All Forum Posts by: Jeremy Sharp

@Corey Griffo I hope to make the next one...I drilled a hole through a water line last night (stud finder found the pipe and not the stud...) so couldn't make it. Does Bluegrass REI send out emails too? I just cut ties with social media after a long battle so hoping to not have to use facebook again!

@Chris Virgil-Stone great thanks for the confirmation. I actually just used this same process to secure a HELOC with a local bank on another property as well to secure the funding to buy the house. The local bank forced me to do a commercial HELOC with less favorable rates if it was in the LLC but would allow me to do a HELOC on a rental property if it was in my personal name. So a quit claim deed allowed that to happen. Originally they told me they would give 80%LTV +0.25 prime but once they found out it was multiple units they said 65%LTV was the best they could do. A quick call saying I was out if they couldn't do the 80% that they promised up-front and another call to the bank VP and in 5min they agreed to 80%LTV (thank you local banks)! The payback amount is 1.5% of the loan amount / month which is higher than a principle residence but in the end it forces me to pay down the principle faster...makes cash flow more tight but allows the HELOC money to be put back in use quicker.

@Robert Shedden great job jumping in...it took me 6 years to build up the equity and the knowledge to buy my next property "correctly"...surround yourself with a great team and you'll be on your way!

Congrats! I just moved to Lexington in the last year so it's great to see these kind of deals happening. Do you attend any events or meet-ups in Lex? It would be great to connect with other locals.

One option in the future people use as a "loop hole" is to purchase the property in your personal name using a residential loan then quit claim deed it into the LLC after purchase. Technically, other members please correct me if I'm wrong, the bank is able to pull the loan if it is switched to an LLC but in my lawyers 20+ years of experience he has never seen a bank search for this once the loan is originated. Worth a chat at least.

Hey everyone,

I am currently in a negotiation stalemate on a property after inspection. I am looking at different options to eliminate some of the repair expense for both parties to move forward. One option is a home warranty so I was hoping to get some opinions based off my situation.

Home details: 

- duplex in great area. 1 bed on 1st floor. 2 bed on 2nd and 2.5 floor (attic). Built in 1913. Central air. Currently about $20k off in the offer.  

Major repairs that led to a stalemate:

1. FR porch (rubber membrane rotted) , Main roof (rodent chewed a large hole through it) and RR roof (3- layers of shingles) need replaced (~$15k)

2. Concrete sidewalk (~60ft plus 3 stairs and small patio) are crumbled and not meeting code (~$7k-$10k)

3. 3 A/C units, 2 furnaces, 1 hot water heater are at end of life or within 2 years of end of life (~$20k)

I would need at least 2 of the 3 items fixed in order to feel comfortable moving forward. After additional review of the inspection report the seller agreed the roof will need to be replaced regardless if I buy the house or not. That's one item down. 

My question is, if I am able to negotiate the concrete to be repaired what are your thoughts on obtaining a home warranty to cover the A/C units, furnace and hot water heater replacement? If it is nearly guaranteed I will be replacing them in the next few years, would this be a better option than me spending $20k without a warranty? I haven't had much experience with the home warranty so any thoughts would be greatly appreciated.

Thanks!

Hey everyone,

I have a duplex that is in a Cincinnati, OH area that has had significant growth over the last 7 years. In 2017 my property tax valuation went from $110,000 to $185,000 which of course created quite a hit to cash flow. Unfortunately I was living out of the country during this time and didn't have a chance to appeal. 

I have a few questions:

1. My understanding is you can appeal anytime. Is this true? Are there limitations on when you can do it?

2. Is finding legal representation "mandatory" or just depends on the situation?

3. If current duplex houses in the area are selling in the $225k range would I even have a leg to stand on? 

4. What kind of information would you need to bring to justify a reduction in property value?

Thanks in advance! This is one of the expense areas I've been looking to reduce just as I would insurance, maintenance, etc.

Thanks for the confirmation @Ray Johnson and @Brandon Sturgill. I used one of the calculators that is in excel then basically added everything else that this particular calculator didn't include (cap improvement, Cap rate, NOI vs Mortgage, etc). I think my calculator is the most accurate but I just wanted a quick sanity check when comparing my numbers vs these other spreadsheets. They are all about 95% the exact same but that 5% seems to make or break most deals.

Hey everyone,

Thanks for the continued feedback and valid points. I've been able to line up a great title company who my property manager referred me to. My biggest concern was figuring out how to determine if a title company is reputable/etc since I have used my realtor's preference previously. I was concerned using any random FSBO contract online for free or from a sketch company that has holes all over it.

This is a good road map for me to go from.

Thanks again

Hey @Aaron K. and @Ondrej Gargula,

Thanks for that information. It helps clarify a few items. My property manager is a little more expensive than what you've mentioned. From what I've seen it's about on par with other PM's in the area but they have also performed much better than many I've seen. I think it's a good place to start some negotiations though as I start to bring them more business. 

Great point about the timing for lease renewals. I just ran into that this year where I had a 2 bedroom unit open up in April but didn't rent out until August. The area I'm in is a lot of young professionals who I've noticed are still on the "college rental schedule" even a few years after they've graduated. It was a learning moment for me.

What do you use for vacancy rate then? I'm around 6%. Is that around what you are at as well?

Hey hey...

I have been looking at multiple rental property cost analysis tools (because I'm an enginerd). I have noticed most tools include a large majority of the same numbers (MV, taxes, rent, etc) but when it comes to the details they can be different. One calculator includes capital improvements but doesn't include annual leasing costs or vice versa, etc. 

I noticed the Bigger Pockets Rental Property Calculator doesn't include:

1. Annual Leasing costs for when a Property manager renews a lease for another year. For mine this is 1/2 of 1 month rent. 

2. New tenant costs for when a Property manager markets and signs a new tenant. For mine this is 1 month rent. (this is included in the vacancy number?)

3. Turn-over costs (a part of maintenance?)

Are these included in another calculation or is it omitted? I am trying to understand which method is correct as I'm searching for properties. If I am looking at a duplex and one of my targets is $200 cash flow/mo this one omitted number can make a huge difference. If rent is $2200/mo then annual leasing cost is $1100. My cash flow would go from $2400/yr to $1300/yr. A potential stud to a dud according to the numbers. 

Any info or advice would be greatly appreciated!