All Forum Posts by: Brian Ellwood

That's a good question. It would depend on the type of loans you are getting in that hypothetical scenario. What is the term on them, shorter or longer? With longer being safer of course. 

Also there's a metric called debt service coverage ratio. Basically, what's your cashflow to debt service ratio? 

If you had 10K in rents coming in each month and 5K in mortgage payments, the ratio would be a 2. But, debt service isn't the only expense, you also have prop mgmt, tax, insurance, vacancies, and repairs.

If your debt service accounts for around 40% or less of your gross income, then you should be good no matter how big you scale.

I.E. 1K/month in rent, 400/month in mortgage payment. 

What you may need to do is try to reframe the way you view debt like this. 1.8M in debt is definitely a large number. But, you OWN 2M worth of assets (assets that historically appreciate at 5% per year, which would be 100K/year!) and you have 200K in equity, and 6K/month in net positive cashflow.

I'd hope that, if I offered to gift you 20 houses with those terms attached, you'd jump on the opportunity to take it ;) 

It comes down to the city within the state more than the state itself. 

I wrote a post on choosing rental markets here:

https://www.biggerpockets.com/forums/52/topics/833390-the-6-pillars-of-a-great-rental-market

1.2 million sounds a lot nicer to me :) 

Some lenders will let you hold them in an LLC, others won't. Some want you to keep property in your name permanently, others will allow you to put in LLC put must put actual loan in your name. You'd have to ask your lenders. Some say it's unlikely that if you moved the properties to an LLC that your lender would actually call the loans due, but I'm not sure if it's worth the risk or not.

Reason for wanting to put them in an LLC? You can always purchase liability insurance umbrella policy and get more protection than an LLC would offer anyways. 

Would the "gift" option cause you to pay taxes? The other refi option should be tax free. But, that option requires you to wait 6 months, right? Talking to a CPA on this may help as well.  

That sounds really high to me, what is the breakdown on that? 

I'm not a legal professional so I'd speak with both a CPA and RE attorney and see what they can offer before making this decision for sure. 

In my experience, there is some overlap. I.E a CPA has advised me on entity structure, which a RE attorney traditionally would do that. But the CPA was very knowledgeable and gave me great advice. 

If I was wanting to draw up a seller finance agreement contract, I'd go to a RE attorney for that. The RE attorney will do your closings for you anyways, so you'll need both on your team.  

I don't really have a top 5 states, there's a lot of markets within many states that would work. 

But, off the top of my head, TN, AL, SC, FL, OH, IN are some good ones to start looking at. 

Those #'s look a lot better. But, a 45K house that doesn't need repairs and rents for $1,565? I've never seen such a deal in my life. Sure about the rent amount and repair amount? How did you verify these #'s?