All Forum Posts by: JM Payne

The lender is pushing for the cash out because they get an extra .5% over the life of your loan.  The payout is the carrot on the stick...you walk with $4k and they walk with monumentally more.  For example, the difference in a $350,000 loan amortized over 30 years between 4 and 4.5% is $37,000 if carried to term!  You're playing the short game because you can go buy a new flat screen, but the lender is laughing all the way to the bank.

As to why the 2nd isn't offering, some banks don't offer cash out refi, or it may just not make financial sense for them at this time. 

I hope that helps!

- JM

Short answer is to move to private money or a portfolio lender, as they have no such seasoning requirements.  I hope that helps.

- JM

LLCs are really pass-throughs, so they offer protection more than tax benefits. 

S-Corps, on the other hand, offer tax benefits by qualifying some of the income as dividends as opposed to income, but you have to have enough to justify the expense of a separate corporate tax return and that's more relevant to flips than long term holds. 

On the plus side, the QBI deduction in the recent tax bill will save you some coin.

You should have SOME type of corporate veil (move it to a corporation) to protect your personal assets as well as create barriers between the properties where necessary, but the specific solution to your situation is a bit too vague for anything other than generalizations without more clarifying information, and your best and most specific advice will come from a local and trusted tax advisor and/or lawyer.  I realize they cost money, but it's money well spent.

I hope that helps, sorry there is not a one-size-fits-all answer.

- JM

I used to cold call all the time, and would scoff at the idea of texting as an initial means of communication.  If you had a local phone number, you were golden.

The problem is that the damn scammers have spoofed so many phone numbers these days that if the lead doesn't recognize the number, they are going to ignore completely (perhaps better to get voicemail) or answer already on the defensive. 

To me, it depends on how you acquired these numbers. If they provided the number (IE craigslist/FSBO sign/etc,) then I'll call them right up and expect that their guard will drop when I tell them I'm calling about the house.

If it's a true cold call, I shoot a text ahead of time along the lines of Hello, I'm _______, I'm a local REI interested in your property at __________ and I'd like to talk to you about buying etc, etc and then follow up with a phone call in about 30 mins, which is a reasonable time to expect that they would have seen the text. Even if they didn't, they will see it when I call, or see it after they ignore, etc. etc. A lot of newer phones now display the last text from a contact when they call, so that's to our advantage as well.

I hope that helps, good luck!

- JM

I've had good luck with Thumbtack.com...you can see rates and reviews up front, and you're generally dealing with the service provider directly, which takes the cost of management out of the equation.   

I hope that helps, good luck!

- JM

The paragraph you posted is what happens AFTER the initial lease term and has nothing to do with the current lease (I am assuming 12 months.)

Barring some early termination clause in your lease, the tenant is liable for the full 12 month lease or until such time as the unit is rented (at least in my state.)

You'll want to check with someone with Colorado-specific knowledge, but don't communicate with the tenant or give permission to vacate at all until you are clear on your rights as a landlord as well as the fiscal responsibilities of the tenant.  The lease looks professionally drafted...perhaps you can reach out to whoever provided the lease, or you can check the CO landlord/tenant act.

I hope that helps,

- JM 

Shop elsewhere.  Go to a local portfolio, if you have one.  NFCU is great in certain areas, but I walked with my whole lending package over their silly rules and they have no flexibility. 

Now on another note; 

I'd be weary of an HOA with an inadequate budget...this is indicative of future "special assessments." I would be cautious and look at both the assessment history as well as the building age to determine what I might expect. At least it sounds like they're used to investors...I have encountered HOAs before that write into their docs that they have to approve a unit for rent and then approve tenants...no thanks!

Good luck with round 2.

- JM 

If the state "law" hasn't been signed by the governor yet, then it's not actually a law and you need not follow it.  The Sacramento statute is the one you should follow. 

- JM

Honestly, if you're not happy in the neighborhood and you've lived in your current house long enough, cash out and take that equity tax free and then go house hack somewhere where you ARE happy, preferably that already has the 2 or even 3 additional units.  Adding on ADUs and this and that adds expense, time, and headaches.  I hope that helps!

- JM

Brad,

Looks like a nice deal.  Quick question about lending...how'd you find financing with ~4.6% down?  My commercial lenders are telling me 20-25.  Thanks!

- JM