All Forum Posts by: Mark S.

Just wanted to hop back onto my initial post and say that it looks like I was wishfully thinking about this, however, the EIDL seems to be an attractive option.  Great thread on that here:

https://www.biggerpockets.com/...

Just applied for EIDL.  Took about 30 minutes.  Got a submission screen with an Application Number upon completion.  Wasn't 100% sure on some of the questions, but filled it out as completely and truthfully as I could with some reasonable assumptions.

I chose the business w under 500 EEs option, used my SMLLC name, its FEIN, and had to put my personal info / SSN on the owner page. Used past 12 months gross rents per PM reports and COGS as expenses on PM reports (including PM fees) + PITI payments. For lost rents due to disaster, I used gross rents x next 9 months of 2020 to arrive at that figure (who really knows?). I checked the box to be considered for the $10K and entered my business bank account info. We'll see what happens.

Joined the NH SBA call this morning at 9:00am and asked my question about landlords that own properties in SMLLC and whether or not we need to choose business w under 500 employees - even if it's just us and it's a disregarded entity for tax purposes (NOT sole proprietorship).  I believe her name was Rachael from the NH SBA.  She stated that we choose BUSINESS WITH UNDER 500 EMPLOYEES.

@David H., that number isn’t working.  Can you please double check it?  Operator error, my bad

I have my 5 SFRs in my single member LLC, which has its own EIN. My SMLLC is also disregarded entity for tax purposes. Do I file as sole proprietor or a business with less than 500 employees (which is just me)?

I just read the the following article on Investopedia regarding Mortgage Payment Relief due to the CARES Act: https://www.investopedia.com/h...

I don't know what the future holds or whether or not my tenants will be able to pay rent in the coming months.  I know many have discussed being proactive with tenants, coming up with solutions for them to pay, etc.  I do NOT self-manage and use two different property management companies (yes, I could have individually reached out to each PM, but I haven't and am pretty much planning to see how they handle it).  Managing as many units as they do, I trust in them having proper systems in place to make this as seamless and painless (I know, I know...) as possible for all their investors.

I am NOT freaking out (yet) about being able to pay the mortgages if rent dries up.  I have been adding to reserves since buying each property and in my business accounts alone (for the properties - I have 5), I could probably go about 8-9 months with $0 rent from all units before bleeding all the business accounts dry.  I'm fairly confident we'll be through this well before that point.

So my question is: do I bother requesting loan forbearance (even if I don't necessarily need it right this second)?  Is there a benefit to doing that now regardless of whether or not I need it?  The way I interpreted the article is that it's simply a temporary suspension of payments.  Am I missing any potential downsides of requesting forbearance?

I would say it's extremely subjective, and fairly easy, to legitimately "experience financial hardship during the COVID-19 emergency."  If 1 of 5 tenants, for example, doesn't pay versus 4 of 5 tenants not paying - aren't these both technically "financial hardship?"

I don't want to "take advantage" of something I don't necessarily "need" right now, but I also don't want to potentially screw myself over (later) if it turns out I DO really need to do so.  Not sure if there's an initial "time limit" on the front end to request this - like I don't want to later have the mortgage servicer say why are you just NOW (6 months later, say) asking for this forbearance versus back in March/April, 2020, etc.  In other words, I don't want to NOT take action now because I don't need to RIGHT NOW only to shoot myself in the foot LATER. Just trying to figure out the best approach that makes the most sense without feeling like I'm "taking advantage."

Any thoughts, feedback, and guidance is appreciated.  What are YOU doing with your mortgages?  Why or why not?

My question is regarding the Paycheck Protection Program and how this relates, if it does, to property owners/landlords under the CARES Act that was signed into law on 3/27/2020. 

I understand that the overall purpose of the Paycheck Protection Program is to keep people employed, however, I'm wondering if the fully guaranteed Small Business Administration (SBA) loans would somehow be available to property owners/landlords.

These loans must be applied for by 6/30/2020, have terms of 10 years maximum, and interest rates of 4% maximum.  I understand that a business must make a "good-faith certification that the loan is necessary due to the uncertainty of current economic conditions caused by COVID-19."  My understanding is that the proceeds can be used for several items including mortgage.  Mortgage is said to NOT be a forgivable portion of the loan (but, rent would be, for example - among many other qualifying items for business owners).  These SBA loans supposedly DO apply to sole proprietorships (and other business structures, like LLCs, etc.)

So the question is: As rental property owners, even if we don't have employees, are we able to apply for one of these SBA loans for our rental property business due to the uncertainty of economic conditions caused by COVID-19 (namely, our tenants' ability to pay rent in the coming months) or is this just wishful thinking on my part?

I have read the posts / listened to the podcasts /etc. about ways to be proactive with tenants and the different payment options we can make available to them, but my question is specifically whether or not as property owners, we are entitled to these Paycheck Protection Program loans by the SBA and their qualifying lenders.

@Jackson Long, thanks for the info.  Didn’t know that about 38111.  I own in 38118, 38116, 38108 and 38109.

@Jackson Long, 

Keith’s show is fantastic.  I’m a huge GRE fan and he’s one of the primary reasons I invest in rental real estate.  With that said, he is all about passive turnkey investing and not at all about doing your own rehabs.  Not sure how, or if, you picked that up from the show, but he’s certainly not managing contractors to rehab his properties.  

Anyway, I currently own 5 SFRs in Memphis, TN with 4 of them being with Mid South Home Buyers (MSHB).  Generally speaking, MSHB is pretty fantastic and I’ve had very minor issues so far - nothing like you’re describing.  I’ve gone out to meet them, toured the market with them, did my own tour into other areas of town that we didn’t visit together - like Frayser 38127 - etc.  I personally will not buy in 38127 and a few other areas after seeing them first hand.  My rents are $850 and up.  You generally deal with a better tenant class and can protect yourself this way, too in my opinion.  If you’re renting $500-$700 in 38127, or anything close to that, that’s your problem right there in my opinion.  

With all that said, there definitely are areas to stay away from in Memphis (and any other market, as others have said).  If you really want to get scared away from Memphis, check out the Drugs, Inc. episode on Memphis.  I about pooped my pants.  lol.  Needless to say, I don’t buy in that area either.  

@Cameron Tope, makes sense.  Thank you.