All Forum Posts by: John Clark

"(only debt besides the vehicle is our rental/pri res/boat) "

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Vehicle interest is 2.5 percent.

What is your interest rate on current rental's mortgage?

What is your interest rate on primary residence mortgage?

What is your interest rate on boat loan?

What is your view as to the next election and its potential effects on rental prices?

What is your view as to Covid 19 and its potential effect on rental prices?

What are the rates of return on alternative investments at the risk levels you find acceptable?

What is the rate of return on the potential rental units you would buy?

What amount of cash flow do you need for your monthly cushion of reserves, etc.?

Answer those questions and they will give you the answer you need.

Maybe the City requires a permit for ads and you didn't get one?

File the claim with the title company anyway, and be prepared to file suit against the prior owner and her LLC. Title companies have sellers fill out affidavits covering unrecorded mechanics liens and judgment liens, etc. I don't know about your case, but maybe that affidavit covers unpaid water. Worth a try.

As for her and her company, sound like there is a fraud action, and certainly breach of contract.

Not being familiar with the bill, can you sue and just get a monetary judgment -- treating the past due rent as a straight debt -- and then try to collect on the judgment through ordinary debt collection procedures?

"What are the source of funds for either. That's who's paying it.

When you have positive CF, that PCF is supplementing the cash you are already putting in. which means you have to put in less. When the amount of supplemental CF is enough to cover the entire mortgage payment, then the REI can keep that amount of cash and not spend it...and the source of that CF (the tenant/rent) is paying the mortgage."

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It's your debt, therefore, you are paying for it. Your internal allocation of income streams (rent in this case) is irrelevant. Don't believe me? Then ask yourself why you take into account vacancy rates when determining cash flow. That money has to come from somewhere when there's no tenant, doesn't it? So no, your tenant is not paying for it, you are. You are simply using the income stream provided by the tenant by his rental

You, Joe, completely ignore the relative cost of alternative investments -- opportunity costs. If your alternatives for investing money you have (after building up sufficient reserves) bring you in less return than the interest on YOUR mortgage for your rental unit, then you are better off paying down the mortgage and "earning" the mortgage's rate of interest on your pay-down amount. In what form do those earnings take? Increased cash flow on the unit.

Where you go wrong is the pernicious idea that because you have an income stream from another person that you are deploying for the debt, therefore you are not paying for the debt. Profits come and go, but debt is forever, and it is always the responsibility of the owner.

"The interest "reduction" isn't a savings to you since you were never the one paying it."

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One's internal allocations of income streams/sources/whatever are irrelevant. You are always paying for it, not the tenant. The only relevant inquiry is what the rate of return is on your alternative investments.

"We didn’t follow up because they kept saying the sellers didn’t have a lease."
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Who is "we" and who is is "they"? If your lawyer asked you what you wanted to do when the seller didn't produce the lease, then that is him telling you there is a red flag.

"With respect to their lawyer, he did give me time to approve lease, but they did not provide the full lease during that time frame and it just fell to the wayside. My instinct tells me they were working me to push the deal through."
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"it just fell to the wayside"? -- This is where you lose me. Did you discuss with your lawyer the consequences of them not providing the lease in time for review? Were YOU working to push the deal through? How could you expect the seller to NOT work to push the deal through?

If your lawyer asked what you wanted to do when the other side did not produce the lease in a timely manner and you hemmed and hawed, then this is 1,000 percent on you. Also, drop the crap about trusting your broker. Your broker is paid by commission, IF AND ONLY IF the deal is consummated. Your broker, not just the other side, is going to work to push the deal through too. You knew your broker only got paid if the deal closed.

Now you know what brokers think of their fiduciary duties to their clients, and why lawyers hold them in such contempt.

"My wife must have similar mindset to Joe as she also says there is no reason to say this is the plan for the next 15 years as unexpected things may happen. "

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It has been a sprightly discussion, hasn't it?

Just remember that there is a difference between having 15-year plans and 15-year goals. Always have goals. Be willing to change plans on how to achieve those goals as circumstances change. Be willing to adjust goals as life dictates.

"The more equity you have, the more exposed you are for lawsuits."
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I've heard that many times. Each time I've dug into it, I've come to the conclusion that operations weren't up to snuff, or the owner was skimping on insurance, or wasn't insisting on renter's insurance, and usually some combination of the three. Keeping high-rate mortgages in place rather than using increased cash flow to improve operations or tenant quality hurts.