All Forum Posts by: Peter M.

@Mike Adams They'd be a lot more pissed if you were asking for a short sale. Is the buyer aware of the tenant situation?

@Pierre Gauthier of course

@Rio Chao I second what @Jon Reed said. Think of banks as sophisticated investors and you, me, and everyone on this website as morons. We aren't going to think of some brilliant idea that the millionaires and billionaires backing the banks haven't already done or thought of. Their whole business is risk management and we are just sitting at the kids table. Now if your LLC has more assets than liabilities, and it is a credible business with history maybe they will. But not to some new llc with a couple of properties with only 20% equity

@Nicholas Potocki I understand your concern but you're treading on discrimination waters. I'd look up the fair housing laws and see where this falls for you (you may not be subject to fair housing rules) How would you treat them if they were just roommates? Its tough but all your worrying may be for nothing too. If you're really worried get a bigger deposit but if they qualify otherwise why not?

Yes. We are doing the same as you right now, getting an Airbnb furnished, but luckily its just a SF home. And of course we have a budget for furnishings and we should be close but my wife is pretty savvy with FB marketplace so that's where most of our stuff comes from. Also, not sure if you have Hobby Lobby in CA but they have rotating discounts on their products so she waits until the week that the things she needs are on sale. Other stores do similar things you just have to know the schedule. But you're right, good decor, layout, and photos will make or break your STR so sometimes you just gotta spend more money to make it work

@John Baker Will they let you take a 70% HELOC? Thats pretty good. What you want to do with it after determines your path. Do you want to pay interest for 5-6 years or 30 years? Are you planning to retire in less than 30yrs? If you can take to money from the cash out refi and keep doing deals for 30 years to get a better APR than 3.25% plus the closing costs, do that. But if this is going to be a one and done thing or you aren't sure about the next deal go with the LOC. The good thing about it is that it can just sit there until you are ready to use it and you aren't paying interest on it. If you do the cash out and don't have it working for you then you're losing money. Im partial to the line of credit but that's just me

@Pierre Gauthier Don't be too early to open an LLC-you dont need it until you have a bunch of assets. Sounds like you're on track, good luck

@CJ T. I think you're right not to start out with the LLCs yet, its so much hassle when an umbrella policy will do. You could just get a business credit card with your DBA. Or open a LLC in a more friendly state like Delaware, Texas, or Nevada but I think you're getting ahead of yourself honestly. Why do you want business credit? If you do well with your investments you can leverage them when the time comes. Just my opinion and I only have experience opening LLCs in my state and using them for business purposes but I wish I never had. Maybe one day I'll be glad I did but that would mean something really bad happened so hopefully ill be pissed off forever haha

@Ethan Berk Yes you a correct in assuming that could happen and if it does you will just have to wait until there is enough equity to do what you want. Also keep in mind that Fannie Mae just changed their position on purchasing investment loans in the secondary market so you might also have to find a bank that will keep the loan themselves like a commercial lender. If it is a good deal and you can keep it afloat even if values stagnate then you will probably be fine but if you are banking on appreication then i would be careful.. There will always be risk, you just have to decide if its tolerable. Also with covid, risk is higher with inherited tenants and this being your only property. It might cashflow with 3 tenants and you living in one but what happens if one claims covid hardship and stops paying and you can't evict?

@Michael Sedillo No you can't do that. Publication 523 of IRS code calls that a remainder interest. Remainder interest. The sale of a remainder interest in

your home is eligible for the exclusion only if both of the

following conditions are met.

• The buyer isn’t a “related party.” A related party can

be a related person or a related corporation, trust,

partnership, or other entity that you control or in which

you have an interest.

You could rent it for 3 years before the 2 of 5 is up then you could exclude it minus the depreciation you claimed but if you go past the 3 year mark you'd be out of luck. In that case you could just do a 1031 exchange.