Army Combat Vet in Washington D.C. Looking to Network and Learn

[Paul Savanuck]

Hello everyone,

My name is Paul and this is my first post on BP.  I'm a 36 year old Afghanistan and Iraq war veteran (no longer on active duty) looking to purchase my first investment property sometime late next year.  After discovering Brandon's "The Book on Rental Property Investing" three months ago, I've been listening to BP podcasts daily, reading several books, and have fully delved into the world of real estate investing.  

I wanted to come out and introduce myself as I am sure I will have a lot of questions both as I develop my business plan, and as I look to someday venture as a full-time, long-term buy and hold real estate investor. 

I'm particularly fascinated by the BRRRR model, and am planning my first investment purchase in Maryland or Virginia. I'd love to chat with anyone interested in talking about their experiences in this market, and any do or don'ts or in other markets.

Thanks in advance and look forward to connecting,

Paul

[Annchen Knodt]

Hi @Paul Savanuck, welcome to BP and thanks for your service!  

I'll second @Gayle Melnick's point that with an LLC you usually have to get a commercial loan, which come with less favorable terms (higher interest rate and shorter term, so much higher payments). Perhaps there are lenders out there who would work with you, but you'd probably need to have an established relationship with them first. I don't know about VA loans though, maybe that would work! However, you may also want to consider simply using insurance for protection (I've seen lots of people on here talk about how that works perfectly fine and that people get caught up in the LLC idea more than they should, especially when your portfolio is still small. Eg see: https://www.biggerpockets.com/...).  Another option would be purchasing a property in your name, obtaining financing, and then deeding over to your LLC.  I've done that on a property after getting advice from folks on here and so far it's worked well (I used a Warranty Deed rather than a Quit Claim deed as many others do, to better protect the chain of title, based on some recommendations as well as advice from my attorney)

I also have recently bought a condo in Germantown MD, and I spent quite a bit of time analyzing condos as investments in the different areas of Montgomery County… so to also echo what others have said on that, I'd be really surprised if you could find something that cashflows in e.g. Bethesda (assuming cashflow is what you're going for), especially with the current low inventory and a less favorable commercial loan.  However it seems like there are more opportunities in surrounding areas as you've mentioned!

You also would have to be careful with planning on refinancing out of a cash purchase on a condo, because there are condos that banks won't lend on (called "unwarrantable"), so if you do go that route you would want to triple check that you'll be able to pull off the refi before making the purchase! And you mention delayed financing vs regular cash-out refi - delayed financing is a Fannie Mae "exception" on a conventional loan that allows you to put a loan on the property right after purchase rather than wait the 6mo seasoning required for a cash-out refi (afaik it's irrelevant if you're doing a commercial loan with your LLC, and I think you may have different options for timelines with that depending on your lender). With DF you get the lesser of 75% ARV or the total amount you put into the property at purchase, and you have to have the purchase funds clearly documented as coming from YOUR accounts (I'm not sure how an LLC would play in here - again i think you wouldn't be doing DF with an LLC)

HTH and congrats on getting started!!!