All Forum Posts by: Pamela Sandberg

@Greg Ko: if you'd like I can set you up with MLS search results so you can see the inventory.

Fair warning: the MF inventory in Phoenix is a little rough. I usually recommend that clients also look into SF and/SF + casita or guest suite. They can also meet your financial goals without the bidding war we get on a lot of our MF.

Happy to help you however I can!

@Brandon Riley: it would certainly be possible to structure a deal like this. These would be my concerns:

(1) you don’t know how long he’ll be in the house, and you’ll be stuck without cash flow indefinitely.

(2) if he is able to pay some nominal rent, how much? For how long? What if he says he can’t after awhile? Doesn’t sound like that’s a definite source of income you could depend on.

Ultimately, if you’re gonna do this, I think you’d have to do it because you want to help a family member ... not because it makes financial sense.

Another idea: is a HELOC an option for him? Sounds like he has a decent amount of equity in the home.

@Greg Ko: welcome! Do you have any specific parameters? Budget, number of doors, etc.?

@Nate Fanara: Yes, a separate bank account will help you access all legal protections of the LLC (otherwise it could be argued that you aren't really acting as a separate business). It is a hassle, but a necessary step if you want the protection of a separate LLC.

If you were to put multiple properties in the same LLC, creditors could access equity in ANY of properties for debt on ANY of your properties. This puts more of your assets at risk (and is why investors do not favor this strategy).

Agreed that the LLC should be registered where the property is located for maximum asset protection. The reason Delaware LLCs are so popular is that they have business-friendly tax laws. This doesn't really help you with a property in Ohio. Most people also segregate each property they hold into a separate LLC (again, for liability purposes). So bear in mind that you will likely want to create a new one each time you add a property to your portfolio.

LLCs can be as simple or complicated as you make them. Most anyone can fill out the forms and pay the fee to the Secretary of State. If you have complicated assets or ownership structure, or other areas that need specific legal protections, its important to have an attorney set up an LLC that meets these specific needs.

Hope this helps!

Are you looking in any particular part of town? 

It's hard to sell people on a second position loan when the first is in danger of going into default. I'm not convinced that getting an investor for a second position is the way to go here. 

Banks like to avoid foreclosure when possible, as it is a huge amount of time and expense for them. (The legal fees alone are significant.) Many banks would rather work with the borrower BEFORE the loan goes into default. That's not a guarantee they will, but it leads me to believe that your client should explore other options. Google her particular lender and see what programs they offer for people struggling with mortgage payments. 

HUD also offers a whole list of programs (https://www.hud.gov/topics/avoiding_foreclosure). When I was practicing bankruptcy law, a lot of debtors used the HAMP program to stay in their homes as they modified other debt. It's definitely worth looking into these programs. 

Hope this helps!

Hi Sarah, congrats on making the leap! Sounds like you have done your homework and are prepared to do it responsibly. I'm happy to answer any questions I can specific to the Phoenix market. (MF inventory is a particular challenge here.)  There are also meetup groups and wholesale groups I can put you in touch with. 

Let me know how I can help!

Those are some gorgeous finishes! Congrats on a good, strong deal.

@Michele Norban: This has been an ongoing issue I've seen on posts, threads, you name it. I've talked to many people and haven't yet found anyone who has a good list of what HOAs do/don't allow STRs. (If anyone has one, feel free to jump in here!)

For the most part, I've been talking to HOAs directly and carefully reviewing bylaws/CC&Rs to see whether they can legally prohibit my clients from STR. Happy to help in this way if you have properties you're interested in!