All Forum Posts by: Anthony Freeman

@Anthony Freeman the most common product that is used in this space are HELOCs/LOCs.  That's the dominant loan product that uses the equity of your property and allows you to draw from it whenever you want to draw from it. 

Quote from @Anthony Freeman:

Do lenders look at all members of a LLC when considering personal guarantees if so what is the best entity to set up to only have one member supply a personal guarantee?

As a lender, I do not look at all If one of them can suffice, the issue is typically one member of a multi member LLC does not want to be the only one on the hook.

Think of it this way, if there are 3 members each with a net worth of $2M and they borrower $600k. If the deal goes belly up then each is liable for $200k. Would yuo if you were partnered with two others take on their liability (in this case $400k)?

I think you know the answer to this, single member, LLC.

Aloha,

It is best to require the Tenant to name you/your company as "Additional Insured" on their policy. That way, the insurance company automatically sends you an annual update of the paid policy; and, if Tenant decides to cancel, or forgets to pay, you will also be notified in writing of that.

Just because a Tenant gives you a copy of the Policy/Declaration page, does not guarantee they don't just cancel it a week later and you will never know...until it is actually needed!

You should discuss your overall insurance program with your Agent to get recommendation of appropriate "minimum" requirements should be established for the Tenant's Renter policy. You then include that exact language in your Rental Agreement, or as an addendum, to ensure proper coverage.

Quote from @Andrew Postell:

@David Wilhite paying down your mortgage goes AGAINST just about every principle of real estate that there is.  Meaning, if I gave you $50,000 right now - would you pay down your mortgage or go acquire another property?  The theory is that your TENANT is paying down your mortgage.  The mortgage interest is tax deductible.  The less equity you have in a property the less that someone can take it from you in a lawsuit. I am personally millions of dollars in debt...but the only way for me to own millions of dollars of real estate is by NOT paying down my tax deductible debt and continue to purchase more real estate.  

I hope all of this makes sense.

 ...i understand we love to hear ourselves talk but i think you're missing my point. actually you may be missing several of them.

first and foremost you're not gonna give me $50,000.

according to the amortization table, you ARE going to pay off that loan according to schedule or else. whether it comes out of your pocket or your tenant's is immaterial to your outstanding loan balance.

the portion of your mortgage payment that is interest is tax deductible. your write offs decrease every month as the principle portion gradually decreases for the life of the loan. people either move or refinance every 7 years so the write offs can reset on a new loan... but how's that going for the folks moving from a %3 loan to a %7+ loan today? could've sworn i saw mortgage applications go off a cliff recently.

i'm talking about paying your mortgage down faster so you can buy your next property faster - as in BRRRR investors who desire to multiply their portfolio. or maybe it's for someone nearing retirement age and want their primary residence to be free and clear in their golden years. it depends on the situation...

if you have millions of dollars in real estate then i imagine you have rock solid tax planning, insurance, and entity structures that shield you from liability but hey they must do things different in Texas.

whether any of this makes sense to you is inconsequential.

Even if not stated directly in the lease it is provided it was there for the tenant to use.  Unless you specifically state that you are not responsible for maintaining it you are responsible to maintain it.  There is no way to list everything you will maintain so the default is if something is there when they move in you intent to maintain it unless stated otherwise.  If you don't want to moving forward buy a cheap used one that works and when these tenants move out sell what is there and don't worry about it moving forward.