Real Estate Investing: At what point did you hire an accountant to do your taxes? |
- At what point did you hire an accountant to do your taxes?
- How to fund this ambitious project? Transformation of a Duplex into a Multi-Plex?
- What's the difference between appraisal value and what a house is worth?
- Refinance investment property, worth it? 3.5 to 3.25%
- How should I multiply $1 million through real state? (if possible)
- Rental house in area with one major employer
- Question about transferring title + loans from personal to an LLC/business
- Off market comps for appraisers
- Complicated Real Estate Math Question
- Help me understand my refi opportunity. Financials are not really making sense to me
- Buying a condo with a sublease tenant
- Help! The appraiser is coming!
- Refinancing and Shady Math
- Purchase of HOA foreclosures at auction.
- How many properties under 1 LLC
- How do you determine when it financially makes sense to refinance?
- Cash out refinance
- What is your best forced appreciation story?
- Buying a rental property - related to current tenants
- Was listening to a podcast and the host said “REI is actually a sales and marketing business”. Can someone explain this concept a little deeper to me?
- How to Train a Birddog
- What is a good multifamily research journal?
| At what point did you hire an accountant to do your taxes? Posted: 22 Jan 2021 06:48 PM PST Wife and I are going back and forth with having an accountant do our taxes this year. We bought our second property in 2020. My hope is that if we got an accountant he can help us get set up for 2021 to run more like a business and less "mom and pop". At what point did/will you get one? [link] [comments] |
| How to fund this ambitious project? Transformation of a Duplex into a Multi-Plex? Posted: 22 Jan 2021 02:56 PM PST Hey guys, a bit more of a complex one today that goes beyond just trying to find and hunt a rental property that can bring positive returns, but here is the details of my question on lending. Thank you in advance. The Project: —> a semi-commercial duplex that can be converted and built into (4) floors with highly conservative and under-projected gross annual revenues of about 252k, where a 15% assumption for OE is applied for a NOI of 214.2K in an area with comparables having a cap rate of about 4.5%, bringing the total value to $4,760M. The Issue: —> the property could sell tomorrow as is for about 1.3-1.5M$. The total project building costs have been overestimated to about 1.5M. The total project cost is $3M on the high end including land acquisition and full building costs. Remortgaging a $3M bridge loan for a property with a new value of almost $5M would require refinancing at project completion of about 60-65% which is highly feasible and in the buffer zone. —> I do not have the 600k or 20% required to obtain the traditional construction and building bridge loan based on progressive draw backs from an institutional lender like a big bank. What I do have though is the capacity to purchase the property at a discount from the owners who have agreed to accept 700k up front and a balance of sale that is to be discussed personally between us. They are my parents. —> the issues of permit approval, or urban planning consultation with the city, the actual plans and the build are not concerning hurdles for this question and nature of what I am asking. So I do not want the advice here on any of this or any questioning of the experience or skills needed to take on this ambitious of a project without the actual practical experience. I really want to focus on the lending aspect. Ideal Scenario: —> I am able to get a loan(s) (multi part, so the one loan done privately to secure second larger loan, etc. If needed) that can allow me to acquire the asset for (700k) + unlock a drawback schedule of capital contributions based on project milestones and completion. Meaning, an initial draw back that includes (500k - the amount my parents are comfortable with to take care of their unsecured debt and have a buffer for new place to own or rent) the acquisition + funds necessary to get the property into its ideal barebone and structural shape required so let's say (33% completion) which then unlocks funds to bring it to (66%) completion to finally bring it to (100%) completion for which the new property can be rented and remortgaged to pay off the 3M$ or project cost + land acquisition + interests and fees to the first investor lenders. My questions: What is the best way to finance a project of this nature for which "my skin in the game" is the gifted portion of equity and down payment? Walking into a traditional big bank and sitting with their mortgage broker is not going to cut it. Getting the bank to approve this will require putting my finance background to use and having the project pitched directly to the policy underwriters and lending department internally, the guys/girls I went to school with who chose the commercial lending route. And this, in order to get the lowest and cheapest interest rate and a valued and trusted partner. The traditional way for which many go through to finance a first home or a first investment income property, relies on simple calculations and risk criteria that is built off CFs. In any case, the golden standard and rule here is the 20%, which is not what I'm going for. Going the other way, where I absolutely want the big bank to finance the ambitious project and requires personally dealing with the commercial lending division and pitching the fuck out of myself and the project, while guaranteeing me the lowest cost of capital, is very difficult these days especially given the risk parameters currently in play for the vision of the bank's lending portfolio. So here's where the ideas come in. (1) is the simplest way to come up with a private lender who is willing to lend me the 20% or the $ required by the institutional lender to get the construction progressive drawback bridge loan? If that's the case, what and how will the private lender base their requirements to extend this 20%/600k for simplicity purposes? If they lend the $ on the collateral of the asset by helping me refinance the available equity (the current mortgage on the property sits at about 200k), how can the bank who I then owe nothing to and has no lean anymore be willing to give me the $3M based on the 600k sitting in a cash account based on the idea I will transform the asset that is backing my 600k contribution? Unless that's how it works? In this scenario, I refinance my building with the private lender, I need the 600k + the 200k to pay off the mortgage with the bank, so 800k. At 65% LTV of $1.230M, that's 800k. I now have a mortgage of 800k with the new private lender (what are usually the % and terms in this case), and 600k cash in a bank account. I do the preliminary work and get my plans drafted, my permits approved. I create a highly detailed and extensive project brief with designs, plans, forecasts, attachments of details of the professionals endorsing the project and consulting on it / "the board". With this plan and my 600k, I approach the institutional lender to get my $3M required? I take the (1/3) contribution drawback and pay for the property (my parents at this gifted equity rate) of 500k and I take the remaining 500k to begin the digging, demolishing and reinforcing of the structure? I now have my 800k monthly obligations to the private lender + the new monthly rate for the first ($1M)? I then enter the second phase and draw the (2/3), and repeat the cycle until it's all said and done? Once it's done, property is fully rented, and I can remortgage with the institutional bank at a healthy and non predatory rate, I still have that 600k that's been frozen from the bank as my collateral to the bank + the balance required to pay them off and the 800k private lender? (2) is the alternative to just have the private lender finance the whole project themselves at a more predatory rate? And once finalized you get the new mortgage on the new value enough to pay them off? (3) the issue here is the obvious one of land acquisition and paying my parents off the 700k they require which is the 200k mortgage they have left + 500k which includes like 300-350k of unsecured debt with an 150k buffer they would need to find a new place either or permanently temporarily (if they would move into one of the completed units and pay rent there, etc.) Would I be better off refinancing with a normal bank now doing those reverse mortgages they do these days (although on commercial it gets trickier), and then using that $ to then go to another bank with the brief etc. And try to secure lending? This is where it all just gets a bit confusing. I am planning on leveraging some government subsidies and grants for environmentally-friendly and eco building, possibly looking at financing the entire project under an affordable housing program as well but I'm working out the details there. Before I look at any of the alternative routes to attack the lending issue, I wanted to better grasp how one can go about finding a transformation project like this. My apologies for the long read, your time and advice is highly appreciated. [link] [comments] |
| What's the difference between appraisal value and what a house is worth? Posted: 22 Jan 2021 03:22 PM PST Hello All, My investor buddy was telling me that the value a house appraises for is not the same as what the house. This confuses me, can anyone elaborate on why a bank's appraisal value is not the same as what a house is 'worth'. Is this all subjective? Thanks. [link] [comments] |
| Refinance investment property, worth it? 3.5 to 3.25% Posted: 22 Jan 2021 06:02 PM PST I have a property I purchased with an owner occupied loan at 3.5% interest that I moved out of and then rented. In looking at options for my primary residence I asked out of curiosity what rates I could get on my rental property and was surprised to find they could do a 3.25% on it. Assuming closing costs are 5k and I roll that into the loan I can save about $112 a month in my PI. If closing costs are closer to 3k its more like saving $121 a month. Not huge, and most of that comes from stretching out a 27 year loan into a 30 year again. I think most conventional wisdom would say that its not worth it to refi with that minor reduction in rate. However I also view it as $112 more a month that the property cashflows. I think if you asked anyone right now if they wanted an extra $112 a month they would say yes. I mean aside from the fact that it would take 2-3 years to pay back the closing costs, I'm struggling to see why I shouldn't do it other than the hassle. [link] [comments] |
| How should I multiply $1 million through real state? (if possible) Posted: 23 Jan 2021 02:02 AM PST My family came upon ~$1 million after a court settlement and I want to really use this money to turn it into a lot more and set us up good! [link] [comments] |
| Rental house in area with one major employer Posted: 22 Jan 2021 07:21 PM PST I'm moving soon from CA to many states away. I'm looking at renting out my house that is in a town pretty much solely reliant on a military base for jobs, other than that it is in the middle of nowhere. There is a current boom due to some major construction going on, but that is expected to slow down in 2 years. The construction isn't really growth, it's more maintenance, so I don't foresee even more hiring following the construction. Real estate has appreciated almost 20% over the last few years (which is amazing), but the huge risk is if the town lost that employer, houses would be worthless, and if they reduce manning, demand would decrease as well. It is obviously a risk with the town only having one major employer, has anyone else taken a similar risk and what were the results? [link] [comments] |
| Question about transferring title + loans from personal to an LLC/business Posted: 22 Jan 2021 08:23 PM PST I have 3 homes. Live in 1, other 2 are rentals. All properties were at one point my primary residence. The 2 rentals, self-managed, have positive cash flow of +$700 & +$550 I plan on turning my 3rd house (current residence) into a rental in about 2 years. My question: Is it worth it to move the 2 properties (and future properties) into an LLC or some sort of corporation? Will the banks that service the loans even allow a transfer of title ownership without refinancing? I doubt it but are there any exceptions you know or have heard of? I'm in my early 30s and plan on purchasing a new home every 2 years (we move a lot for work) and would like to just stack them into a company instead of having them all be in my name. Are there advantages to this? Disadvantages? Thanks for the help [link] [comments] |
| Off market comps for appraisers Posted: 22 Jan 2021 12:56 PM PST Hello, I was listening to a podcast on biggerpockets and the guest was an appraiser/investor. He said most appraisers compare your property to others sold on the MLS but if you show them off market properties that are similar to yours and sold for the price you want your property to sell for the appraiser might give you a higher appraisal. Does anyone have a good way to find off market properties sold in an area? [link] [comments] |
| Complicated Real Estate Math Question Posted: 22 Jan 2021 08:25 PM PST I have a real estate math question that is so complicated that nobody wants to touch it--not my accountant, nor my financial advisor, nor anyone else I've tried to hire. I'm hoping someone on Reddit can either: 1) Point me toward someone who might be able to help; or 2) Explain why nobody wants to. Here's the setup to the question: I bought an apartment in 2019, for which my employer gave me $100,000 toward the down payment PLUS a monthly stipend to help with my mortgage. The monthly stipend comes out of a larger pool of assistance ($150,000) doled out over nine years in decreasing amounts. In the fourth year, there's an option to spend $10K on a renovation and start the pool of money over from scratch--the sum goes back up to the original amount and gets doled out over nine years from the beginning. All of this would be a great deal (even though all of that "free money" is heavily taxed) if I lived in the apartment full-time, but I only live there five months out of the year. Pre-COVID I was able to sublet some for rental income the rest of the time, but now subletting has dried up in my city and there's no more income. Plus it doesn't make sense for me to live there at all during COVID for various complicated reasons. To make matters worse, I bought the place at the height of the market and the value has dropped way down now, to the point where I can't even get a good enough appraisal to refinance. So now my options are: 1) Sell at a loss; 2) Foreclose; 3) Hang on to the place. My mortgage is $3351/month, and I purchased the place for $965,000 at the height of the market at a 3.75 fixed 30-year interest rate. Property tax is $11,223/year. If I were lucky I could maybe sell for $856,000 now. It normally rents for $3900, but during COVID it's renting for $2650 if I can get a renter, which right now isn't the case. I can afford to keep it, I just want to know if that's the best idea. I only provide the above information about the money from my employer to buy the place because that's money I'm willing to lose. Here's the question: Which is the wisest option given the above circumstances? Note: I'm fairly certain I haven't provided sufficient information to answer the question, so if anyone asks me for more info, I'll provide it here rather than in the comments. Even if you just have questions rather than answers, that will be immensely helpful. Thank you so much! [link] [comments] |
| Help me understand my refi opportunity. Financials are not really making sense to me Posted: 22 Jan 2021 06:54 AM PST Howdy all. Last year approx 9 months ago we purchased a 2 flat owner occupied FHA loan. Purchase price 445k 3.5 down 3.375% interest 30yr fixed Original loan amount 436,939 We have a current principal balance of 431,260 My lender has reached out to me as we have started receiving FHA streamline info in the mail, I brought up conventional as we have seen multiple homes on our street sell pretty high in the last 2-3 months that we're flips or new builds. 500-600k and new build around 800. We have put approx 60k into renovations: full exterior siding trim gutters all new 29 Sierra Pacific windows. Interior work painting appliances re working of room layouts with some non load bearing walls. House visually looks night and day from when we bought it. Interior and exterior. Lender currently has us slated at house value of 525,00 in our refi disclosure page. Losing most of PMI from 300 to 80, then to zero if appraisal puts us at the right amount which we believe we will get. I'm having hard time understanding the benefits aside from just the potential PMI removal. The loan is for 443k? With about 10k in closing costs rolled in. Is there something I am missing? I was under the impression that if through renovations and rising values etc if we were able to reach 20% equity wouldn't we have 20% equity from our purchase price of 445k?? As in a new loan to conventional would be in the dollar amount of 80% of 445k? I'm getting confused with the higher valuation in comparison to the original vs our equity. I would appreciate someone with some more experience breaking it down for me. [link] [comments] |
| Buying a condo with a sublease tenant Posted: 22 Jan 2021 05:29 PM PST Hello guys I need a some advice I'm about to close on a condo that has a sublease tenant. The owner receives $1200 in rent but when I did a walkthrough the tenant told me she pays $1300 I'm assuming the person subleasing is charging them a fee. Once I close on the condo should I put the tenant that lives there on a contract? What's the best way to approach this ? Edit. it's a yearly lease Edit. Subleases not allowed Thanks [link] [comments] |
| Help! The appraiser is coming! Posted: 22 Jan 2021 08:27 PM PST I've got to days to get ready. What should I do to make the most of the time I have left before he arrives? [link] [comments] |
| Posted: 22 Jan 2021 12:16 PM PST I have a current mortgage for I house I bought to live in and now rent with ~$134k remaining at 3.25%. I'm One lender is offering me a $145k 20 year at 2.99% claiming it can save me money. It does appear to save $5500 in interest, but the total cost of the loan seems to be $5700 more than my current situation. He also claimed I was saving money by paying it off 2 years earlier by multiplying the monthly payment be 24 and saying I "saved" that $17k ($711 * 24 month). However my understanding is this: in both situations I end up owning the house outright, the refi add closing costs to principle, and I already calculated the difference in interest above. So this calculation it a complete sleight of hand and makes no sense. Am I missing anything here? As far I can tell they're offering to sell me roughly my same situation but structured differently and they walk away making some money on fees. [link] [comments] |
| Purchase of HOA foreclosures at auction. Posted: 22 Jan 2021 01:59 PM PST Is it worthwhile to purchase HOA foreclosures at auction? My understanding is this gives the purchaser the right to possession of the property subject to lien of the 1st mortgage holder. As such, purchaser can rent the property or live in the property until mortgage holder completes a foreclosure and secures a final judgment and writ of possession. Would purchaser of HOA lien have a claim for the money invested in purchasing the lien, upkeep, taxes/fees paid? My guess is that investment could be recovered but this this would be paid out of excess funds (if any equity) once the 1st mortgage foreclosure is paid off. Anyone care to share their experience with this sort of investment? [link] [comments] |
| How many properties under 1 LLC Posted: 22 Jan 2021 01:26 PM PST |
| How do you determine when it financially makes sense to refinance? Posted: 22 Jan 2021 09:10 AM PST Just wondering if there is some sort of tool or something that tells me when it makes sense financially to refinance a mortgage? That takes into account all the up front fees and such [link] [comments] |
| Posted: 22 Jan 2021 08:46 AM PST I have 3 rental properties that I can refinance and get about 20K cash out. I don't want to buy a house now because the housing prices are so high. Can I keep cash out money in a stock market and wait buying a house until housing market comes down? Is this a recommended strategy or just buy a house in this market or don't even cash out? [link] [comments] |
| What is your best forced appreciation story? Posted: 22 Jan 2021 06:05 AM PST |
| Buying a rental property - related to current tenants Posted: 22 Jan 2021 11:27 AM PST My parents are in a rental while their home is under construction. The landlord made an informal "offer" to sell to them for 280, while zillow says it was purchased for 250k in 2018. I have been interested in buying but holding off in this market. The home is located in my home town in NEw Jersey in a somewhat hcol area (schools arent great so its relatively more affordable). The home is also a 2 bed 2 bath townhouse with an hoa, so theres no room to expand the property. The thing is the home needs a lot of work — from what i see its mainly cosmetic, but there are some appliances and plumbing issues that need to be addressed. My parents said the owner probably would want the property of his/her hands, since i think they wanted to occupy it initally. I was in a thread on another site that warned my against townhomes. I think this could be a good offmarket deal for the right price. My guess is the owner prob overpaid on the home too and jts not worth 280 tht they are "asking". But i know we are in an inflated market and there's uncertainty as to when or if the bubble will burst. Im also wondering if influx to the burbs could improve schools and make the area more desirable. Havent done much research on city data, but i did grow up there and it has attractive features. Havent talked about it seriously with my parents yet but would like some of your REI thoughts and perspectives! Thank you! [link] [comments] |
| Posted: 22 Jan 2021 05:05 AM PST The way I interpret what the host said was that it's about a network and getting your name out there. You want people to call you about properties for sale or about to go on sale so you get first pick at what opportunities work best for your strategy. But if anyone can add to or touch on this topic a little more, I would really appreciate it! [link] [comments] |
| Posted: 22 Jan 2021 08:18 AM PST Hi all. I have a friend of mine living with me due to unemployment problems ( high end storage engineer if anyone needs one). I'm wanting to add an AirBnB to my portfolio that I could use as a family getaway on occasion in a different part of my state. He has no REI knowledge. I know about Deal Machine and plan on having him use that. But I don't know what ELSE to tell him. And the area I'm going to have him look in isn't likely to have your usual boarded up windows type of homes. So, wise-Redditors... How would you best utilize this resource of mine? [link] [comments] |
| What is a good multifamily research journal? Posted: 22 Jan 2021 07:11 AM PST Any good multifamily research journals? Like medical journals but for multifamily...? [link] [comments] |
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