cash now, it might be easier to get a small/cheap modular home set up while you await the new build, then have 'two doors' to rent on your land than the one alone after you move from the modular home. In theory, you would have two rental incomes then to cover first loan payment and help with second loan payment on new build. 

Third (I think by now ha) option is to sell off some of the acreage to a developer and make as part of the negotiations the building of your new home in terms of a discount maybe. 10 acres would accommodate current home, a modular home, a new build and maybe selling off a few lots it seems. Even if you bypassed the modular home route, this would add to cash reserves at least. 

Hope this helps some! 

@Seth Larson

Hi Seth! Great to know you see both sides here too- not too much to see right now with flooring being done etc. but I have some before pics. All 'honey oak' all carpeting being replaced with flooring to match woodwork (some done, pic included- but no carpet to remain), stone flooring will wrap up in kitchen and baths, etc. Up-close pics of cabinets are in all three baths to the same extent/finish level. 'Popcorn' ceiling being replaced as well, but have left beams 'as is' for now. As noted in a couple pics, all window trim is of the same finish, spindles between sunken family room and kitchen are matching to top of kitchen cabinets and run floor to chair rail level. Hearth remains unpainted at this point as well so this would be factored in if repainting woodwork. Would love your input as well & thanks! 

@Evan 

@Evan Polaski

Thanks for including the pictures - this is actually very helpful. No, not a true MCM property, only in appearance. I think perhaps you're right, and with that in mind there's seems to be the 'happy marriage' of  a modern look, with original design elements to combine. You and your wife did an outstanding job of this it seems! 

Yes, I think that Michael had a valid suggestion for some markets, but it seems like end users -  in the market of the property- are probably more into move in ready product. 

Thanks to you both for the input! 

@Michael Plante

Hi Michael! 

Yes- have run those and they aren't as high as those that have finished the wood off/modern looks, but none of the wood was at a baseline start in quality of this current property to begin with - if that makes sense. What was painted and 'updated' wasn't solid oak (more big box style in quality at a lesser initial cost), it was placed to lesser extent throughout the homes, and in some cases is was in disrepair - to which this is still in near original state. 

Maybe I'm too hung up on the quality of the wood and craftsmanship vs what is more common knowledge in end use buyers - how many of them will know it's value and appreciate the overall style of the property in design vs how many want modern/light and what's currently popular. 

Comps & level of finish I'm clear on, just not the clearest path to take in terms of what would be more sought after for end users. I suppose finding a trim carpenter as a buyer (who would appreciate all of the oak) might be like finding a needle in a haystack ha. 

Maybe it's best then to hop on the 'modern look' bandwagon an appeal to more buyers...  

Appreciate your input! 

Hi everyone & thanks in advance for any and all suggestions here;

Usually I'm on the answering side of things, so this is out of pattern for me, I'll admit = ) In design ideas for flips and rehab work, I've never encountered an issue with design ideas and what end users will find appealing- thankfully. Now however, I'm looking at some design ideas for a property that I'm just not certain on, and it's due to the fact that it's simply not like any other property I've dealt with before. 

This is a Class A+ area, ARV of $800K. Now here's the question; All of the woodwork in the house is custom oak. The kitchen cabinets, bathroom cabinets, crown molding, baseboards, banisters, wainscoting, chair rails, built in book cases on each side of the hearth, closet doors (solid oak), bedroom doors (solid oak), window sills, overhead exposed beams, EVERYTHING - down to the spindles in decorative ornamental design, newel posts, even the attic access doors ha- all custom made for the house from solid oak. Absolutely none of it is is disrepair and it's truly one of a kind.

The issue is it seems outdated in design - again never an issue before in flipping as it's very easy to give a 'modern/fresh' look that's so appealing to end users. In this case however, it seems like it would be easier to install stained glass windows in the kitchen to match the custom stone backsplash, wood floors, Tiffany style light fixtures,  and overall more Victorian/gothic feel than to try and make it look 'modern'.  If you can imagine the feel to the B. Harley Bradley House in design by Frank Lloyd Wright, this is what I working with. 

Some of the homes in the area have tried to update and look more modern, painting similar looking (yet not solid/custom oak) wood styles white, adding in more modern looking light fixtures, accent work etc - but it seems 'cheap' looking to me. Maybe this is due however to knowing how much it would cost to have something like all of this made in today's market. 

Do I bite the bullet and try to make it look modern, comprising custom, vintage, one of a kind quality to appeal more to end users,  or truly play up the custom elements by adding in more period design elements such as stained glass, hammered bronze sinks to kitchen & vanities etc. One will appeal to only a few end users, while the other would appeal to a more broad base end user pool it seems. 

If this property were in Chicago (like Oak Park) and not Indianapolis, it might seem more clear to me to stick with the original design concept and truly embrace the more 'old world' feel, for Indianapolis however where modern looking flips are in steady/constant supply, it's more questionable. 

Thanks so much- sorry this was long! 

@Vishal Gala

Hi Vishal!

I think maybe this will depend a little bit as to how the property is titled- if you purchased/titled it through an LLC, it's still the LLC that is the owner.

If this property was purchased in your personal name (and this may be the case as you lived there prior to getting married it sounds like maybe) you can either set up an LLC and transfer the title to the LLC or you should probably be able to obtain an umbrella insurance policy that would cover in case of lawsuit.

You probably do need to let your lender know that you're no longer occupying the property /renting it out if there's a mortgage on it, as well as your homeowner's insurance provider. The homeowner's insurance provider should be able to help with the umbrellas policy as well. 

If you haven't already rented it out, probably double check if there's an HOA that there are no ordinances outlining renting is not an issue for this neighborhood as well.

Hope this helps some! 

@Amanda Santos

You bet, happy to try and help = ) 

@Amanda Santos

Hi Amanda!

You should be able to use cameras in common areas without question apart from private areas of rooming occupancy. Meaning if in the kitchen, don't point the camera at the half bath door off of the kitchen, rooming bedroom door etc. 

Footage should only be brought into question over incidence, and not used as false leverage to question on comings and goings, who is brought in (such as dates) etc. as this would fall into harassment and a breach of lease as it pertains to the quiet  enjoyment and the very principal of their equitable interest as a leaseholder. 

There may be local legislation to consider on this as well and worth verifying, and I would consider making other parties aware of these cameras  in use right away. I would be ready to have supporting data as to the necessity of them and be sure to include exterior cameras as well, not only in the common drive/entry area, but along the rear permeameter as well- otherwise it seems as if spying on the interior might be miscommunicated as the goal, and if truly for security, you would be covering all points of entry without exterior cameras along all exterior walls. 

Occasionally there is reasoning beyond the element of security from unwanted external sources coming inside, such as that of a child that may be prone to fleeing. In such a case as this, there may be more of a reason (including legally) to have cameras anywhere in the home you would desire to have them placed beyond the bedroom and bathroom. But for typical security use, I would check local legislation then move on to installing with full disclosure in common areas both interior and exterior as you planned on doing keeping boundaries of quiet entitlement in mind. 

Hope this helps some! 

@Jayden Hamilton

Hi Jayden! 

It depends on which bank you're using in some cases and as to what they specifically might be able to do with online options or you- some banks have Zelle for free transfers, but have little hang-ups like daily limits of $750. 

Just for a quick answer a lot of people are pleased with ZenLordPro https://www.zenlordpro.com/pri...

Should be able to get a decent amount of things here with the free plan in most cases. 

The long answer to this is that I've recently put together a class on which banks are best for landlords, as well as the separation of accounts for landlords and I'm currently working on ACH set up and how to incentivize this for tenants. 

Mainly you'll want to make sure that if you're going through your bank it's on your timeline in collection dates, and that the fees are not unreasonable. 

Yes- electronic payments are the best way to go in most cases- avoid "check's in the mail" excuses. It's not always possible, like in dealing with older tenants for example, but usually it's the best way to assure rent is coming in each month on time. 

I can DM you some the links to the first two classes I was telling you about, and when these others are ready as well. 

Overall; check with your bank first for a free option like Zelle, then move onto setting up with a third party player like ZenLordPro (there are numerous rent colleting apps, this one is just pretty easy to use) and you're thinking along the right lines in setting up electronic payments. 

Hope this helps some! 

@Jonathan Duhon

Hi Jonathan! 

I think it seems like you're worried about what looks like a conflict of interest on paper come tax season maybe. While I'm not a CPA and this question is best suited for one, there are numerous ways to have the organization of LLC's work in your favor.

With two separate EIN's and two LLC's, these are (to the best of what I can suggest as a Realtor, not a CPA!) two separate business entities. Let me break down the complete separation for you in how I would think you would proceed;

- Two LLC's, each having an EIN

- each LLC having it's own bank account (the investing LLC and the contracting LLC)

- either an umbrella policy for each LLC or an umbrella policy for the investing LLC, and what your state requires for the contracting LLC to have (licensed through you as manager, boned/insured etc)

After the firm establishment of two separate business entities, it seems like there would be no reason that you could not hire your company to do these rehab jobs. I would not personally worry about a 'small' fee as that indicates maybe a discount rate and charge what is an average competitive market price once I verified with professional advice on the matter.  You have subcontractors to pay, overhead in marketing, insurance costs, supply costs etc and there would be no reason to short change yourself here on what you paid yourself.  

It should turn out that using the pass through income setup of the LLC's will put these revenues under your personal taxes, just as expenses. I would also recommend getting with a CPA who truly knows there stuff; Personally I use a tax attorney/CPA who has surmised as much as I can deduct in all areas, including prorated portions of my personal phone bill, home utilities in SqFt%'s, as my business headquarters are from home/ in home office.

So yes, it makes more sense to not only formally hire your company to do the work, but to also make sure things are set up properly from the start it seems. 

Hope this helps some!