All Forum Posts by: Spencer Wetmore

Thanks for the responses @Michael Koncaba, @Rosston Smith. 

FYI - I actually just spoke with an attorney this morning who suggested I wait until I refinance out of the FHA to create an LLC since it is much more regulated than a conventional mortgage. This could also cause issues with the due on sale clause.

Hi Nick,

To me, it sounds like a great deal, but you should definitely perform some additional due diligence.

Have you looked into comparable rents in the area to verify those amounts are reasonable? I like rentometer.com for an initial gut check on the local rents. 

I usually factor in 10% for management fees and 10% vacancy, but repairs can be a bit more nuanced. My starting point for repairs is usually 5% of rent, but depending on the  age of the home, location of the home, and types of tenants I am attracting, I will adjust repairs up to 10-12% of gross rents.

Have you incorporated taxes and insurance?

Who will be paying utility costs, you or the tenants? 

I'd recommend trying out the BP Rental Calculator if you haven't used it yet or look into a free one online. At the very least, this helps me remember all the little expenses I forgot to consider.

I have a four family home in Cromwell, CT and had Eversource hook up a gas line to the house. Now I am looking for a licensed plumber / heating specialist to perform the following:

-pressure test on gas line

-interior gas plumbing

-install gas furnace

-modify the existing ductwork

-install 1-2 gas water heaters

If you have any recommendations for a trustworthy plumbing/heating person in the Cromwell, Hartford, or Middletown areas, please let me know.

Greatly appreciated!

Spencer

Thanks for your insight @Matthew Kreitzer. Our plan is to get a lawyer - I figured slapping a haphazard LLC onto our business doesn't do more than pose a small hurdle for a competent attorney.

Thanks @Thomas S., do you have any idea how much a partnership agreement usually costs?

Hello BP Community,

Myself and a couple partners are starting a new flipping business in the Hartford area with the end goal of creating financial freedom through large apartment complexes. To do so, we are structuring our business around a process-oriented franchisable model to produce consistent results for our team and final customer. 

Our first steps to build this business is creating an LLC, tax ID #, and a business operating account. I am speaking with an attorney this Friday to discuss the possible legal entities we can create and the pros/cons of each. Prior to the meeting, I wanted to get your opinion on whether an attorney is necessary for setting up the above, or going through a site such as LegalZoom is sufficient. I understand nobody can give me official legal advice on here, but your two cents would be greatly appreciated!

Thanks in advance,

Spencer

Also, feel free to send me a PM or colleague request if you are in the Hartford or surrounding areas and would like to connect - we are always looking to expand our network.

Hi Everybody!

I purchased a multifamily in June 2016 using an FHA loan. I did a little research and would love to create an LLC for this property (and possibly future properties). However, I heard from a non-attorney it is not allowed to put an FHA property into an LLC.

Can somebody substantiate this fact? I did a little digging, but couldn't find anything concrete.

Thanks so much,

Spencer

Thanks for the warm welcome! I will definitely consider attending one of these Manchester meet-ups.

Hi @Albert Bui, 

Thanks for the response, that's all great information and definitely answers my questions. I wish there were some way around this refinancing hurdle besides waiting years of payments to gain 20% equity in the property. 

Also, as I am new to REI, I'd be interested in learning more about appraisals and how to value multifamily properties (from an appraisal standpoint and actual sales standpoint). If anybody has any advice on how to educate myself in this area, I'd greatly appreciate it.

I purchased a 4 family home in June 2016 using an FHA loan and a 3.5% down payment. The house was appraised using comp values rather than an income based approach due to the house being mostly vacant. I fixed up and rented out the 3 units + the unit I am living in. I believe my equity in the property would be much closer to 20% using an income-based approach.

Are there specific appraisers that will focus more on income rather than comps?

Also, I heard somewhere the UFPMI will be partially refunded if refinanced within a certain time period of the loan origination date. Is this still true today?

Finally, how much do refinance costs usually run? 

Thank you!