My Story So Far (And A Couple Banking Questions)

[TJ Woolum]

Hello fellow investors,

I want to give a quick overview of my real estate investing story so far and then get into a couple questions regarding banking and financing.  

I've always had an interest in real estate investing.  In high school and college I started reading up on how to invest and how to build wealth, and it seemed that everyone with considerable wealth listed real estate as a source of income.  I come from a blue-collar family whose patriarch was often unemployed due to multiple factory shut-downs so the only money advice I was ever given was to get a good office job and invest in my 401k.  Anything even slightly risky was not only frowned upon but adamantly discouraged.  Fear based decisions were the only decisions allowed and that mentality still sticks with me today whether I like it or not.

Through college I started looking into flipping houses, buying storage facilities, etc... but never pursued it due to the lack of certainty and the risk involved.  Again, that fear mentioned above.  Fast forward many years to when I was 37 y/o and finally decided to pull the trigger.  I purchased a single family home in an area I knew would have no problem filling vacancies and would generate decent rent.  Finally... an investment property!  Still, it was a safe purchase so while the rent is good, the purchase price leaves little for cashflow.  After I bought that property I waited to see how it would all go.  2 years went by with no problems at all, so I decided to buy another property.  This time I purchased a single family home for only $37k.  The property was in decent shape and really didn't need much other than paint and some flooring.  The cashflow on this one was great.  I sat another year and confirmed the cheaper house was generating great cashflow consistently so in July of this year I bought another house for $55k.  A couple weeks later I bought another house for $53k and two weeks after that I have another two houses under contract for $22k and $33k.  Needless to say I caught the bug!

Most of these houses have been financed through a local bank with the down payment coming from my personal funds.  The down payment for one house was funded by a friend who I pay 8% for two years.  I didn't need the money necessarily but I wanted to test out the private funding option plus it freed up some cash for my next purchase.  Another house I am using a 401k loan to purchase outright without a bank.  While I hate taking a loan from my 401k the interest is only 4.3% and it is paid back to me rather than a bank.  Plus I will have the house paid off in less than 5 years where it will completely cashflow!  

So that is it for my personal real-estate journey.  As you can see I took it painstakingly slow at first but now I've started generating some steam!

Now for my questions. All in all I currently have 6 mortgages with the same bank. (5 rentals and 1 personal home). They're all in my personal name but I will soon put them in my LLC. I really want my next purchase to be a 4-plex and would consider using the same bank. I'm nervous though...

1.  What are your thoughts on the number of mortgages to have with the same bank?  I understand the limits applied by Fannie Mae, but just for diversification purposes would it be wise to start looking at a different bank?

2. Has anyone had an issue with loans being called when you transfer the deed to your LLC? Technically this could trigger a call since the bank could look at this similarly to you selling the property, correct?

These questions are fear-based, I understand.  I just want to make sure the banks don't find a loophole to call my loans if we see another bubble burst like in 08.  

Thanks!