All Forum Posts by: Sam Booth

@Sam Booth

If the property is being bought for 145k and needs 45k in rehab this is not a good deal. The purchase price is too high. What happens if you get into the house and the rehab needed is larger than you originally anticipated? There is zero profit in the deal from an equity perspective.  

On the rental side, say you take a loan on 150k (75% LTV) at 7.5% rate. Let's say your taxes are 2k per year and insurance is 1k per year.

Your PITI Payment would be $1,298.82 per month. Then let's add the 10% Property management fee. PITI + PM Fee = $1,458.82 PER month 

You actually only cash flow $141.18 per month and that's IF your escrow is only 3k annually. 

All and All - NOT A GOOD DEAL.

@Sam Booth www.MySmartMove.com for credit check and background check. It’s about $42 charged right to the applicant. I generally try to weed it down to one final contestant and their spouse if applicable and then run the credit/background checks. If they fail I move to the second choice etc etc.

I personally dont charge application fees and then run tons of background checks. I feel people have enough expenses today so I try to minimize costs for them.

I pick the first qualified applicant(s) and do the checks and thus avoid discrimination issues.

Hey Josh, I've got a 3 SFRs in the Reno market that cashflow $700 - $1000 a month. The $325,000 price range is a bit low for that market but if you are ok with putting in some renovation work, it could be possible. If you are ok with buying something on the Sparks side (894236/89512), which is an adjoining municipality just East of Reno, I think you could find something that wouldn't take too much work. In Reno proper will be tough to find a property with decent ROI in that price range.

I have lived here and been investing here for the last 5 years. I would love to connect and share my contacts with you.  I know a fantastic, investor focused realtor who invests out her herself who can put together some pro formas for you.  Happy to connect and discuss the market.  

-Daniel 

The reason most lenders require the LLC is because these secondary mortgages/Hard Money loans are Business to Business loans not Business to person which would entail lots more regulations and docs.

@Sam Booth An attorney isn't a CPA.  A lender isn't a CPA either.  So, no matter what I say...or anybody else...check with a CPA.  When you check, you'll see.

Likewise, an S Corp is COMPLETELY different than a single member LLC. It's also kind of hard to say what the "right" structure is for these sorts of things especially when we start out. But if we want one just for loan purposes that's usually not too expensive. Creating a single member LLC is usually handled by your local state office and isn't too difficult to learn how to do it on your own. I can't tell what state you are in but for most states we go to the "Secretary of State" office. Play a little dumb and they are usually ok with helping you where to go. They won't give you legal advice...but just to create a LLC they will tell you what's needed and what forms to give.

Hope all of that makes sense.  Thanks!

@Sam Booth to address the capital gains thing - that description is ABSOLUTELY incorrect. Transferring from your personal name to an LLC, from a LLC to another LLC...nothing of that triggers capital gains if you own these entities. I'm not sure who told you that...let's just say they were "mistaken" and leave it at that. We do these types of transfers all the time. Completely safe.

I want to address something else here too - if any lender is saying you have to face seasoning...then don't work with them.  Conventional or other wise.  I mean, you can work with whomever you want to work with of course but you don't have to face seasoning with any loan type as long as everything is structured correctly.  Sometimes people may not know how to structure things...so make sure you are working with people with experience and knowledge in this space.  How do you know what people are knowledgeable?  It's the same answer with finding renovation lenders that are ok with giving you a loan in your personal name - ask other real estate investors in your market who they use.  Read this post HERE on how to find investor friendly lenders.

Reach out with any questions.  Thanks!