All Forum Posts by: Stephen Chittenden

I'm pretty sure that neither Freddie or Fannie will buy a mortgage on a property owned by an LLC, so if you're looking to finance the purchase of a home by an LLC, you will not need to worry about Fannie or Freddie guidelines. Your note will usually be a balloon 5-, 7-, and 10-year terms are fairly common. 30-year amortization isn't as common. Interest rates are higher.

So, we are closing today on our third LLC project. Previously, we closed on a single-family home, which we renovated and rented. We have also purchased a three-unit multifamily that has all three units rented, but hasn't turned out quite as well as we've hoped.

Our third project is another single-family home in Havre de Grace, MD.  This one involves a bit of risk, in that the house is not entirely on the lot.  The front of the house is built on property owned by the City, but that is grandfathered in.  The very back of the deck extends ever so slightly over the property line of the rear lot.  We're considering making an offer to buy 15-25' of the lot behind so that we can create a decent fenced-in yard to make the property more attractive.  I discovered the issue with the location of the house, and as a result was able to bargain the purchase price down another $10,000 from the initially agreed price, which was already about $10,000 below the original asking price.  In the end, we're purchasing the house for $81,900 (about $88,000 after taxes, fees, and realtor costs). The house is a 3/2 with about 1700 square feet of living space.

Our rehab budget is about $50,000, including $12,000 for two bathroom remodels, $5,000 for a kitchen remodel, $9,000 for a new roof, $10,000 for HVAC and plumbing, with the remainder for carpeting, flooring, painting, and appliances.  Although the floor plan would be best if we removed some walls from the kitchen and opened the space up, the extra cost to do so (given that HVAC ducting and electrical run through the wall to the second floor) is more than we can justify for a rental.  Instead, we're going to open up the kitchen somewhat from the front door, so that you can see all the way through the dining room to the back deck.

So, all told, we expect to be in for about $138k. The ARV should be $185-200k. Monthly rent of $1400-1600.

The answers you seek are here:

https://www.fanniemae.com/content/guide/selling/b2...

If the mortgage being delivered to Fannie Mae is secured by the borrower

 I find this funny, but mostly because I find that the more expensive the granite, the less I like it. Not disagreeing with you. Finishings are important. Just saying, sometimes it is different strokes for different folks. 

 I don't see what seem to be really good comps. I don't see any recent sales with a basement rental unit. That could be a crapshoot. Some buyers may not want the hassle of being.a landlord. Others might believe it increases their buying power. I see two recent sales within a couple of blocks. Each of them was in the $750k range. They were both renovated and somewhat larger than your home. I would guess $800k might be reasonable. I don't see anything to support $900k in that area at the size. I could be off though, that's not really my market. 

 This guide from Montgomery County, MD, is instructive.  The guide indicates that this would be "damage," but nonetheless says that the tenant is only responsible for the replacement cost multiplied by the remaining useful life percentage.  In the case of carpet more than 5 years old, the landlord would be entitled to nothing even though the tenant damaged the carpet.  Maryland is fairly tenant friendly, and Montgomery County is more so, but I think many courts would look at it this way.

http://montgomerycountymd.gov/DHCA/Resources/Files/housing/landlordtenant/ordinary_wear_tear.pdf

 When I say that, it is usually because I want to make clear that I am giving general advice and not legal advice that may apply to their specific facts.  I also want to make sure that it is clear that we have not established an attorney-client relationship, that I have no duty to you, and that our conversations are not privileged.  It is intended to protect against ethics complaints to the bar (and it makes my firm happy).  For those who are not lawyers, it may be an effort to ensure they are not engaged in the unlicensed practice of law.

 You can garnish bank accounts in Texas.  It's not quite as easy as getting a chunk of each paycheck, but it can allow you to collect judgments.

 I didn't know there were any rowhomes left in that block.  I thought they had all been knocked down?