All Forum Posts by: Simcha Davidman

@Jonathan Roldan I primarily use my excel model, the T12 (aka income statement, operating statement, p&l) and the rent roll. For comps, it's wherever rentals are posted in that market (costar group, rentpath group, zillow, craigslist, fb marketplace, etc). And some market data - I found St. Louis and KC Fed to have some useful info, as well as censusreporter.org.

You?

@Gina Grimmer this is not legal advice :)

The liability from the properties (e.g. tenants get hurt) should end at a properly structured/maintained LLC. I assume the debt on the property recourse back to you personally, and will stay that way. However, it's worth noting that technically, transferring a property into an LLC may trigger a mortgage note's "due on sale" clause. I have yet to hear of anyone having a problem with this, but my understanding is that it is a (very small) risk.

Also, if you have a rental agreement with a tenant in your personal name, your personal liability will likely continue until at least a new lease is signed in only the LLC's name, or maybe even only with a new tenant.

Financially, you should have a real heart-to-heart with your accountant to see if it there are real business to separating it out into an LLC. It might be a good move, being able to run more expenses through it and offset more income. But it might not.

Good luck!

@Christopher Murphy Are you thinking of looking into another location? If you're set on a neighborhood, then your other options are to come up in price (assuming you can afford it, within reason you should be fine over a long term hold) or find a way to pay faster (line up private and/or hard money - it will cost you more to get in, but once you close you can start the refi process and get them their money back. You might even be able to start the application process before closing).

Best of luck! The most important thing is that you just don't quick. Pivot, maybe; but keep on truckin and it (maybe something different) will come!

@Curtis Wang unfortunately, I don't have anything definitive to say either :)

Every state has different rules, and within states, counties apply the rules differently. Some jurisdictions only "reassess" every X years, so they can't just take a sales price and reassess. Some states that do that also allow for small adjustments on an annual basis. There are places that don't look at a single property's sale price but rather take "all" the comps and create some sort of value/average. There are also plenty of places that have caps - let's say the sales price is 50% higher, and the county might even want to raise the property taxes by 50%, but there might be a law in place that limits them to raising property taxes 10%/year.

Lots of people do what you're talking about, especially commercial real estate and mortgage brokers. Personally, I usually underwrite using the full sales price instead of just 80% (or some number less than 1).

@Andy Bailey better to do the cash out refi than what?

@Steven Wisniewski I have no idea :) Feel free to dm it to me; you can attach files to messages.

@Naga A. for insurance, don't focus on what your property is worth. Instead, figure out how much it would cost you to replace it. If for some reason you wake up one morning and your house is missing . . . how much would it actually cost you to rebuild. It may be more than it's "worth," but more likely you'd be able to rebuild it for a little less. Hopefully it will save you some money.

Across the country, the last year or two have been very bad for insurance premium pricing. More natural disasters and higher replacement/reimbursement costs have driven premiums up, in some places astronomically.

@Adrian Marshall the only place I know that you can get 0% for any time are credit cards, but unless you have a really significant business, each one will not come near $100k. You can try to get a few; each additional one you apply for will make the next one harder (within a short time frame).

@Steven Wisniewski congrats on closing your first deal! Sounds like a story you're going to enjoy telling your grandkids!

If you do the extra work, how much will the property be worth? If you don't, how much? In other words, does increasing your budget make this deal better? Better enough to deal with the increased risk of increasing your investment?

On the other hand, how much does the big shot want? Sober living houses are great - I applaud you! But you may or may not run into neighborly problems, like you stated. And you bring a great point of having a reason to build a relationship with big shot. If the numbers aren't too far off, I'd be inclined to go this way.

Good luck!

Hi again :)

Who's to say what they're worth? Things are worth what someone is willing to pay for the income, or in the case of residential properties, what someone is willing to pay to live there. You might only be willing to pay $160k for something, but for a variety of reasons, other people are willing to pay $180k.

It could be that prices are being bid up irrationally. One way to check that is to look at replacement cost. What would it cost to build the house you're looking to buy?

But it also could be that our dollars are worth less and it will take (a lot) more of them to buy the same stuff it did 2 years ago.