All Forum Posts by: Peter M.

You may be right about the fair housing thing but seems like a gray area to me. Best to err on the side of caution though. One compromise that comes to mind is to tell them they can do it but they each have to continue paying what they are currently paying until both units are rented or their lease expires, whichever comes first. That way you essentially only lose the rent from the 2 bedroom which you would be out anyway while you screen for a new tenant. Yes, you will have two leases expire at the same time but just let them go month to month once it is up, then stagger a new lease signing a couple months apart if you want the leases to expire at different times. I try to keep good tenants if I can but losing out on 2400/month is not worth it. 

Maybe California's title laws are different but I would ask to have them write up a general or special warranty deed if they will do it. 

@Raleigh Lewis Its a double edged sword. I also am there more and can keep a better eye on things. I spent a lot of time and effort on that building so I didn't mind so much them telling me about problems because I wanted to keep it nice. I feel a bigger problem is when tenants don't report issues. But there were times when I wanted to avoid them sometimes so I would park on the street. Overall though not to much of an issue. 

It is possible but you should probably try it first with a W-2 job and work out the kinks of the business before quitting and doing it full time. Make sure he actually likes doing it and that it is scale-able to a salary your family can live off. Keep in mind, if the market busts, flipping as a business becomes much harder. It is all rainbows and sunshine now but once the market turns to a sellers market, you and your family may be in for a world of hurt. 

Price quoted seems about right for an LLC. Yes, refinance in your name then deed property over-some banks will let you refi using a LLC, you just have to ask. If they say no and you do it anyway they usually won't call the note but if they do, be prepared to have to refinance it again. Do not use a quit claim deed, use a general warranty or special warranty. Quit claims should almost never be used and it will be an issue when you go to sell it down the road.

4-plex short sale bought during the crash, 20% commercial construction loan for 20k extra to fix up 7% interest 20 year am/5 year call. Ended up putting an additional 25-30k to get it livable over next 6 months, did most of the work myself, lived in one of the units. Definitely underestimated how much work it needed but it was a great learning experience for me. One inherited tenant that I had to evict and learned a lot there as well.  Luckily I was able to live with my parents while I made it habitable so that helped. Now its fully rented, refied and appraised for more than 2x what I bought it for. 

Yep, sounds like a good plan. You don't need to rush to refinance either but the seasoning is usually 6 months. If you make sure your FHA payment is less than market rent you will usually be good after the refi. Also consider a conventional loan up front (5% down minimum) in case it takes longer, at least MIP will stop once you get to 20%.

I do open house appointments but make it clear that if there are no confirmations for a slot then it will be cancelled. The number on the listing is a google voice number that has the times of the showings. I post the listing on Thursdays and have a showing Friday evening, Saturday morning, and Sunday morning. I make each showing 1 hr each or less. In the voicemail I instruct them to text the number with their email address and then send them a form letter with qualifying questions and a blank copy of the application. I explain that I process applications in order they are received so the sooner the application is completed in full, the better. They also only get 24hrs to respond to and pay for the credit/background check or I move onto the next applicant. All of this combined with a group showing creates enough demand and usually I have at least 10 applications before the Sunday showing. This works for my area right now but may change as time goes on.

@Account ClosedCan you provide any banks in Texas that will allow you do have series LLC bank accounts? I agree with everything your wrote about series LLCs in theory but I have talked to a couple bankers and lawyers that have said that although Texas allows Series LLCs, most banks will not accept them and issue bank accounts for them making them practically useless. The commercial guy I talked to at Chase said he had to talk to 30 different banks before he found one that would even consider it for a customer.

I have never heard of losing deductions for renting under fair market value. If that were the case a lot of mom and pops not be doing this. The IRS does not determine fair market value.I have heard about if you charge a lower interest rate on a loan you would still be responsible for paying taxes on what you would have earned using the market rate but that doesn't apply to a rental unit. Maybe that is what you have been reading? Whatever your income minus all expenses minus depreciation gives you your taxable income. The only time you would lose deductions is if you used it for personal use for part of the year then you would only get to deduct whatever percentage it was used for a rental.