All Forum Posts by: Andrew Kougl

@Joseph Medina

Also be aware of fees. Cash out refinance is a new loan with all the fees that come with it. You are going to then turn around and take that equity to purchase a rental (using the equity as a downpayment) and have another round of loan fees. Double whammy.

I prefer a HELOC, because it gives you flexibility and is a fraction of the fees. I've never purchased something that didn't have a repair needed a couple months in and having a HELOC is nice for those small unforeseen expenses. And you only pay interest on the portion of the HELOC you currently use.

Be aware of your debt utilization, making sure you aren't maxing out the HELOC because it will affect your credit score if your overall credit utilization is high but the flip side of that is taking out a larger then needed HELOC will impact your DTI as lenders will calculate your DTI with the assumption you've maxed out your HELOC. My opinion though is the second option is better.

The "HELOC to purchase a rental" is how I started and it turns your primary house into an asset.

@Daniel Bloomfield

You could also look for private investors or seller financing. Are you trying to do another live in flip?

Thanks Mike for the clarification of NV vs WY

@Allen Li

Check out Clint coons with Anderson Advisors on YouTube lots of great information for free that will answer your questions.

High level, taxes are about income and co-mingling is about using business income for personal expenses. You making an owner contribution to your business with post tax dollars (W2 income) is not considered taxable income to the business. Your business hasn't made any income from a third entity to be taxed. You personally paying business expenses is technically okay just can't do it the other way around but that's not the point of having a business, businesses are taxed on their profit, not their income so you want as many qualified business expenses being paid by your business as possible to reduce your taxable income.

Regarding liability protection, anonymity in WY is only good for one year then you have to renew it every year is my understanding and not worth it. What is worth it is the "charging order protection" meaning you personally can't make a dumb decision that affects your assets. Normally LLC says that for a slip and fall your LLC is liable and not you personally and your personal assets. But the other way around, you injure someone let's say and get sued personally, those LLC's are owned by you personally so lawyers can get to them if you don't have a holding LLC with charging order protection like in WY and a couple other places.

Finally, please go the partnership route, single member LLC'S are just sole proprietorship and there really is no protection between you and the entity you are one and the same. Should you run into legal issues a majority share vote of the LLC is needed to award a judgement. So if you are personally liable and ordered to pay damages from your LLC you 100% own then that's it, you have no say the judgements against you are 100% of the assets. If you own 50/50 with your wife and there is a judgement against you and your assets, your wife has to vote for her share of assets to be leveraged and if she refuses, 50% of the LLC is safe, assuming the corporate veil hasn't been pierced and you are holding annual meetings and keeping notes.

All if this isn't legal advice and consult a professional of course.

@Sean Ruggiero

My perspective on high cash value whole life insurance is a little different and it's important to listen and learn from multiple voices across the spectrum, from Nelson Nash to Dave Ramsey.

In my opinion, cash value whole life (CVWL), is not an investment- it is a banking alternative. It is only powerful if you are actively leveraging the cash value to invest in high yield producing assets that provide cash flow.

I realized early on, and started young, that I wanted to invest in real estate and real estate takes money, down payments aren't cheap. I needed a better yield alternative than a checking account but without penalties to loan out the money and disrupt compounding or have a chance to lose principal and CVWL has provided that.

Unlike others on here, I think you should focus on small insurance premiums that are comfortable for you, mine is only $1644 for the year. You can add a term rider for added death benefit and make OPP contributions which go towards building up the cash value. I've had my policy since 2015 and I'll have over 55k in cash value after this next OPP payment in July. It's not an accumulation strategy or nest egg, it's a down payment fund meant to be used and paid back to be used again. Coupled with providing a policy loan to my business which is purchasing real estate, there is a qualified interest deduction to my business and I'm able to harness some annual cash flow to pay back the policy, creating some synergy and a positive feedback loop paying back the loan faster so I can loan it out again on the next property.

@Sonya Antrobus

Your realtor has a duty to represent you and your best interests at all times. This also means presenting accurate comps but they aren't appraisers. They can't guarantee what the ARV will be on a house you purchase after renovations are made.

It's been my experience that you should work closely with your lender, providing them the punch list of all the rehab items and they'll provide it to their appraiser who will use it to provide you with two values, current and future appraised value. This allows the bank to lend you more money, typically via construction loan accessed through draws, and keeps their finger on the pulse that the stated renovations are being performed.

@Jesse LeBlanc

Trouble following how that first private investor, who loaned you 70k is getting their capital and interest back without a cash out refi?

@Devon Greenfield

You should be filing the LLC in the state it is doing business in. So if you run a rental business that owns real estate in Iowa the LLC should be in Iowa. You'll likely need a physical address in Iowa and can lookup registered agents who serve this purpose for out of state investors.

@Akshay Johar

I don't unfortunately but would love to hear who you are using in Lexington KY if you are happy with them.

@Marc Alexander

Following this thread and sent you a follow request as your goals are aligned with what I'm trying to achieve as well. Best of luck to you!