All Forum Posts by: Arhum Nomani

Thanks @Derek Adkins!

Great point on the lender and agreement (documentations). I've been checking this with each of my lenders and they've provided me with the same response as yours - i.e. as long as the mortgage payments are made on time there will be no issues. 

Your worst case scenario is also a valid point as lenders may be reluctant to lend in such times and the appraisal values may not be very good either. 

Appreciate your thoughts!

Hi all,

I have been using the BRRRR method to grow my portfolio. One question I had was - Regardless of location, what happens if the market goes south due to political / cat event / bubble activity… and house valuation decreases. Even though you may be able to overcome the gap with constant renters, you run the risk of being over leveraged if you have 70-75% LTV on multiple properties. Usually, the lending is in the same country  as the investment, so in this instance, it could be the bank or lender being in trouble causing you to have your margin called. 

Just looking to get some feedback on this as I have been mulling over "worst case market home prices crash scenario" as I continue to grow my portfolio through BRRR-ing

Thanks in advance!

Arhum

Hi @Nathan Klym,

My understanding is the same as @Jaysen Medhurst. However, I was wondering if you were able to find out anything else or different on this topic ? 

I live in Toronto and invest in the US, but as I'm continuing to grow via the BRRRR method, just want to make sure there is no such "margin call" risk at play here.

Thanks,

Arhum

Hi @Nikhil Gupta - thanks for your response. Yes, LP seems like the most popular option for us Canadians. As for lending, there are some US commercial lenders who provide financing on long term leases but their interest rates are typically higher. I've heard the big 5 Canadian banks here also offer loans for investment properties in the US. 

Just out of curiosity, where are you looking to buy in the States and what type of properties ?

@Chad U. Thanks, Chad! Yes, I am in touch with a cross border accounting/legal specialist and he's also recommending setting up a limited partnership in the US. I will most likely take that route, but was curious to see how others operating under an LLC set up are dealing with it. Also appreciate your comment on repatriated earnings.

Hi, this post is relevant to Canadian residents who are investing in US rental properties. With regards to setting up a company structure for these properties that will avoid double taxation on rental income in US and Canada, I've read several posts that discourage holding the US properties under an LLC because the CRA does not consider it to be a flow through entity and hence will tax it as a US corporation which leads to double taxation.

My question is 2 fold: 

1) If a Canadian resident has a US corporation (could be an LLC), which owns rental properties, and there are Zero payments from the US corporation to a Canadian citizen or company, how can Canada tax the US corporation, or the corporation owners, when the US Corp is not doing business in Canada? ( this scenario assumes all US rental income is kept and reinvested in the US...and not brought back to Canada)

2) I would really like to hear from Canadian residents here in on BP who currently own rental properties in the US within an LLC. How's their experience been so far with regards to filing taxes ? and how are they filing taxes in both US and Canada?

Thanks in advance for your help!

Arhum

Hello Bigger Pocket friends!

I bought a fix and flip property on a hard money loan and closed on it with a clean title. 

After completing the rehab I put it for sale on the market . The property went under contract, but the buyer's closing attorney found title issues and could not close on it as their in house underwriter refused to insure the title - He pointed out that there was some potential fraudulent activity done on when a quick claims deed was filed by some previous owners around 10 years ago. 

I went back to the closing attorney via whom I purchased the property and he immediately passed me on to the title company that cleared the title. 

The title company then investigated the matter and told me their underwriter is also refusing to insure the title since there was potential fraud involved. Luckily, I have title insurance with the same title company and they asked me to file a claim...and so I did just that. 

The title company then retained an attorney in Georgia to resolve the matter and told me I'm now in their hands. 

Fast forward 2 months and that attorney has made no progress. They keep telling me they are unable to locate the "heirs" to the person who wrote the quick claims deed and they will just "keep trying" to find them.

Meanwhile, the deal with the buyer has fallen through and I have been paying the monthly interest payment on the loan since then. I cannot refinance the loan as the property does not have a clean title and I've been told its very difficult to find an underwriter will be willing to insure a title with such potential fraudulent issues.

The title insurance company has told me that my policy does not cover financing costs. So my question is: who is liable for these extra expenses that I have incurred due to the delays caused by the discovery of this title issue ? 

Is it the title company who issued the title ? or the closing attorney who carried out the closing on this property when I purchased it ?  

Should I consult a litigation attorney for suing one or both of these parties ?

Just trying to figure out the best way to deal with this issue because the hard money loan is approaching its maturity and the lender will apply a 1% late fee every month beyond the maturity date.

I think its unfair that I have to bear these additional financial expenses and costs because of this title issue - since it isn't my fault (as I had purchased the property with a clean title)

What should I do ?

Thank you in advance for any tips or advice you could share to help resolve this matter!

Best,

AN

Congrats Sharad!  this looks great  . Looking forward to connecting soon !