All Forum Posts by: Martin L.

I wouldn’t ignore a gut feeling. Maybe you’re wrong and she ends up being a great tenant but if you’re right and she isn’t, the only one that suffers is you. Are you really hard up for tenants without any applicants for an extended period of time? A credit check is a great idea and maybe can sway your decision but... unless it was fantastic I would walk away.

Thanks for the reply, Danny. It’s exactly what I needed to know. And regarding your confusion: I’m currently working on a new approval letter to buy another property. I want to get a HELOC right after so I can purchase a second and possibly third property. My concern was whether I could use the HELOC directly. The first property will take up most of my immediate funds except for reserves, so if I could not use the HELOC directly, I would have been in trouble.

I'm thinking about getting a HELOC so I can purchase another property. However, is this possible to do with a mortgage? I'm thinking about this now because I'm qualifying for another property right now with cash, and I was just reminded of all of sourcing, proof of funds, seasoning, etc etc etc. If I'm using a HELOC, will I need to cash a check from the HELOC and season it before I can use it for a down payment?

If not, is it possible to just write a check right out of the HELOC?

Did I do it backwards and perhaps should have gotten the HELOC first, bought the next property out of it and then used my cash?

You have access to a whole bunch of mentors right here. Many people here are extremely knowledgeable and more importantly, generous with sharing that knowledge. Read up, maybe find an REI group in your area. If you’re just starting, you will need every penny you can scrape up. Learn what you can from the amazing resource that BP is. Most mentors are usually not worth it. Either they’re trying to suck you in to pay more and more for their knowledge, or else they weren’t that good in the first place. If the mentor was really that good, he’d probably be spending his time making more deals for his money, rather than trying to make ends meet by mentoring.

I’ve been a bit concerned about an eventual market correction as well. I’m not a major player but currently all of my eggs are in one basket as it were. My thoughts have been to look towards emerging markets with high growth potential. Of course, this is a different type of risk and requires a lot more cash (no mortgages) but risk can also be good (ie certain areas of Manila have been growing about 10% a month for the past half year) as well as devastating (Duterte could choose to launch an attack the gaming industry in Manila at any point, and possibly wipe out all of the recent growth and more overnight). I’ve heard some interesting things from India, Vietnam, and Cambodia as well. I’m currently caught in analysis paralysis as the prices keep moving up lol. But I’m looking more and more towards opportunities in Asia right now for future diversification.

@Bill B. I'm in Vegas.  Kinda.  First I heard of opportunity zones was this post, and I did a little research after reading about it here.  I'd be incredibly interested if there is depreciation capture, but a lot less so if there is not. 

I've put some thought previously into investing in NLV or Hender-tucky before but... so far I've been sticking with turnkey in the Southwest and it's been very easy for me so far, very minimal turnover and no major issues with tenants.  My first property has had the same tenants for the past 7 years, my second has only had two different tenants in the past 6.  Only my newest property has had a bit of turnover.  I'm not a hardcore investor, really kind of started by "falling into it" 7 years ago and kept going.

From the looks of it, you should still be able to go with your plan, you just have to self-certify yourself as a Qualified Opportunity Fund first.  The IRS and Treasury Department clearly haven't even figured it all out yet, so you have time to think about it.

Like many, my first rental was my first home.  I upgraded and since it was a bad time to sell, I just kept it. 20% down conventional.  Cash flow was like $650 since I owed very little on it and refinanced.

Second investment property was the home I upgraded too.  I was transferred out of state, 20% down.  Cash flow was only about $100 to start.

Third property was my first real investment property. SFR, 20% down conventional. Again, $100 to start.

I hired management after I moved out of state.  If I were to do it again, I would have

A) Hired management from the beginning

B) Downgraded instead of upgraded so I could have bought two or three properties instead of just one

C) HELOC'ed the first property right away and bought another one or two with the HELOC

I personally don't think you're a jerk for asking it, but I can understand where you might not want to.  I closed on a new construction where I had EVERYTHING lined up prior to viewing, but then they pushed all these "incentives" on me to use THEIR approved lenders.

Ultimately, their approved lender sucked, and delayed the transaction by a couple weeks due to their extremely slow processing and communication.  Apparently there were late fees that I had to pay as a result, a couple thousand dollars, which were just about the same as the supposed incentives I had gotten making it close to a wash.  I think the whole thing was probably a sham and they were in cahoots.  To add insult to injury, their wonderful approved lender immediately sold the loan to CENLAR literally the day after it closed.  I never even wrote a check.  For those that have dealt with Cenlar... they're probably the worst loan company I've ever dealt with. 

So yeah...  late charges aren't uncommon, but these were included in the original paperwork.  I also did have a choice to walk or pay.  I did pay of course, but I'm still a little bitter about the whole experience.

I took a few pertinent bits from the IRS website.  I'm also curious to see how the rest of the details unfold as per the last bit:

Q. How do Opportunity Zones spur economic development?

A. Opportunity Zones are designed to spur economic development by providing tax benefits to investors. First, investors can defer tax on any prior gains until the earlier of the date on which an investment is sold or exchanged, or December 31, 2026, so long as the gain is reinvested in a Qualified Opportunity Fund. Second, if the investor holds the investment in the Opportunity Fund for at least ten years, the investor would be eligible for an increase in basis equal to the fair market value of the investment on the date that the investment is sold or exchanged.

Q. What is a Qualified Opportunity Fund

A. Qualified Opportunity Fund is an investment vehicle that is set up as either a partnership or corporation for investing in eligible property that is located in an Opportunity Zone and that utilizes the investor’s gains from a prior investment for funding the Opportunity Fund.

Q. I am interested in investing in an Opportunity Zone. Is there a list of Opportunity Zones available?

A. Yes. The current list of approved Opportunity Zones can be found at . This list will continue to be updated as more Opportunity Zones are approved. A complete list of approved Opportunity Zones will be published later this spring after all Opportunity Zones have been nominated, certified and designated.

Q. How does a taxpayer become certified as a Qualified Opportunity Fund?

A. To become a Qualified Opportunity Fund, an eligible taxpayer self certifies. (Thus, no approval or action by the IRS is required.) To self-certify, a taxpayer merely completes a form (which will be released in the summer of 2018) and attaches that form to the taxpayer’s federal income tax return for the taxable year. (The return must be filed timely, taking extensions into account.)

Q. How can I get more information about Opportunity Zones?

A. Over the next few months, the Treasury Department and the Internal Revenue Service will be providing further details, including additional legal guidance, on this new incentive. More information will be available at Treasury.gov and IRS.gov.

Big question on the HELOC. Can I write a check directly from the HELOC to use as a down payment? What about proof of funds, seasoning, etc?

Or do I have to drop the funds into my account and season it? I've never used a HELOC to purchase a property before.