All Forum Posts by: Seth Nadreau

Your local zoning codes will pretty much rule over all of that. 

It's not uncommon to see this happen. If zoning doesn't permit business leases, you can always have a real estate lawyer draft up a suitable NNN Residential Lease with Sublet Options... you just have to make sure it's worded plainly and with enough residential language to keep the city happy should they come knockin. :-)

1-4 Units on a strap is considered residential multi-family. 5+ is commercial. 

It's doesn't really matter how it's broken down in actual structures. You could have 4 individual little cabins... if they're all on one lot and all platted on the same parcel/strap ID then it's residential. This is ultimately defined by FNMA and HUD who rule over everything when there's a lender in place.

If there are two quads on one parcel and you don't want to go the route of commercial lending... look in to splitting the parcel. As long as each parcel meets minimum zoning requirements (size, set backs, electric/water, etc.) then it's not a terrible way to do it. 

I bought out my sister's appraisal company in 2016 after working for her for 7 years. This was primarily done so I could have more control over my own career/earnings, but I retained every aspect of the company (including it's 4 employees) and re-branded with a new name and mission as she was a great appraiser but not much of a businesswoman.

I didn't have the liquid assets to buy the business outright, and it was a bit wonky in the math anyway since I was a top producer, my gross earnings couldn't really be factored in to the totals as I would have made that anywhere. I ended up putting about 20% down and then offered her an equity split on GROSS earnings for 2 years to cover the rest. (No ownership... just debt servicing a percentage of gross receipts.) It was ballsy, but it worked out well. I owe her three more checks and then I get an automatic raise of her percentage.

I partnered with her during the last 6 months of her ownership as she handed over the books and we worked together to transition her out and me in. My NUMBER ONE piece of advice is to get EVERYTHING on paper. We discussed who was going to do what during the transition, but then she sorta lame-ducked me.  

Congrats (in advance) of your big move. Good things coming!

I don't wanna be that guy... But did you not plan an exit strategy or two prior to taking on the investment?

Best way out is to have a plan and stick with it. 

That said, if the market is full of buy and hold investors, I'd put tenants in the properties and sell them as cash flowing income properties. If there aren't many investors, lower the price. 

My understanding is that you want to give yourself a massive headache now so that you don't give yourself a minor brain freeze later. Sadly, that's the short and skinny of it. 

The ideas thrown around are so close to fraud that one I not dotted or T not crossed will ensure that your next property comes furnished with a cot, bars and 3 hot meals a day.

If you don't know 100% what you're doing, don't try it. I'm pretty sure the note's due on sale clause would kill any effort to try this anyway.

Its optional... But my leases include verbiage regarding liability. :-)

So many factors at play here. Lower cap rates indicate safer investments with lower potential returns while higher cap rates often carry more risk. 

The easiest way to determine a good cap rate is to have a realtor pull up rental sales in the market. If you can get rental rates and sales prices, you can then figure out a typical market cap rate. Then figure out if your investment is better or worse than the market at large.

I can't speak for every neighborhood in the US, but generally speaking, if it doesn't increase the rent then its not worth spending extra money on it. 

Really, only you know your costs and any realtor could do a rental survey, but (again) generally speaking, primary factors of value for rentals are location and bedroom/bathroom counts. If the nook is large enough, you might be better off turning it in to a bedroom. ;-)

Then you should have no problem at all getting an FHA with a lower down payment. Congrats!

You found brokers who can do an FHA loan on an investment property for less than 20% down? Are you taking up occupancy in one of the units? This is VERY rare.

As an FHA approved appraiser, I've NEVER seen anyone get an FHA loan on a multi-family property without either living in one unit or putting up 20%. Double check that these brokers know what they're talking about.