All Forum Posts by: Jaysen Medhurst

@Eric Gutierrez, I have them in my personal home and they work fine. The cost is on part with a quality window unit. Installation will really depend on the unit construction--wood, masonry--and what floor.

What's the motivation for installing? Is A/C a given in your market? Do you think it will be a differentiator? 

@Jehd Jones, lots of opinions on this. If you plan to buy more investment properties down the road, I think it's a good idea to start with an LLC. It protects you both inside and outside the legal entity. If you think it will just be this one as an investment/personal property, it's probably not worth the hassle and paperwork. Just make sure you've got good insurance.

Hi @Edward R., I'm not a lawyer, but I'm pretty sure that once you take ownership the contents are yours as well. Especially, since he has vacated the property.

That being said, NY is a very tenant-friendly state, so it's probably a good idea to pay a few hundred bucks and get an actual attorney to weigh in.

@Amanda N., sounds a bit too good to be true. 10% in 120 days works out to be over 46% annual return. Really do your homework and talk to several other people who have invested with the flipper. If it's all legit, go forth and prosper.

I'm not a tax or asset protection attorney, but I don't see any need for an LLC at this point. Plus they're very expensive in CA. Pretty sure you'll pay standard earned income tax on the money you make, even in this situation, as a flip isn't considered investment income by the IRS.

@Derrick Thomas, I'm not an expert here, but I don't think you can do that with an FHA, since it requires owner occupancy and you won't be living there.

Normally, it would be possible for one partner to guaranty the mortgage, but both be on title (or better yet use an LLC), but I think the FHA loan is going to trip you up. Anyway you can do traditional financing?

@Natalia Zhou, start by talking to your lender and see if they would have a problem moving the title to an LLC. There might be some paperwork/costs involved. Remember, you'll still be personally responsible for the loans.

You can also explore refinancing the properties and transferring titles at the same time.

Asset protection gets complicated fast. Check out Clint Coons on YouTube, he offers a lot of sound guidance.

@Khemaro N., No, this would not be a wise decision. 

Paying off a depreciating asset (your car) by taking equity from an appreciating asset (your house/renal property) is a terrible idea.

First off, as a pure investment property your duplex is probably not very good. If you weren't living there you'd probably be barely breaking even. This is based on the simple 50% rule.

Now with regards to the car and refinancing: Have you considered taking the $40k in equity and using that to purchase a true investment property? I'm thinking a triplex with an asking price in the $150 range, cashflowing $150/door/month.

With $450/month cashflow you can easily cover your car payments and have CF left over. Additionally, you'll get the depreciation, mortgage paydown, and market appreciation. This is a much more sound financial approach.

You may need to look outside of your immediate market to find a deal like this, but not too far. Central or Western Mass, maybe?

@Ashley L., my first thought is to take a hard, cold look at the numbers on this deal. I don't think it's a winner. You'll most likely be in the red.

Without actual numbers and just using the 50% rule, you'll be $650/month in the hole. Have you run this through the Bigger Pockets Buy-and-Hold Calculator? You should and be brutal and conservative with the numbers.

What are other renovated properties in the area going for? You're going to be $590k all in after purchase and renovation. If this was a flip or BRRRR, you'd want the comps to be $800-850k.

I REALLY DON'T LIKE THIS DEAL.

With regards to the ownership split, I would set up the partnership based on the equity with some consideration given for who's managing the rehab. Going just by equity, you should own 68%, your parents 32%. Adjust your number up if you're managing the reno. 

To keep things clear, you and your husband could still pay market rent. Then you'd take your portion of the cashflow each month. So you'd still be paying $800/month out of pocket. That avoids all the messiness.

BTW: if your parents are taking an ownership stake, they aren't "gifting" you the money.

@Account Closed, I'm not a CPA or tax lawyer, but as I understand it you can't offset earned income over a certain point (I think $125-150k/year, not positive).

It's unlikely that you would be showing a loss on a 50-unit, unless it's in a high-demand/low-cap rate market, where you're really getting appreciation and not a lot of relative cashflow.

That being said, you don't do get to "hold on to" your RE losses. Say your show $10k of RE losses in 2017 and then $15k of RE profits in 2018. You can carry the losses forward and apply them towards your 2018 taxes.

@Randy Frederick, why do you think the owner would accept 70% of asking price? It doesn't sound like there's a ton of work to be done on the property.

I really don't think the owner would go for that price AND seller financing. There's very little upside for him.

If you effectively finance 100% of the property, it's going to be very hard to cashflow.

Not knowing your market, it's hard to make sense of your numbers. But the rents sound very low compared to the asking price.