All Forum Posts by: Patsy Waldron

As Jeff mentioned, water and sewer are commonly paid by owner; electricity and gas are usually paid by tenants as each unit has its own meter. Some landlords also sub-meter water so tenants pay their own water too.

Good topics there! I would add a general discussion of revenue vs. expenses and learning always keep one's expenses below revenue. I also echo Sam's suggestion about savings- kids need to hear and learn from a very young age the need to save their money. They need to start cultivating good financial habits and attitudes such as saving, comparison shopping (within reason), practicing self-discipline by delaying gratification, etc. By the time they turn 18, it's almost too late to teach these things, IMO.

Can you borrow them from a family member, friend, co-worker/business associate? People who know you well and trust your judgment and honesty. Or could you get a personal loan from the bank?

@Ryan Keenan

Go speak with a loan officer at a small, local bank. They are easier and more straightforward to deal with, even with FHA/Fannie Mae loans. More person-centered (and therefore better) customer service, as opposed to the big banks' purely rule-based process. The small bank will ask you questions too, but will be more likely to shepherd you through the process to a successful outcome.

It is so silly that one's credit score goes down when a report is pulled. What's the logic behind this ridiculous practice?! The score should reflect what amount and type of debt actually *IS* on a person's file, not what they might, could, or are thinking of getting!!! /rant

About the financing- I should have added that, even though it's a commercial loan to your LLC, the lender will most likely want to see personal financial statements from all the LLC owners and ask for a personal guarantee from them. So you guys are technically on the hook for the property even though it is owned by the LLC.

If you want to sidestep the personal guarantee, you can apply for an asset-based, non-recourse loan, but most banks don't offer this and you will have to put more money down (typically at least 40%).

 I agree partially. I, too, have walked from a house that would have required almost $30K in escrow while I put more than that into the rehab. My offer reflected the fact that I would have to have $75,000  of available rehab budget just to be able to buy the house... When the bank refused it, I moved on. Now they are trying to sell less than what I offered months ago! But they will still have trouble moving that house because of the amount the city wants in escrow. I don't think the system in place is very effective in that regard. 

However, it has helped force owners to really clean up their properties and given a facelift to cities where houses were falling into terrible disrepair. Many neighborhoods where owners would just neglect the properties now look nice because the cities have enforced their building code.

- Financing: Your LLC will apply for commercial loans through the commercial lending department of any bank.

- As usual, local banks can be easier to deal with as they often do their own underwriting and can be flexible. 

- For commercial loans, especially starting out, you should expect to put 25%-30% down AND have cash reserves to cover anywhere from 6 months to 1 year of mortgage payments (principal + interest).

- Type of property: Each bank will have its own set of criteria for what type of property it prefers to underwrite. I don't own commercial property, so can't speak from personal experience, but I have heard that banks prefer residential to commercial. 

With this particular scenario (several owners), I would start with a smaller multi family property, figure out your system and work out the kinks in your process, show the bank that you guys can run it well, and then go bigger. Good luck!

To add to what @Oren Karp said above- If the seller does not remedy the POS violations and the buyer assumes them, before closing can happen buyer has to put money in escrow with the city equal to 1.25 the amount estimated in the POS report while carrying out the repairs- so budget for 2x repair cost! Bank financing typically does not include the escrow amount, so it means more cash upfront to close. You can draw from that money as work progresses, but that requires inspection by the city to sign off on work completed, and you pay the city to come out each time to inspect the property. Once all violations are cured, the city issues a certificate of occupancy. 

Not very buyer-friendly.... But protects the community.

Wow, I can't believe the termite company told you to let it go and see what happens! That is some terrible advice. Give the contract to a different, hopefully more ethical provider.