All Forum Posts by: Rick C.

Hi Stephen - Philadelphia has a diverse mix of neighborhoods. What are the specifics on the opportunities being offered to you?

@Jack B. - Sounds like you are onto something with regards to tapping into the equity of your existing properties. I own rental properties mostly in Tampa, but Lakeland is also an area with significant growth potential, given its walkable downtown, location between the hubs of Tampa and Orlando, colleges and presence of large employment centers, such as the Publix headquarters. Please note though that it is a smaller community with lower rents than you may find in a place like Tampa. There are also some neighborhoods of Lakeland that are significantly less desirable, so be sure to travel there and do your homework before making any purchase decisions.

@Brandon Hall has an excellent article that explains the travel deduction rules before owning a property in a given geographical area. Here is a quote from it that should answer your question:

It’s important to understand that there are travel expenses that you may not deduct. These include any business trip undertaken to explore new investment opportunities in a geographical region where you have yet to purchase a property.

For instance, I live in DC and have a property in Western NC. If I choose to explore investment opportunities in Raleigh, my trip expenses are non-deductible — until I close on a property in that region, at which point the costs will be added to the property’s basis and depreciated over 27.5 years.

On the other hand, if I took a trip to explore opportunities right down the road from my current rental, my trip expenses are all deductible as “expansion costs.” It’s confusing stuff, so make sure you loop in your tax expert.

(https://www.biggerpockets.com/renewsblog/2015/12/20/plan-holiday-travel-maximize-tax-deductions/)

Congrats on your 1,000th post, @Brandon Hall! I am sure speak for many, when I say that you add an incredible amount of value to the BP community. I cannot thank you enough for all of the very thoughtful and helpful information you have provided in contributions, many of which I have been able to implement in the practices of my own business. Looking forward to reading your next 1,000 posts!

Hi @Account Closed - I ended up moving the focus of my business to Philadelphia, PA and Tampa, FL. Although the cash flow was good in a lot of the neighborhoods in Wilmington, it just did not have the population or job growth, particularly among the creative class, to make it favorable enough for me to be a buy and hold investor there.

Are you buying this property in an LLC? If so, then most banks will default to commercial financing, regardless of how many properties this is.

I would be interested to see if a reputable attorney agrees with @Trevor Tilton's thoughts on not using an LLC. My understanding is that there are plenty of insurance loopholes that could still transfer the liability payment from the insurance company to the owner.

Hello,

I am looking to cash out refi properties owned in my LLC. So far, I have only been able to find commercial financing, which I am fine with, but I want to do my due diligence before taking on this level of risk. Here are the details of the offer:

6% fixed with 5 year balloon

15 year amortization

LTV 89% purchase price or 80% appraised value, whichever is lower

The loan would cover 3 single family homes that I own in the Tampa area. Let's assume that the properties are worth enough that I would be going the 89% LTV route. These are the details of the homes:

Purchase price $45k, rents $850/mo

Purchase price $49.5k, rents $1440/mo

Purchase price $34k, rents $1100/mo

Given the properties being financed, how do the terms look? Are there any questions I should be asking before agreeing to move forward with this loan? I have never had experience with a balloon loan, so I am concerned that there is something important I am missing in my risk assessment. Thanks in advance for any advice.

Very interesting project! A few questions come to mind. Is there a demand for a beauty salon and a coffee shop in that neighborhood? What do you expect this building to be worth (based on area comps) after you put all of your expected repairs and improvements into it?

I am currently in the process of getting my out of state property Section 8 approved. I have Section 8 tenants who qualify and are ready to move in, the only thing waiting is a successful inspection. The property failed its first inspection because of a multitude of preventable issues. The issues have allegedly been fixed by the property manager's handyman, so the second inspection is all that is left. Assuming that inspection passes, it is looking like at least a half of month's rent will be lost from this failure/delay.

My question for the forum is, given that I live out of state, is it the property management company's responsibility to ensure that the property is in a condition that will pass the Section 8 inspection or is it mine?

Thanks @Matt Motil. Would the umbrella policy be in my personal name or would I need one for each LLC?