Advice on buying your SECOND property

[Chris Eden]

Hi All - I am happy to say I just invested in my first rental property. It's a house-hack. A duplex that will be owner-occupied for the foreseeable future. My big question now is, how do I get ready to buy that elusive 2nd property? I used my FHA loan for this on, so advice on financing options and generally how banks react to someone holding multiple mortgages would be helpful. I have done a lot of research on creative financing (and all things real estate) but just want to put it out there. Secondly, what should I do in the mean time? Focus on business logistics & processes? Setting up separate bank accounts? Create an LLC? This piece is really importatnt to me. Would love to hear from an experienced investor on that front!  I look forward to the discussion! 

Keywords: Buy and hold investing, duplex, multifamily, Northern Kentucky, Cincinnati

[Louise A.]

@Chris Eden

Just a couple of thoughts to add - my lender will use 75% of rents as soon as you've got leases and doesn't need 2 years of ownership.  He's with Ruoff, maybe they work in KY?  Make sure to call lots of lenders.  Don't just assume that something isn't possible because one lender told you it wasn't.  

Second - LLCs. You can't use residential 30 year financing in the name of your LLC. It has to be in your personal name. If you've flipped the property out of your personal name into the name of your LLC and interest rates sky rocket, banks may consider using the due on sale clause to call back those low interest loans. Also, using the LLC correctly requires some education. If you don't use it correctly, the LLC is not providing you any protection. Ask me how I know... I have a business structure now and own 38 doors. I would not advise setting up LLCs until you know you're going to be in business for the long haul and have a larger portfolio.

Let me know if you have any specific questions.  Happy to help!  

House hacking is the best though.  Great start!