All Forum Posts by: Zane Cress

DSCR is designed for this situation. Focuses on the property and its ability to pay for the debt via the rental income. You can get 30yr fixed DSCR financing. I got quoted by MoFin 7.125 recently. If you're credit is good then you might get below 7 with a lower LTV. Another option is to find a local lender that will provide you a portfolio loan based on your total rental income. They could roll everything into one loan with one payment.

What are the tenant laws? Even with a lease in place is there an option to terminate contracts with a sufficient amount of notice? It's all dependent on state and city but where I live a 60 day notice to vacate is sufficient after purchasing, especially in leases where the wording is vague and mom&pop landlords were using Word document leases. If you can't terminate the leases then offer a buyout. A lot of long time renters will look at a 5-10k buyout as hitting the lottery. Pay them to leave and go find another place to live. 

It takes 5 minutes to put together a formal offer and show proof of funds. Seller probably gets a ton of verbal low balls and he wants to see who is serious and who has cash. If the deal is worth it then why would e-signing a few pages be the hold up here? Maybe he thinks that a 950k counter is possible once a negotiation is started. That's the game, just have to play it. 

I think the issue is the stress on certain sectors of housing. If someone crosses the border the odds of them working a low wage job and living in D and C class housing is very high. There is already a substantial domestic population living in D and C housing. Nobody builds D and C housing. We only build A class new housing. The only way for D and C housing to be created is for A and B to fall into disrepair or be abandoned. D and C is more likely to be condemned or destroyed by fire, flood, etc and rebuilt as A property. So there is a shortage of "affordable" housing because millions of people have come here but millions of D and C class units have not been created. These people are also concentrated in major metro areas with lots of red tape on development and limited space to build anything new. The reason cities are spending millions of tax $$s to reopen dead hotels and take over community centers in poorer neighborhoods is to force housing space at any cost. I don't know what program you would call to tap these funds but your local housing authority might be a start. This would seem like a Section 8 style rental with no background check and a high risk tenant pool. AirBnB and first time home buyer rates have no influence on this because that is A and B class property for the majority of the transactions. No one sets up STRs in C and D class areas. 

Yes I sold property and had a QI to hold funds before purchasing the subject property. All of that has been done properly. The transition into and out of LLC was my biggest concern because it might be viewed as a short holding period, but it seems to be fine. I reached out to a second lender that has more agreeable investment lending products and I think we are going to avoid putting it in my personal altogether.

I have a note out to my tax person but they take a minute to get around to things sometimes, wanted to see if anyone has dealt with this situation before.

Sold property in my LLC and purchased new property with a hard money loan. Just started the Refi process and my lender sent the title search under my personal name and is starting the loan in my personal instead of LLC. If I Refi this into my personal will I create the taxable event? It's still used as a rental and my LLC is a single member. On taxes I believe we file as a nonqualified entity for the business.

Just connect the renters to your home owners. Let them set a month to month lease and then pay you as the cleaner/maid/contact person. Home owners can be the "manager" and you just do the work. 

Not being a tax professional the way I understand it is that the capital gains are broken down as a gain each year based on whatever the payments were. So if your payments total $20k to them for the year that would be their gain for the year and it keeps them at a much lower tax bracket instead of having a massive gain all at once. There are minimums on the interest rate they can charge you as well so you probably can't structure a 1% rate. Need to speak to your trusted real estate attorney and your tax professional. Have the seller speak to them as well to get the info direct or draft them a letter/info packet on the benefits. Use actual numbers to show them how the savings and deferment work.

Become a BP recommended agent. That will direct any investors in the area to you. I picked up 5 clients last year in just a few months. Been a great success for me, way better conversion rate that Zillow leads.

Sounds like it would benefit you to get your RE license and hang with a local broker that will allow you to property manage. Could be the next step in your journey and open you to buying and selling. Suppose one of your clients decided to cash out their property. You would be the perfect agent to sell it and collect that commission. Maybe even buy it yourself if the numbers work and you can keep renting it.