All Forum Posts by: John Clark
John Clark has started 5 posts and replied 1537 times.
Post: How to be on safe side from forecasts of 24/25 housing issues?
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Quote from @Kal Wol:
Hello awesome BPs
I have been learning quite a lot in the past couple of months and also putting some offers, though they didn't go though, and I am still in the process of pursuing that.
I am in the DC/MD/VA market to proceed with the conventional and to the house hacking. I can't, for now, consider the out of state market as I can't move and also I am a bit skeptical to move on the investor side to put large amount and give it a try. And the area I am looking at happens to be expensive for any of cashflow.
In the meantime, there are predictions based on the credit card loan, the job market and related stuff that 2024/2025 will be showing greater impact on real estate on the negative side. Probably you might have heard about it. And as a newbie, I keep getting to every news and start to hear that. Actually, it is funny that it was like that for 2023 also - it is just getting a bit more for the upcoming years I think.
That is not what I am afraid most. I will still continue to offer based on the number that works for me though it might be lower price. I don't want to lean on equity, I want to at least breakeven on the house with all the expenses covered: mortgage, vacancy, cap expense..
What I wanted to know is, what are the tools and strategies you awesome investors use if housing issues happen? Incase if you had been investor in the great recession, how did you deal with it? Is that possible to negotiate with the bank on lowering/renegotiation or forbearance? When housing issues happen, does it also happen to renters and do they in general lower/stop rent, vacate? How to deal with this if you have any experience?
Also do you see, if you have any experience in the past, any indicators that shows what is coming at all - like good or bad housing and preparing on those accordingly. I am sure in both scenarios investors can benefit but we have to which direction we are heading to benefit or at least not to loose much.
All I am trying to do is lower the risk what I am getting into. Hopefully you will see it from the eyes of the newbie and understand it.
Thanks a lot for all your input in advance.
Post: Would you buy your first rental property all cash or use leverage if you have 600k
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- Votes 1,250
Quote from @Gregory Chadwell:
Quote from @John Clark:
Let me be clearer. They can only go after the equity of the asset. The asset isn't protected but a majority of the equity is with a mortgage.
If the property is worth $600,000 and you owe 450,000 the creditor can only get $150K (your down payment)
If you paid cash and they go after the $600,000 property and it's paid off, then you lose $600,000.
It also means that you have $450k in the bank that the judgment holder can also go after. Do you really think that creditors stop looking after they reach one asset?
Post: Would you buy your first rental property all cash or use leverage if you have 600k
- Posts 1,572
- Votes 1,250
Quote from @Gregory Chadwell:
Quote from @John Clark:
Let me be clearer. They can only go after the equity of the asset. The asset isn't protected but a majority of the equity is with a mortgage.
If the property is worth $600,000 and you owe 450,000 the creditor can only get $150K (your down payment)
If you paid cash and they go after the $600,000 property and it's paid off, then you lose $600,000.
It also means that you have $450k in the bank that the judgment holder can also go after. Do you really think that creditors stop looking after they reach one asset?
Post: Would you buy your first rental property all cash or use leverage if you have 600k
- Posts 1,572
- Votes 1,250
Quote from @Gregory Chadwell:
Quote from @John Clark:
Encumbrances may make your property unappealing to scammers and title thieves. It does not “protect” the property in any meaningful sense of the word.
Let me be clearer. They can only go after the equity of the asset. The asset isn't protected but a majority of the equity is with a mortgage.
If the property is worth $600,000 and you owe 450,000 the creditor can only get $150K (your down payment)
If you paid cash and they go after the $600,000 property and it's paid off, then you lose $600,000.
Post: Would you rent to a bank robber?
- Posts 1,572
- Votes 1,250
Quote from @Erin Church:
So, I've come across something I hadn't contemplated. I have someone that is interested in a vacant unit I have that meets the minimum income, seems to meet the minimum credit score, but robbed a bank 5 years ago, served 4 years, and has been out for almost a year. They disclosed right away.
When I researched the person, they passed a note that they had a gun and would shoot everyone if they needed to. They actually got out of the bank, but were captured later due to fingerprints. I do not know if there was actually a gun.
I have one other inherited tenant that has a recent felony and they are a wonderful tenant that I will likely keep for many years.
I have other applicants, but but wanted to see what other folks thought - if nothing else, it's a fun thought exercise. :)
Post: Would you buy your first rental property all cash or use leverage if you have 600k
- Posts 1,572
- Votes 1,250
Encumbrances may make your property unappealing to scammers and title thieves. It does not “protect” the property in any meaningful sense of the word.
Post: Chicago water meter installations on hold
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- Votes 1,250
Quote from @Jay Garrison:
Hi,'
Looks like the Meter Saver program is kaput. There is some new thing called Lead-Safe, hopefully that is actually true to it's purpose of offering lead line replacement. The city never did get back to me about replacing my lead pipes. Instead, besides the meters, they sent me two water filters. Wowsers.
Two different programs. Sounds like you need to talk to someone who is willing to actually check on the status of the meter program, not the lead pipe program.
Quote from @Caroline Gerardo:
@John Clark he doesn't have a free and clear property, they all have mortgages. If he files a transfer deed to the Land Trust or if he "sells it" then property taxes increase, the change in hazard insurance becomes a tangle.
I wouldn't give authority to a bank person to collect rents, file evictions, deal with repairs... there are set up costs and on-going management costs. Also tax consequences. We don't know what states the properties reside.
Florida, Georgia, Hawaii, Illinois, Indiana, Montana, South Dakota, Virginia have different laws.
There are considerations such as the loss of asset protection after judgment (beneficial interest is personal property, not real property), but if the property is clear of a mortgage and the concern is title theft (a concern you raised), then putting the property into a land trust is probably a lower cost alternative to maintaining a debt (which irritates the wife).
Quote from @Caroline Gerardo:
@John Clark he doesn't have a free and clear property, they all have mortgages. If he files a transfer deed to the Land Trust or if he "sells it" then property taxes increase, the change in hazard insurance becomes a tangle.
I wouldn't give authority to a bank person to collect rents, file evictions, deal with repairs... there are set up costs and on-going management costs. Also tax consequences. We don't know what states the properties reside.
Florida, Georgia, Hawaii, Illinois, Indiana, Montana, South Dakota, Virginia have different laws.
most states have upheld the “Illinois land trust” — has nothing to do with Illinois per se. it’s a description of how little a trust can do without being declared passive and therefore executed.
No trustee will take an assignment of the power to collect rents, etc. Your concerns are not valid. If the original poster wants to increase equity and create safety (and keep the little woman happy) financially, then maintaining leverage (mortgages) is not necessary if title fraud is a major concern; put the paid-off properties into land trusts.
Quote from @Caroline Gerardo:
@John Clark He can't transfer to land trust with a conventional mortgage. His plan is to pay down low interest rate mortgages with higher rate seconds, then have one maybe free/clear in time. He doesn't have a paid off property today.
With a land trust, a bad guy can see who owned the property before the transfer to a land trust so it's not really secret.
In a lawsuit a judge can order full disclosure from the Land Trust of the real owner (not just the trustee) and go after the person .
With Land Trust you still have to file with IRS and state and form 1041 so that also not so secret.
The trustee has to be honorable, which you never know with money...
Title theft happens, it's rare. Lawsuits happen more often.
He's not touching property with a mortgage, remember? I said "paid-off property."
If I sell to you and you want it put into a land trust initially, then I deed into a land trust. "Bad guy" doesn't know for sure who owns it, and in any event, he now has to forge a trustee's deed to do something with the property. Hence, greater protection from title theft, which was the original point of what I was responding to.
Yes, judges can order disclosure. What's your point? I defy you to name a title vehicle that cannot be pierced, even LLCs owning LLCs.
Yes, have to file tax returns, but you don't know what your neighbors' tax returns say, and courts don't order turn over of tax returns as a matter of course, and even then, it's usually after judgment has been rendered.
Trustees have to be honorable, which is why I use established banks and trust companies.
Having your property in a trust will not protect it from a lawsuit. Having your property in your name will not protect it from a lawsuit. Having your property in a trust to protect it from scammers committing title theft, however, is cheaper than maintaining a mortgage on the property just to help prevent title theft, which is what was mentioned.