All Forum Posts by: Adolphus Fletcher

 Use and Occupancy - In the city of phila its called an L&I Cert (License and Inspections) 

Its just a cert you buy online for 130 bucks that discloses any violations

@patrick 

@Patrick Roberts "It's rare to a get a nonrecourse DSCR mortgage without approx 50% down"

That’s been my experience.  On our syndicated properties we have 2 bank/lenders that issue non recourse loans to us as long as we have 50% equity in the deal. 

We avoid PG by putting 50-80% down for DSCRs. We've negotiated some in a portfolio where a certain house will be at 25-30%, maybe even as high as a 35% but the loan is less concentrated in houses with less of a downpayment(10% needed for a STR).

This takes a relationship with the lender, though. They also required X amount of reserves always to be shown available, which was actually less than what I earmarked so I am okay with it. We don't have a PG for any of our DSCRs, and tax wise have it completely separate from personal. That's why we have our LLCs and the set up we do-- complete separation.

@Adolphus Fletcher Like others have mentioned, gaining a non-recourse loan is a challenge unless in some cases where the loan is a commercial style loan of $5MM+ and the borrowing entity has strong income & assets to satisfy the lender's concern tied to the guarantee of the loan. However, if you choose lenders that originate the loan (purchase/rehab/DCSR) to the LLC (entity) and do NOT report to the credit bureaus then as long as you do not default on a loan, the odds are slim that your borrowing activity will appear on personal credit. Just make certain to pay as agreed and exit as planned.

 You can always call up the title company beforehand to get an idea if they charge any sort of settlement, recording, doc prep, etc fees.

As for the Seller side, the buyer chooses the title company 95% of the time, unless seller just recommends one. Seller really shouldnt be paying any fees to title company unless they did their conveyancing (ordering U&O, tax and sewer certs etc.). They sometimes charge the seller notary and doc prep fees - especially if you don't plan on attending settlement and do a deed package. And we are talking about $50-200 bucks

Hi there! Great thinking about using a HELOC to help grow your investment portfolio. It's definitely an outside-the-box idea to transfer the property to an LLC before applying for the HELOC.

If you move the property to an LLC, lenders might see the transfer as a red flag. They may feel unsure about giving a HELOC right after the property's been moved. Many lenders see recent transfers as a risk, which could affect your terms or lead to a denial.

Regarding taxes, changing the property's ownership can have some effects. You might face transfer taxes or reset your property's tax basis. This means new taxes you didn't have before. It's a good idea to talk to a tax professional about this part.

Using an LLC can help build business credit over time, but make sure the immediate needs and potential costs are worth it. Sometimes, keeping things simple is better than making moves that are more complicated.

I agree. You are looking to buy a vacant RSA5 lot by Temple and turn it into a multifamily… thats a big big lift. 

I would first start by talking to folks in the Temple area first. The last few folks I talked to in that arena were trying to sell as it was becoming iver saturated. Maybe that has changed but I would do alot of due diligence first.

If you like the numbers and situation, then look into acquiring a building that maybe needs some work rather than new construction that needs a variance.