Investor in California

[Sherry Maxey]

Hi All,

I'm Sherry,  a real estate investor located in sunny California.  I originally started in real estate as an agent, however my ultimate goal was to invest.  Like many I was caught in the rafters of 2007ish chaos.  While doing other Entrepreneurial projects, I started studying real estate investing again and decided to take it on full time.  

We have a couple of investment properties we are holding and are now focusing on Multi-family.  My goal is to eventually do Apartments and Commercial.  I joined Bigger Pockets a couple of years ago, however have just started to make it a part of my daily routine.  I love the blogs and helpful stories, tips and experiences I read.  It keeps me encouraged and motivated.  

Although I'm not a novice, my hope is that I will be able to recipricate and share some hope, knowledge or inspiration to others here that may need it.  I'm looking forward to a continued exchange of knowledge and experience, from other like minded professionals!

[Thomas Franklin]

@Sherry Maxey Since your focus is now on Residential Multifamily Properties, I invite you to consider the following. Many Realtors will suggest purchasing a property using a FHA Loan, to reduce your out of pocket money. If the property requires rehab, the Realtor and/ or Mortgage Broker will suggest applying, for a 203k Loan. A 203k Loan is where the purchase price and rehab costs are rolled into a single loan.

Assuming you have a respectable FICO you can buy, with a FHA Loan (3-5% down, a 30 year amortization schedule, and a residential loan rate). Because you closed personally, you will not have Asset Protection, in the form of closing in the name of a LLC. What happens if one of your tenants has a slip and fall, on your property, or something else happens to them? You are on the hook and can be personally sued, for everything you own. Some people will say, "Take out a quality Insurance Policy and you will be protected." Ambulance chasing attorneys know their way around and can legally navigate around Insurance Policies. Another downside is you loose on the advantages, of the Federal Tax Code, by not closing in the name of a LLC.

If you want to close in the name of a LLC, Mortgage Lenders will offer you Commercial Loan Terms (25-30% down, a 15-25 year amortization, and a ballon due in 5-7 years). This is what I am encountering, in the current Mortgage Industry.

If you think you will go FHA, Conventional, 203k, etc. and then Quit Claim the property, to a LLC, or a Land Trust you run the risk of the lender discovering a Title Transfer occurred and activating the "Acceleration Clause" or "Due on Sale Clause" that requires the loan to be paid in full, within 'x' number of days. These clauses are contained, in all Promissory Notes nowadays.

Many Realtors and/ or Mortgage Brokers will not tell you this information. Many, but not ALL are only focused on the commissions he/ she will earn and not focused, on your best interests. You many be asking yourself what can I do? Locate a Motivated Seller that will consider Seller Financing. You may have to put more money down (10-15%), but you can close, in a LLC, with no worries about banks. I have a lengthy Legal Opinion, from my seasoned Legal Team regarding this matter.

I hope you find the above information to be of useful value.