Separating when buying your houses?

Question

When financing real estate do you try to keep it in one spouses name or the other? I know there is some benefit to having four or less and many people each spouse gets four instead of both so you can have more before it counts as four. I forgot why though. Is this true and why?

Thanks

Terrell Garren · Answer

Just an opinion from and old retired guy. Marriage is a commitment and partnership. Don't chip away at it with separate bank accounts, property titles and loans. If you need more than 10 loans, I think you are getting into high risk territory. Use an umbrella policy until you have a couple million in net wealth, then move your properties to an LLC for additional asset protection. P.S. My son is getting married soon. Said he and his wife may keep separate bank accounts since a lot of his friends were doing the same. I mentioned that he might ask a few couples that have been married longer than his friends have been alive. You could see the wheels turning.

Andy Webb · Answer

If you are targeting Fannie Mae or Freddie Mac backed loans (the cheap money), then right now the max number of loans that any one person can have is 10. If each spouse can swing a property/loan on their own, you should absolutely do this to max out those FNMA loans. Note that it is not just 10 FNMA loans...if you have other loans in place, that counts towards the total 10 for any given person. We put an owner finance note in my wife's name, so now she can only get 9 FNMA notes until that owner finance one is paid off...To the concern about having that many mortgages in your personal name: get an umbrella liability policy equivalent to your net worth. E.g. if you have amassed 1M in net worth, put a 1M umbrella policy in place.

Tamara R. · Answer

True Terrell, you are right on that. I was thinking more as to do it as a team we take turns in putting the next property in one of our names and one works a w2 while the other works on the properties...divide the work, concur and share the benefits of having two working on separate things they are better at than the other. My husband is terrible at $$ he sees it in the bank and thinks he has to spend it although he has access to all the accounts he still has his own just for spending when he sees money in it he can lol. I am terrible at remodeling the houses so we both bring to the table our strengths we dont have ourselves. I do the $$ and the research and business work side and he does the building. We take turns on working w2s. I was thinking more along the lines of we both have our strengths and use them together to make a better team with the resources we have. Good to have a trustworthy partner on these or be willing to give it all up. I feel like I have both so not really worried. I can see how this would be a problem in most relationships tho. I am old and been married 20 plus years and I would say for us it has been great to keep at least our fun money seprate so we arent fighting over or upset one of us spent too much on whatever we think isnt necessary. I dont care what he spend his money on that is his to use. My friends complain and fight over money constantly tho. I think it depends on the relationship and how much you trust that person.Can you tell me what is your structure for umbrella policy and where did you get it?

Tamara R. · Answer

Thanks for the advise. I think it may be an oregon thing that if after you have four you have to follow certain landlord rules?

Brenden Mitchum · Answer

Hey @Tamara R.I have not heard of four being a particularly important number but I will admit, I am not a lending pro. However, I will say that there is definitely some sense in separating mortgages between the two of you rather than putting them all in both of your names. First, you are limited on the number of conventional loans you can have in any one person's name. I believe this number is 10 but could definitely be wrong there (although I'm pretty sure it's nowhere near as low as 4). Another thing to think about is DTI. This shouldn't be an issue as long as your properties cash flow and that income is offsetting the mortgages on those properties, but still something to keep in mind. Last thing I would say is to be careful having so much real estate in any one person's name. This is a huge liability as if a tenant from one property sues you and wins, all of your properties could be at risk. Best thing to do is to purchase under LLCs or transfer titles into them if/when you can.Hope this helped a bit! Please, feel free to reach out anytime if you have other questions or just want to chat.