All Forum Posts by: Richard Elvin

I would finish it as a SFH. Depending on how long that actually takes, you could then either list it (Steve K. is right that it's a terrible time to list, but the few buyers looking during that time frame tend to be motivated.) or cash out refi.

The market could change, although many, including myself, have been expecting the market to change for well over a year and it hasn't happened yet.

One of the guys on BP that has been doing this a long time (Collin H) says something to the effect that time heals a lot of REI mistakes Even if you refi and are unable to payback your HELOC immediately, you may still be happy with this house in 5 or 10 years. The memories of your ex will have faded, but the appreciation and cashflow will live on.

Just my thoughts. In the end, I'm just some random person on the internet. :) 

Best to you!

@Scott Davis When to use an LLC is definitely a polarizing question.
I would point out that several responses were from current property owners and investors, their responses were either ambivalent or negative to the idea of buying with a LLC. It's a lot different in practice than it is in opinion. Personally, the advice I take is heavily weighted towards those that have the experience to say what they've done vs someone's opinion of what they plan to do. 
You're free to do what suits you, and you should, but I would thoughtfully consider why those that are "doing" don't feel the need to have a LLC.

As to my "...and why". 
I've had rental properties in the past and, now that life circumstances are favorable to that, plan to invest in the "near" future. I've never had a LLC and don't see the hype for one. If you have any active part in managing the property you will very likely be a named party in any lawsuit regardless of whether the LLC is named also. That said, DSCR loans usually require an LLC, if that's the route I end up going, I'll get the LLC as required.

Best to you in your endeavors!

I don't have a STR, but what @Michael Baum said is what I would do. I wouldn't want anything with batteries for the owner's closet, so mechanical lockbox with the OC key. The cleaner wouldn't be locked out if the batteries died and, if an urgent issue arrised, I could give the code to the guest. (Batteries died on the main door lock, etc)

Personally, I would also have a second mechanical lockbox with a house key, JIC the guest was having an issue with the electronic locks.

Just what I would do, if/when I get a STR.

@Nick Crosby Pretty sure you would still have to register at least one of the LLC's in CA to avoid fraud/tax evasion charges.
To "properly structure" the STR. Buy it, get STR insurance also, get an umbrella policy that covers you for any trumped up/legitimate liabilities, the end.

@NIcholas Arbuckle As someone with LL experience this is my main reason it's a hard no, there are other reasons as well: You stated that it would be 10 to 15 year time horizon before having the DP for a second home. How are you going to fix something if one of your guests causes significant damage? Do you have the cash to pay if a guest causes $15k, $5, or even $1k in damages? Most arbitragers don't have any resources, so the LL ends up taking all of the risk of loss. 

Usually there's a phrase to the effect of bulletproof lease, landlord protective document, etc, that's pure hogwash when it comes down to it because the arbitrager has no way of affording to actually make the landlord whole again if there's substantial damages. Insurance will cover some damages, but ask any LL and there are always holes in insurance. 

Second reason, almost as good as the first, is that I would hire a PMC, let them have ~20%, and reap the rewards myself for the added risk.

Why not start a good property management company? Get licensing, insurance, etc, and do it well! Less risk for everyone involved and you'll still make $$.

@Jozlyn Parker I don't think this is what you are looking for, but just to throw this out there: My family of five stayed in a STR that was rentable as either a 1bd or a 3bd. The owner could lock out the back two bedrooms, but they were either rented with the front 1bd or not rented, so no sharing of space.
I'm not sure that's helpful, but thought I would mention it.

 I'm sorry that happened to you! Sounds like you have a good plan though. Experience can be a hard teacher.

Congrats on getting started, you're doing a 100% better than most already! 

Best to you!

@Brad Smith Tagging is using the at symbol, then click on the name you want. It's not as intuitive as it could be. 

"Anyway, so from what I understand - if I'm renting it to tenant A long-term and then this tenant goes on to subleasing it to subtenant B at a marked-up rent, and subsequently if subtenant B causes any damage to the property, I cannot hold tenant A responsible or liable?"
That isn't what I was trying to say, but I can see how that could be less than clear.

You absolutely can hold tenant A liable, but what can you actually recover from them? Most arbitrager's don't have anything of value that you could recover damages from. A several thousand dollar judgment against someone that doesn't have two nickels to rub together doesn't pay for the damages you may have sustained.

I would interview a couple of reputable STR PM companies and they should be able to provide you with expected occupancy, rates, and data to back that up. If all are fairly consistent, that would give me confidence that their numbers are reliable.

"My idea of why I was exploring rental arbitrage was to take a lesser risk"
Rental Arbitrage for a LL is not usually lesser risk. Search for it through these forums and you'll find that most of us that actually own/owned property are against it, except in a few specific cases.

Feel free to dm me or continue asking questions here. :)

@Sam Hoffer I don't currently have an LTR, but that is how I got started. As an actual experienced LL, it would be a hard pass. I've posted about this often enough, as have a lot of BP'rs.

If it were me, I would use a PM. Why would I allow someone that lacks the desire or the ability to actually be an investor (arbitrage is not investing, it is creating a job for oneself) to attempt to make $$ on my property, while I take all of the risk? 
If an STR is the route I want to take and I don't want to handle the day to day of it, I would hire a licensed, insured, and experienced PM, after I interviewed several. 

@Brad Smith I wouldn't consider rental arbitrage. You will have more control, realistic safeguards (ever tried to get blood from a turnip? How will you collect against someone that lacks enough collateral to even buy their own invesment property if they have a tenant damage the place? If that doesn't sound realistic I've seen water damage in the several thousands happen almost overnight.) and you will see the profits for your added risk. With arbitrage someone else gets to profit from your added risk.

If you have carried forward losses that will eliminate your tax burden (I'm assuming you either know or have had this confirmed by a CPA) then I would sell. 1031'ing is useful when you are trying to avoid a tax burden, if that hurdle is already dealt with, then I would sell and use the write off. 

Just my opinion and not tax advice.