All Forum Posts by: Pete M.

@David Edwards  Good to know!  Any useful contacts for the area you can share?

Hey, folks,

I'm interested to hear if/where others are successfully BRRRRing in western MI. I grew up a little southeast from GR and now living on the west coast (summers here remind me a lot of MI... with the bonus of way less mosquitoes and more mountains). I'm currently investing and BRRRRing in Oklahoma City, but looking for a second market. I also have a friend in the Wyoming neighborhood who's interested in taking a closer look at RE investing, so wanted to find out if (and where) others are finding a steady flow of BRRRRable properties (likely SFR or small MFRs to start). Besides GR, I've seen others mention Kzoo and Muskegon. Also appreciate any pointers to good agents who have a line on BRRRRable deals.

Thanks in advance.

@Cassi Justiz @Dylan B.

Thanks!  I'll definitely reach out to them as well.

Out of curiosity, what what deductibles amounts and % of reconstruction are you carrying with your SFR policies? I'm looking at $5k and 80%, but curious as to what others are doing.

Pete

@Rodney Phillips Joe is right, 4 or fewer units can be on conventional loans, which is often the cheapest money. However, Fannie Mae will limit the number of loans you can have, and they have traditionally needed to be in your personal name. Recently Fannie Mae changed their policy and allow the property to be in the name of an LLC if that LLC is owned by the same person as listed on the note.

Commercial loans typically have more flexibility in the terms, but will come with a higher interest rate.  I've opted to put all of my future investments directly into LLCs on commercial loans due to the speed and flexibility it allows.  Obviously it's up to you to determine which is best for you, but make sure you talk through all of the options with the lender (and preferably several lenders).

Good luck.

@Landon Whitt Thanks for the recommendation!

All,

Hopefully closing on my first investment properties in OKC later this month.  Any suggestions on insurance agents/brokers who work in the area is appreciated.  Already have one quote, just looking to shop around and see what is available from others.

Thanks in advance.

Personally, I'm pretty unimpressed with the PM's marketing abilities, if we got 50+ responses in an FB group.  Who knows how many of those are qualified, though. 

It is a bad time to have a vacancy in general--this is why most landlords structure their leases to end around late spring or during the summer.

Pete

@Tina S. Still empty at the moment, unfortunately.  We ended up advertising it on a private FB group and got 50+ responses, though, so there's definitely interest out there.  We even got an application that passed muster, but PM has not heard back from the applicant after notifying them of the approval, so we're in a bit of limbo.

Pete

@Mike S. @Scott Smith

What are the legal/liability implications of deeding a property from a person to an LLC? Does the LLC still afford protections, or was that broken through the conveyance?

If you buy a SFR property in your personal name, get a conventional loan in your name, and then transfer to land trust (with beneficiary as an LLC), do you then essentially have a SFR property protected by an LLC and on a conventional loan? Or what am I missing?

Thanks.

@Jeremy Bohnett

Welcome to the BP forums! Fellow Issaquah resident here. Still getting started in REI, too, but been preparing for the last year, basically.

Regarding your questions:

1. Start your own LLC with just you and your partner. Keep it simple and clean. Messiness leads to liability.

2. The LLC that will be the legal owner of the property needs to be registered with the state in which the property resides. On a related note, if you dig into legal entity structures, you'll often see mention of having an "asset holding" LLC that then owns the LLCs that own the properties. This "asset holding" LLC is usually registered in states with favorable legal rules, such as Wyoming or Nevada. In my case, my asset holding LLC is in WY, and it in turn owns my WA LLC that will hold property/properties. I'll also add that you'll hear mixed opinions on whether all of this is necessary--that's for you to research and decide in the end. We chose to set it up from the start to reduce our legal exposure and not try to shoe-horn it in later, but it also costs more money to establish and maintain.

3. You and your partner will probably both provide a PFS to the bank/lender and be the guarantors of the loan, especially if you don't have a track record. As Basit mentioned, you can buy in your name and transfer to LLC, but that can also get weird with the Due On Sale clause (though unlikely). If you do that, I've always been told to be sure to use a warranty deed, not quick claim deed. There are other options, like land trusts, that can be used to avoid the DOS clause, but those will cost more.

Pete