All Forum Posts by: Pat Lulewicz

Probably the most persistent deal acquisition I've seen on BP in a while! Stunning finished product, insane rent rate, and resulting cash flow. Who was the lender you used on the refi? Based on the timeline, sounds like you might have snuck this in before rates got out of control?

Gorgeous. Not every day you get to take on a project of this scale and potential. Way to unlock it and make this look stunning. Who did y'all use for the reno? Or did you sub it out yourself?

Generally speaking, wholesalers will include the closing attorney in the contract (both A-B contract between seller-wholesaler and B-C contract between the wholesaler and you). If the closing attorney isn't included, they may not have the experience necessary to know an attorney in NC who does assignment contracts or double closings. These transactions are starting to get more scrutiny from the state. Although you can use a separate attorney, you're just going to pay another $800-$1000 for what should be the same answer regarding title.

If there is an attorney noted on the purchase contract and/or assignment contract, the wholesaler should have either already opened title process or will do it now that they have an executed assignment contract with you. From here, attorney will advise if there are any issues with title. Wholesaler should put you on email chain or some other communication with attorney so y'all can discuss title, ALTA, closing date/time and wiring instructions. In addition, if you are using a lender, you need to get lender in contact with attorney to get title insurance policy. From there its awaiting clear title, wiring funds, and getting to closing table.

BTW, make sure you get the original purchase contract itself as well. Some wholesalers won't share until you sign the assignment contract, which is fine, but just make sure you get a copy in the process.

@Gabriel Pais this entire situation really is a math decision with the caveat of finding replacement property as @Dave Foster mentioned.

On the HELOC point, still same math equation exists. Even if you get floating rate at 6-8%, and it has a ceiling that you can stomach because the deal is good if the rate adjusts, the new deal just has to cash flow. My HELOC has adjusted from 3% to 7% over the last 3 years, but my rental still makes more than that AND its still lower than what I'll find on the open market, PLUS I controlled the closing process. Just find one that has a good cap or pay for a cap. If the open market is still giving you DSCR loans at 8%-10% without buydowns, then the HELOC makes as much sense as DSCR loans.

Plus, if you have a W2 job or know that your self-employment efforts will bring steady cash flow, you just pay yourself (the HELOC) over time. And if the rate gets out of control, refinance the whole damn thing at purchase or when your seasoning hits if there's trapped equity in the new home.

@Archana Ravula What's your definition of or criteria for good?

Where in NC? What kind of price point is the current home? Do you already have replacement property/ideas in mind? Selling the home can mean that its going to sit vacant for a while forgoing opportunity cost. Then there's also the buy side...you have to meet the timelines of the 1031 exchange at a time where lending is tough AND if you're buying smaller (i.e. less expensive) homes, there would be a higher demand and competition for those with in state and out of state investors alike battling it out for rental grade inventory. Unless you all-cash 1031s, if you're against the clock and NEED to buy a property, remember that overbidding still leaves it up to the appraisal to make sure you can qualify for the financing. Don't want to see y'all get caught by the clock, lose an amazing interest rate and steady cash flow, AND pay the recapture and gain taxes for selling.

Any opportunity to go to the lender on the primary OR the bank that you use for your personal banking, and see about getting a HELOC? If you don't have another primary and are renting or something of the like, they may still view it as your primary. If they can do a HELOC without even getting a formal appraisal done, just a desktop, then you might be able to pull equity that way.

Would be helpful to know how time-consuming your job is, your liquidity to furnish a home like this, the actual location, and if the property stands out for any reasons. Remember the characteristic you look for in a home when you travel: location, price, special features, pet friendly, etc. This will help a lot in deciding if another other than a LTR is useful. You could definitely manage an STR/MTR yourself if you have the people around you that can help (housekeeper, lawn, handyman). Plus if/when you come back to visit friends or family, you'll always have a place to stay for "free"

Any part of the Triad will have good deals if the numbers work. You can flip a house with a $100k ARV the same that you can flip a house with a $500k house. You're more likely to wholesale or flip homes to buy-and-hold investors in the $250k and under price point. High Point is a great location for any type of investment strategy or flipping.

Other markets that have potential nearby - Eden, Reidsville, Statesville, Ashboro, all of Alamance county.

Before the keyboard warriors jump in, please understand that I am in between Tax Advisors/Preparers so this is as much of a short-term need to get an answer, as well as a prelim interview Q as I source my new Advisor/Preparer. I am a former CPA as well, but this is a very niche IRS Code/Case question that I'd prefer to have an expert provide their expertise on, especially if there is evidence/experience with it.

I am purchasing a property in NC under my LLC as a rental. For simplicity, the title/deed and lending/loan will be under my LLC only. I have a partner that wants to contribute financially towards the downpayment however, neither they nor their LLC would be on title or loan. The goal is to split the income and expenses including, and specifically, depreciation so that we can each claim our share on our personal tax returns under Schedule E.

Is this as simple as drawing up a JV Agreement between our 2 LLCs with the understanding of how the income and expenses, including depreciation, will be split, and including our share on our personal tax returns? Is there additional documentation/forms needed to satisfy the documentation for the IRS? A K-1 obviously isn't the answer, but a 1099 doesn't seem like it would cover all the line items. Is it as simple as making sure our individual Schedule E's agree back to the Income Statement/accounting for that property?

If the JV Agreement is the simple solution that I'm overthinking here, does anything change if the upfront financial investment (downpayment) is not 50/50 - say its 25/75 - however, we do split the income/expenses 50/50? Is the main thing just to get crystal clear in the JV Agreement language and take our shares on our Schedule E's?

@Adriese Williams following. I've considered the same concept. To answer the above question on not refinancing, the theory would be that the partner/spouse would get 3.5%-5% down financing instead of the 20%-25% refinance, right?

My understanding is that it would not be an arms-length transaction. Of course it may depend on lender and their deep dive into the asset and your LLC, but your name would come up as the signor for the LLC. If its not considered arms-length, I believe it restricts lenders' on their comps or ability to lend on it in general? That's just big-picture thoughts...an attorney or NC lender would need to chime in here.