All Forum Posts by: Michael Doherty

@Carey Gatto I completed a successful BRRRR in Middletown, Ct last year which you can read about HERE. Filipe is right, they are very hard to find on the MLS as everyone is looking for the same thing. With that said, I did find that BRRRR on the MLS and I also flipped a property earlier this year off the MLS. So deals can still be found. Ironically in both those examples, I was outbid and it wasn't until 1st buyer's financing fell through I got the deal.

You may have better luck networking with wholesaler's, driving for dollars and getting your name out there for the best deals. 

@Dilman R. I don't have decades of investing experience nor any out of state experience however, I do have a few rentals in Ct so very in tune with future of Ct. I think it is a fine place to invest. You have to be specific with what your goals are though. If your looking for cash flow there are a few specific towns I would look to (new Britain, Bristol, Middletown, Manchester, new London, Groton, Norwhich). If your looking for appreciation that is a different ball game and I wouldn't initially look to these towns although I think a few mentioned will also benefit from appreciation too. 

For me, I sleep well at night knowing I am max 30 mins from anyone of my properties. OOS investing is very possible and there are many who do well with it but from everything I heard, you NEED to have boots on the ground wherever you invest otherwise it could be more of a headache. 

@Timothy Jacobson It is very possible to get a better rate than 6.5% right now in an LLC. I was personally looking to this on 2 of my properties one with a 6.1% and the other 6.2% rate. If your time horizon is long enough it makes sense, but figure out the break even point. That is... how long it would take to make the costs back from refinancing the properties.

I would personally be doing this now but I checked my Loan agreement and there is a 5,4,3,2,1 penalty if refinanced. With only being year 2 into these loans it doesn't make sense. So make sure you check your loan agreement docs before considering. Would hate to be smacked with a penalty for refinancing. 

@Filipe Pereira thank you for the shout out. @Brandon Turner Bristol is just like any other town, there are good and bad areas. One street would be okay to invest in but the other not so much, so you definitely want to have boots on the ground like others have mentioned. If you are looking in Central Ct I would also consider New Britain and Middletown. It's my thought that both these towns will appreciate faster than Bristol but still provide a similar return from a cash flow standpoint. 

1. New Britain just approved the largest Fuel Cell Plant in the Country. It is currently being developed and poised to bring thousands of jobs. You can read more about it here. 

2. Middletown is nice little city that I have seen emerge since buying property. Small local Micro Breweries, luxury apartment buildings, restaurants and shops are a few to name that I have have surface in recent years. You can still buy Multi-Family buildings with similar returns as Bristol and New Britain. All these cities have their fair share of war zones so feel free to reach out for street by street specifics. 

@Mark Leclair I have been house hacking in Central Ct area for since 2016. 2% rule is going to be hard to find unless you do extensive rehab. 1.5% is going to be more obtainable especially in some towns in central ct. 

I wouldn't live and die by these rules though as there are still other factors to consider when buying an investment, especially a house hack. For example, perhaps the house has a 2-4 car garage that you could rent out for additional income. Or perhaps the house is turn key and there is little deferred maintenance that it needs. Which means that the 10% you were going to allocate to cap ex and maintenance can really be 5%. Every house is different and you shouldn't discount a house because it doesn't mean a specific 'rule' that many talk about. 

@Anthony Frascone @Ishmael Carter I would agree with Filipe and add that I have been adding units to my portfolio that are closer to the new Fuel Cell Project being developed in New Britain (Corner of Myrtle and Curtis Street). Upon completion it will be the largest Fuel Cell Plant in the Country and poised to bring thousands of jobs. 

@Jake Belden  this link may be helpful regarding your question. Link to IRS . You should keep all your expenses on your rental separate if you have an LLC. If you get audited you don't want to be caught commingling funds between personal expenses and 'business' expenses associated with your property. When you do your taxes at the end of the year you will file a 1040 form and you should add all your income and subtract all your expenses for your LLC.

The only reason to have an LLC is for liability protection. If a tenant slips and falls they can only go after what's 'in' the LLC. They cannot go after personal assets. It also may be worthwhile to look into an umbrella policy if you choose to not go the LLC route. Many investors choose to have both.

@Jake Belden I'll take a stab at this... but by no means is this legal advice and I am not an expert. However, I own a few rentals and have a few LLC's.

1. It is not difficult to transfer 2 properties into 1 LLC. You will NOT need to refinance. Connecticut from what I have been told, has done away with the 'due on sale clause' which previously scared some people. What that meant was.....when the bank saw a change in ownership, they could technically call the loan due. However, this is extremely rare and people have been transferring property out of their personal name to an LLC for years. But now from my understanding Ct has done away with this clause all together so nothing to worry about any more.

2. I would recommend hiring an attorney. If you have bought and sold a few properties by now, maybe you established a relationship with an attorney who can help out. If not, it is not a costly and something I would outsource. 

3. One thing you'll want to do is have a separate bank account which technically you should have done already. But if you haven't, you definitely want to do so before forming an LLC.

4. You'll get mixed answers here. I personally have not seen an increase in insurance by having my properties in an LLC but I know clients and friends who have. I would just shop around.

5. Interest rates will not go up if you have a fixed rate loan. 

6. Financing will not be harder for an LLC but when you buy the property you will pay a slightly higher interest rate than if you were to buy in your personal name. This is why most people buy in their personal name and quick claim it over to their LLC afterwards. Going back to my answer in #1- people have been doing this for years (switching from personal to LLC) and the main reason is because you lock in the better rate in your personal name and then switch over for liability and protection... best of both worlds.

Hopefully that helps let me know if you have any further questions! 

Just have her collect 1 months security deposit and put her friends/tenants on month to month or year lease. 

@Katrina Gillrup I've use hard money a few times now. Overall, it was a pretty good experience. The few drawbacks I see to using hard money is:

1. The cost: You will have to pay (points) upon closing. This is one way the lender makes their money and it's the cost of doing business. Lenders will usually charge anywhere from 2-4 points depending on your credit, # of deals done ect (think of it like a resume). The better the resume the cheaper the rate. 1 point is 1% of the purchase price.You will also have to pay for wire and draw fees. The wire fee is very self explanatory. The draw fee is the fee you will have to pay for the lender to send someone out to inspect the work that was complete. After a fully satisfied inspection that the work was done they will wire you the funds. This process between wire and draw can be a few hundred dollars each time. So it's best you keep your 'draw's' to 1-2 if possible. The other part of the cost is obviously the interest rate they will charge. I have seen quotes as high as 14-15% interest only and as low as 8.5% interest only. Again- this will vary per deal and per experience. Try and find yourself a lender who will only charge interest on the funds you have 'drawn on' not the entire amount. 

For example- you purchase a house for 100k and 50k reno budget and you put 20k down. Instead of paying interest on the total 130k- Find a lender who charges interest as your request the money. Meaning you should only be paying interest on the 130k towards the very end of the project after you have requested ALL of the 30k reno. 

2. Execution: What i mean by this is: the time it takes the lender to send someone out to inspect the property (that the work was complete) until the time the money is wired into your account. A lot of contractors want to be paid 1/2 up front and the rest upon completion. This makes it very challenging as you have to come out of pocket initially for each part of the rehab. Say your contractor finishes the job and wants to get paid. You have to explain that he cant get paid until you receive your wire. This can take up to a week from the time you call.... ask for the draw.... they send out an inspector.... he does he report, verifies the job and they wire you the money. 

One thing I have been doing is calling the lender 3 days before the work is actually complete and requesting the draw. That way... by day 3 and the work is done the inspector is already on his way and my contractor does not have to wait as long. 

I hope this helps put things into perspective!