All Forum Posts by: Llewelyn A.

@Kurt Hines

I also use Rentalutions and could not be happier. I didn't use them for Tenant Screening, however. Maybe you can let me know more about that?

What I do for tenant screen is ask the tenants to provide me with their Credit Score from one of their credit cards. They would eventually need to log on to their accounts on their phone or laptops to prove that it is their number.

This also helps the tenant as an inquiry does not happen which can possible reduce their Credit.

IF they cannot provide me with a FICO score on one of their Credit Cards or if the Credit is less than 700, I will ask them to go to myFICO.com and pull their own credit. Again, they will have to log on line to prove to me that their credit info they would send me is accurate.

I will pull their Eviction and Background checks, especially if their credit is less than 700.

Either case, I also recommend Rentalutions and I have 48 tenants in 25 apts in 7 buildings.

All are on Rentalutions and we are all happy with their service.

I invest with Family and friends all the time.

The only difference is that I put my Family and Friends through the same rigorous process of due diligence as I do for my screening process of candidate tenants.

Because you are buying together, I would be even more detailed and careful in your screening process for a partner.

I pulled Credit, Criminal, Eviction, Income Verification, etc. on EVERYONE. Then, because they are family or friends, I look at their facebook, do some personal investigations, and find out the real deal with how they deal with others that we both obviously know. If they had outstanding loans that never get paid, etc.

Really, because you have the inside advantage, you can know everything about your friend or relative to make a very informed decision than to just accept a partner who is a stranger.

Of course your relatives will think you are nosey, but hey, you have to protect yourself BEFORE you agree to get into a deal.

Put it this way, if the Bank can go through all of this stuff and they will, then time for you to do it BEFORE the bank does it to make sure that you won't have problems. In fact, this is the reason that you tell your relatives and friends why you need all of that information. If they have a problem, move on to another friend or relative.

Anyway, that's the way I have done it and I have had ZERO problems investing with my relatives and friends. We all have made very significant money over 20 years.

Funny to read this tread here but in fact, I've been trying to work how AI will affect my RE Holdings in Brooklyn, NY.

In fact, AI is just one of two very important factors that I believe everyone needs to take into account. The other is Climate Change.

In regards to AI, as @Sourabh Bora points out, you will become location independent. BUT, a large segment of the population will wind up having to either switch careers or become jobless as being a driver gets transitioned to robots.

Also, as @Ralph R. points out, robots took over Car Assembly. I'm pretty sure that lead to the demise of Detroit as well.

Either case, to ignore these issues is to jeopardize all the wealth you have built up.

If we only take just the two forseeable issues into account, loss of Driver type jobs and loss of Manufacturing type jobs, then we can come to some sort of insights that can tell us which area will be most negatively affected, which area may still continue to be stable and which will actually grow.

There seems to be a transition that's happening in which cities are becoming Mega Cities. Cars which are becoming automated will start to move either underground or in some place that will allow City Residents to only use them so that it the City will become more walkable.

I'm not sure what's going to happen to non-Mega City locations. But if it's predicted that Cities will continue to grow as people move towards cities, then it only follows that other places may have a decrease in their population.

Combine a loss of Driver type jobs, Manufacturing jobs, and a migration towards Mega Cities, and I think you get a good picture of which areas seem to be a good place to invest for the future.

Combine that with Climate Change, then all of a sudden, Cities that are predicted to be Mega Cities, may have to shift to inland, since most of the Mega Cities are coastal.

The point here is that there should be concern on where to invest, if only for Asset protection. 

I strongly believe that Charity such as sharing your success stories, teaching classes for free, meeting with people that need your help, posting here on BP, etc... ENRICHES your soul.

That is FAR more than any thing money could buy.

I hope everyone who is successful is humble enough to understand that there is something far better than what's in your pockets.

That's the reason why I am here on BP.

@Katya Joseph

You can add me to your list.

I have been Investing in Brooklyn for 2 decades and currently hold 7 multi-family properties in Windsor Terrace, Clinton Hill, Bed-Stuy and Ditmas Park.

I'm interested in helping this group.

I have to say that John T. Reed gave an exhaustive analysis on "Due Upon Sale."

Here is the link: The truth about getting around due-on-sale clauses

It answers, I believe, ALL of the questions that was already posted here and included proof.

Here is an excerpt:

Rise in interest rates would likely increase enforcement of due-on-sale clauses

The Wellenkamp and de la Cuesta cases, both of which involved lenders aggressively enforcing their due-on-sale clauses, occurred in the early ’80s. At that time, mortgage interest rates were at record highs---about 18% at the peak. In contrast, the interest rates on the Wellenkamp and de la Cuesta mortgages were much lower. The lenders have a fiduciary duty to put that money back out at current rates.

Other lawsuits to enforce due-on-sale clauses during that period were Patton v. First Federal Savings & Loan Association (578 P 2d 152) in AZ, Nichols v. Arbor Federal (250 NW2d 804) in Michigan, Bellingham First Federal Savings & Loan Association v. Garrison (553 P 2d 1090) and Morris v. Woodside (682 P 2d 905) in WA.

A conversation among three investors might go like this during a period of increased interest rates.

Investor A: Boy, I'm sure glad I have fixed-rate mortgages with that run-up in rates last month.

Investor B: I don’t have fixed rates, but my lifetime caps are below the current rates so I’m partly protected.

Investor C: I may be in trouble. I have all fixed-rate mortgages, but they are all in technical default because I did lease options. The lenders could call every single one of them.

In his article on the subject, William Bronchick says that lenders don’t care about enforcing due-on-sale clauses these days because market interest rates are low. He says, “This trend will probably continue so long as interest rates remain within a few percentage points of existing loans.” That may be true, but it implies an unspoken corollary: “This trend will probably NOT continue if [market] interest rates rise more than a few points above existing loan [interest rates].”

I found an interesting, albeit legally meaningless, clause in the law. Section 1701j-3(b)(3) says:

That means would you lenders please go easy on the borrowers.

There are other ways of doing things instead of using an LLC or Corp.

You can use a Schedule E. Here is the form:

If you used an Investment Loan, bought a Landlord's Insurance policy (can be both owner occupied or non-owner occupied), and took out an further Umbrella Liability protection policy, you won't have to worry about the Due Upon Sale Clause.

You also won't have to worry about the DTI because the Banks will calculate your Cashflow using this Schedule E.

Going back on topic, I have a friend, Steve. He normally puts his properties into an LLC after he buys it in his name. He told me he asked his bank to allow him to do the transfer. He ultimately did it when they refused.

I believe a little while later, probably a year later, they told him he violated the Due Upon Sales clause and they told him to immediately switch it back to his name. He did that promptly because he didn't want to lose the lower rate he was locked into.

I think a previous poster is correct. Not much Investors would post on here if it happened because they don't want to flag other properties that they may have in the same situation.

@Patti Robertson

The lease is proof that a tenant signed a lease agreeing to pay the terms of the lease.

It is not proof that the tenants actually have paid that way!

If you were to examine the Business' tax returns or the Schedule E for 2 years, you will see if the tenants are having problems or verify that everything is great and that you can make a sound and solid offer.

You can also discover if there were any deferred maintenance, legal problems, etc.

Also, not every Broker/Agent will be on top of their game.

I usually throw out the numbers given to me and just do my own, adjusting for vacancies, late payments/evictions, etc.

Also, the Agent's fiduciary responsibility is to get the best deal for the Seller, not the buyer. Agent works for the Seller, in other words.

If the Agent was working solely on my behalf, then maybe I would trust the information provided to me which was not verified by a Tax Transcript.

Ultimately, when I do need to get a Mortgage, 2 years of the Seller's schedule E is going to be used. I don't want to waste my time, money and effort finding out that the disclosed information had an error, was missing or completely fabricated.

I really would like the Broker/Agent to make copies of the Schedule E and just wipe out personal information like SS#s give it to me so I can just say, great.... let me sign the contract.

This way of conducting business always makes the Buyer Beware and the Buyer has a reason to be suspicious of the situation.

Then, when the bank requests the information from the IRS, I'll match it with what I have.

Any discrepancies, my lawyer get involved.

I actually don't have a problem getting any information I need these days because I only deal with Brokers/Agents that I have purchased properties with and they know I'm not wasting their time. I also own enough properties that Brokers/Agents that I don't know tend to give me what I need.

However, when I wasn't as well known in my area (or at least it's easy to find my name on expensive multi-family properties), this was a serious issue for me.

Ultimately, Brokers/Agents that worked with me earlier on in my career that disclosed the information with me honestly got my business and make a lot of money from my transactions.

I don't expect my postings to change the way things are done, but I'm just venting from my earlier RE Investing Career.

Investor Llew

@Amit M.

FI is not based on your own definition.

If one's definition of FI is that you are not working and can pay your own living expenses, then there should be a lot of people pointing out to me that my definition is inaccurate.

All I need to do is point out an example of Warren Buffett.

You cannot say that he is NOT financially independent because he's working! That doesn't make sense if he's a billionaire.

Now, someone that "gets some basic gov subsidy, dines el fresco by the bay, sleeps in local shelters, or urban camping when the weather is nice" probably wouldn't qualify as FI in 90% of people's definition.

That's why I was saying that to get to a standard base definition, the majority of us who are commenting on here should have some sort of agreement on FI. Otherwise, what's the point of this discussion?

I tabled a definition of must make enough cashflow from RE Investments to live in at least a "D" neighborhood with all expenses paid by the cashflow.

I also think that there are two kinds of posters. 1) the Poster who wants to believe that there are strategies that should theoretically get them financially independent in 3 to 5 years but HAVE NOT achieved it and 2) Those who have Achieved it (like me).

I think the OP is really trying to find out from people who have already achieved FI in 3 to 5 years to see if there is any commonality or is it just dumb luck? Will just any strategy work as long as you were lucky enough to buy at the right time in the right place?

I think it will be amazing what we will find out once we start getting enough people who have really achieved financial independence in the 3 to 5 year time period. 

Maybe I'm not correct in what the OP really wanted, but I think if this thread wound up getting a large amount of BP posters who actually answered my questions, we may find out that it's not about luck, but some common strategy or even personality trait.

When I say personality trait, I am that hard working person who achieved $200k plus but didn't have a large student loan since i went to public university. I'm just your typical workaholic and over achiever.

Maybe, just maybe, we'll find out that it's more about your personality than a particular strategy.

Who knows until we start getting some amount of good posts here from those of us who financially independent already and have achieved it within 3 to 5 years.

Investor Llew

I read an article from Business insiders: The American suburbs as we know them are dying

It's very interesting and basically talks about how the Suburbs are changing, malls are becoming ghost towns, and Millennials are move to more urban and efficient living spaces in denser areas where walkability is a benefit.

Of course if all of this is true, buying into major cities ahead of the migration of younger people seems like an excellent strategy.

In fact, we see this all the time and contributes towards a process of gentrification. So I'm not sure if this article is talking about a new phenomenon or something that has been happening for at least the last 15 years.

I'm curious if anyone had notice that there was a trend where malls are struggling, young people are avoiding the suburbs, etc. I only see it from the end where they have arrived. I can't see the side where younger people would stay in the Suburbs where their family live. Therefore, I can't determine if this is a real significant movement because NYC is a mecca that if 500k young people move in from all over America, that still doesn't mean there is a trend (or does it?).

So, if it is a trend, what does that mean about small cities? If business leave, as in the article where GE leaves Fairfield, CT for Boston and UBS leaves Stamford, CT for New York City, how much of an impact does it have on the traditional cashflowing smaller cities? What about those that invest in SFR?

Does anyone here invest in either Fairfield or Stamford? It would definitely be helpful to know the impact of those two companies after a few years when they left. I don't want to make the assumption that Rental Real Estate went down hill. I'd like to know from those that actually have investments there.

Just curious to see what BPers think of this article or phenomenon.

Investor Llew