All Forum Posts by: Rob Hakes

 I will post the actual costs of the eviction once it is all said and done.

@Jared Friedman we are still in the eviction process. No payment since June on this one. The tenant is supposedly still in the house so I can only hope that they don’t trash the place. Discouraging. 

@Natalia Avalos

I started doing some turnkey properties last year.  On one, I signed the purchase contract July 2017 and we closed December 2017.  Definately longer than i had anticipated, but the rehab was very extensive and contractors were slow (typical).  They did not require earnest money and all rehab was on there dime so I did not have cash tied up in the deal for that duration.  Just the downpayment at closing.

@Jeff Lundeen It seems that the method some attorneys are starting to use is once the property is purchased in your name, then transfer the property into a Trust and list the LLC as the beneficiary. The beneficiary will hold the liability, but beneficiary info is typically not publicly listed.

According the Garn-St Germain Act, a bank cannot trigger 'due on sale' if the change of ownership is into a trust with the beneficiary not changing.  So it is a little gray area, but because of this, if the bank saw the name transferred into a trust and they don't have access to the beneficiary info they may not go down that road. 

This is how I set up a few of my out of state properties and it was pretty slick.  More than likely, as long as the mortgage gets paid, it should never be a problem, nor would the bank have any incentive to call a performing note.

Also not a lawyer!

@Jeff Lundeen

I guess another question you may need to ask is if you want to purchase your first deal with the new entity on the title, or with you personally on title and then transfer the title to the entity after purchase? The property must be in the name of the entity to have protection. It may be tough to get a loan with a brand new LLC but is possible.

On my properties i bought them in my personal name and then trasferred them to the entity after purchase.  This is a bit more complicated and does carry some risk with the 'due on sale clause' , but some theorize that this may not be a big deal.

If you are in Salt Lake you may want to reach out to the team at Breglio Law.  They helped me with the process.  They also have a lot of info on their website that would answer some questions.

@Kevin Kraver

I recently have gone through the turnkey process and have a few underway.  A few things I have learned.

- you will pay top market value for the property.  you need to decide if you are willing to accept this.  Be prepared to hold the property long term as your exit options are limited the first 5 years or so.

- It is best to stick to the turnkey providers that are okay with traditional lending.  This acts an extra safety net as the bank has to vet the deal just as much as you do.  This also compels them to keep the asking price in line with what the appraisal will be.

-With a good provider the appraisal should be within a few thousand.  Some providers will leave it to the investor to make up the gap if the appraisal is low.  I think with how high the demand is right now and with prices being pushed up you may see more of that no (low appraisals and the investor having to make up the difference)

-In a lot of the turnkey markets the 'comps' are other turnkey houses that are being sold for as much as the provider can get for them and still leave enough meat on the bone for cashflow.  I don't think it is an accurate price for what a retail buyer would pay.  This fact alone makes some a little squeamish.

-If you are decide you are okay paying top market money then MAKE SURE that the rehab is as extensive as possible.  All Cap Ex items must be new.  Also MAKE SURE the provider owns their own PM company or at leas the PM company is very reliable.  This will make or break it.

I posted the details of my first property under the post 'Another Spartan Invest Turnkey Case Study' if you want the detail.  

Seems like a good model,  only time will tell...........

@Jaye Seay

Things are not looking any better.  Both tenants are over a month behind.  Was hoping to get rent and late fees by end of July, but nothing.  So on both houses we are looking at eviction.  If we have to go through with it and payments are not caught up, then this years returns will look pretty terrible with two evictions, two vacancies, and two turnovers.  Total bummer.

@Noel R. Yes it has been a little rocky.  Surprisingly both of the houses I have with Spartan have all of the sudden been slow to pay. Starting in may (as stated in earlier post) the tenant was late to pay.  Coincidentally, the other house I have has been late to pay as well.

The one tenant paid in full (including late fees) by the end of the month in May, which has pushed this month into the same pattern.  Just crossing my fingers that i get full payment by the end of June, but not very hopeful that they would turn around the next week to get back on track.

The second tenant has paid late and short paid.  This is a new tenant so they don't have much payment history with us yet.   Spartan set them up on a payment plant to get caught up, but to no avail so Spartan sent an eviction notice. They made a payment in June to catch them up for May which would delay the eviction I assume.

Spartan has been communicative throughout the process and have kept me updated.

So really, I am okay waiting for a late payment if it means i get the late fee, however I don't like the feeling of always being on the edge of a vacancy and turnover.

Hoping to get things back on track.

@Jon Zhou I won’t know for a few days. Payments usually post on the dashboard  within the first 5-10 days of the month, So we will see. I imagine it will be tough for a tenant to turn around with full rent just  a few days after paying.  Here is to hoping 

Just a quick update on this rental property.  I think this month was the first 'hiccup' so to speak. Tenants have faithfully paid the rent on time until this month.  The rent did not get paid till the end of the month instead of the beginning.  I actually get a little more return with the late fee ($45 additional), but now just have to hope that they stay caught up.  

I didn't have to do much extra other than message Spartan to make sure they were on it.  

All is well

Hope next month gets things back to normal.