All Forum Posts by: Leon D.

You're not describing a partnership. What you are looking to be, is known in the industry as a "bird dog." That's someone who spends their time trying to locate properties with substantial investment potential. Usually, the intent is to find properties that are distressed and selling at a discount that can be repaired or remodeled and sold for a sizable profit. Bird dogs do this for a fee; for example, you bring five properties to an investor, and they pay you $250 or $500 or whatever for each one they close on. If you want a partnership, you have to provide something more: money, rehab expertise, sales connections, etc. I, at least, wouldn't consider anyone who had nothing to lose on a deal to be a partner.

Impossible to add a lot of value to this thread without knowing more: how long are the leases? Who are the tenants? How long have they been there? What sort of guaranties? How old are the properties? What sort of properties? Where in Detroit?

Remember, CAP rates in commercial real estate are in many ways just an answer to a risk/reward calculation: the greater the risk, the greater the reward (and higher the CAP).

The grounding (or not) of a particular outlet has no effect on equipment, only people. If something "fried," it may very well just be from a surge, and that you really have no control over. 1) Tell her to use a surge protector. Don't tell her that she was dumb for not using one with her computer to begin with, just keep that part to yourself. 2) If you don't already, insist that any new tenants and your current ones if/when they renew there leases, or with 30-90 days notice depending on local laws/ordinances, show you proof of renter's insurance.

All that said, how serious are the other problems in the building that electrical is low on the list? Make sure that you're not in violation of any building codes, I'm reasonably certain for example that GFCI's are required within X feet of an interior water tap almost everywhere in the country.

@Angela Henderson I'm not totally sure what you mean by "one transaction," so I don't know how or why you think a refi on one property and the purchase of another could be done that way, maybe I'm missing something?

The cash out of A is one transaction, entirely independent of anything else you might be doing in the future, like buying B. The purchase of B is the second transaction, the success of which is in part dependent on getting cash out of A and getting a mortgage for the balance.

Patrick Fleckenstein a turnkey investment property is exactly that. You buy a property (usually an SFR, sometimes a duplex or larger) that the seller has rehabbed, tenanted, and manages. You metaphorically "turn the key" by buying the home, and your investment is done. No worries about you having to replace the roof, fix the furnace, or find someone to live there. When you can replace the property manager depends on the turnkey provider/seller. Some sell only the home with PM services a la carte, some throw in six months free, others might have you sign a year-long contract; there are no hard rules. Brie Schmidt has a great site, though it is hampered by a relatively small number of reviewed firms (you see the same few companies over and over), and the vast majority of reviews are all amazingly positive (which may or may not accurately reflect the "whole picture.") It's a good place to start, though. A deep dive into these forums ought to give you an idea of the good and bad for a lot of turnkey firms.

That depends in large part on what sort of property, location, time of year, etc. Is it a condo? Single family? Rowhouse? Duplex? No matter where, when, or what, each will require a good cleaning, and basic maintenance check. Hopefully there's no deferred maintenance, or any surprises: you or your PM were on top of their game in fixing things that broke, and the tenant was honest about anything that did break. 

But whether or not you need to make the place "pretty" for a new tenant depends to a great degree on the tenant. Maybe a wall needs painting, or something needs updating (fashion changes, after all). Who knows? Barring a major problem, figure 2-3 days to turn the average place around if no problems, a week tops if you're super busy.

Obviously, you shouldn't start listing or showing if anything big needs to get done, but once the grass is mowed, snow shoveled, lightbulbs replaced, carpet vacuumed, I'd think you could certainly show it. You could even (potentially) show it with the existing tenant in place, if you give the tenant sufficient notice (check local laws) and you trust the place isn't a pig-sty.

Good luck.

@Omar Alvayerothat's not quite it. Close, though. Let's use your example:

You buy a house for $100k by putting 20% down and getting a mortgage for the other 80%. You have a mortgage at an LTV (loan to value) of 80%.

A year later, the home is now worth $140k. Your mortgage is a little less than $80k, but instead of $20k equity, you have $60k (your original $20 plus another $40 from the increase in value). You go back to your original lender looking for a cash-out refinance. They still have their 80% LTV rule, so now you can get a new mortgage for $112k (80% of the new value).

A year ago, you borrowed $80k to buy the home, now with the refi you've paid back the original $80k but with a new loan, borrowed $112k instead (an additional $32k). While your monthly payments have gone up a few dollars, you also have $32k you didn't have before, to spend/invest.

Oh, I thought the way to do was to borrow $6.8m (in today's dollars) from your father, and then inherit a few hundred million more when he dies. 

@Amy Goodperhaps you misunderstand. I'm not opposed to @Logan Sherwoodgaining property management experience. I'm only asking, if I'm a property owner already (which I am), why would I hire him, or you, or anyone, if they don't have any experience managing property? I don't necessarily want someone learning at my expense.

Going to work for a PM company though, might be a different story. 

You didn't have to do that: a single-member LLC (assuming it was) has the same credit history you do: the loan is in the LLC's name, but you personally guarantee it. A single-member LLC is a disregarded entity, so it's cake to structure that way. Any loan officer worth their business card shouldn't have had a problem with doing that.

Since that isn't what happened, you'd have to speak with the bank about the loan particulars, since transferring the loan could technically default it, even if it's only to the LLC.