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All Forum Posts by: Brice Aldrich

Brice Aldrich has started 6 posts and replied 13 times.

Post: Private Money Lending Trust

Brice AldrichPosted
  • Fort Wayne, IN
  • Posts 14
  • Votes 3

@Brandon Hicks I've been trying to do as much networking as I possibly can these days. I'm in the process of purchasing a residential property that has long-term commercial buy-out potential on the intersection on Dupont Rd next to Lima Rd, as my primary address. Unfortunately because of this I can't have my credit pulled by portfolio lenders, until after I close, but I plan to focus my energy on them until I can. 

Since your semi-local to the area, I'd love to sit down and chat over lunch if you have some time!

Post: Private Money Lending Trust

Brice AldrichPosted
  • Fort Wayne, IN
  • Posts 14
  • Votes 3

@Brandon Hicks I forgot about portfolio lenders! I should have known, do you have any recommendations on portfolio lenders since you are around my area? I have excellent credit, and about 18k in assets, only 7k in cash. So I feel like I would be deemed reliable. 

Post: Private Money Lending Trust

Brice AldrichPosted
  • Fort Wayne, IN
  • Posts 14
  • Votes 3

@Brandon Hicks great job on your expansion! I am really curious how you were able to do that with typical land contracts? From my understanding after so many years in a land contract you need to qualify for a loan to pay in full. Almost like a balloon payment. If that is the case, you would run out of credit quickly because banks will not loan typically on more than 5. It's hard to even get to 5 because of the income/debt ratio. 

Post: Private Money Lending Trust

Brice AldrichPosted
  • Fort Wayne, IN
  • Posts 14
  • Votes 3

Thanks for all your suggestions! 

@Nick Sabat

@Nick Sabat I was told by an experienced investor that getting individual loans for future purchases could face legal consequences. Because it may seem that your using loans to pay off loans even though that's not my intention. These loans won't be tied to a specific property, their more like a line of credit for future deals. Maybe setting up an REIT would be the way to go.

@Account Closed

From my understanding there's a work around to this. You can put the property in a land trust and name the beneficiary the LLC. My intention was to have the lenders loan to my LLC directly though, most of these lenders would be family and I believe they would do this.

Post: Private Money Lending Trust

Brice AldrichPosted
  • Fort Wayne, IN
  • Posts 14
  • Votes 3

Hello All!

I'm trying to raise capital to do some co-investing with experienced partners. I am new to the game but have done a fair amount of research, networking, and reading around the topic of realestate. I am 21 and have a decent paying software job for Fort Wayne IN, at $60,000 salary. I am able to set back about $33,000 a year out of this salary, but around $18,000 of that goes towards tuition for my wife and I each year. I am disappointed with such slow financial growth, and really want to get out of software and do full-time real estate investing. I imagine I'll have to keep my software gig for several years before I am able to do this.

In the mean time because I am only able to use about $15,000 a year towards realestate I thought of a creative financing plan to fund future partnership deals. The idea is you gather a series of private lenders and you put all of the loaned money in some type of entity. Each lender puts their money in at the same time, and the loan length is 5 years. The max debt I want to take from these lenders is around $80,000 combined, because if something were to fail, I could still make payments at this point. The entity that these lenders put their money in, will in return give them 7% compound interest (not amortized). In a way its kind of like an REIT. My LLC will control the entity that the loaned money is in. The lenders can't call their loans unless I miss payments of course.

My question to you, is if I were to set something like this up, what would the entity type be? Some type of trust? What are the legal consequences if any (I will still ask an attorney, don't worry)? 

Post: Bad Advise From My Realtor?

Brice AldrichPosted
  • Fort Wayne, IN
  • Posts 14
  • Votes 3

Thank you everyone for your thoughts! Special thanks to @Jeremy Tillotson for taking the time away from his evening to give me an abundance of great advise!

Post: Bad Advise From My Realtor?

Brice AldrichPosted
  • Fort Wayne, IN
  • Posts 14
  • Votes 3

Hey everyone! I'm an aspiring investor who is looking to finally pull the trigger on a duplex as a house hack under FHA. I've been on the market looking for one in my area for quite some time, and I found one recently that interests me. Most of the multi-unit homes in Fort Wayne Indiana seem to be in low-income/high crime areas; because I'm planning on moving my wife with me, I don't feel that moving to these areas is a good option.

Recently I found a duplex in a safe, middle class, part of Fort Wayne. I contacted my realtor to schedule an appointment to see the property. I am under contract to use this realtor for my next purchase. The contract basically says if I use a different realtor, I owe him $1,200 for wasting his time. When I signed this contract I was not fully educated on what type of realtor I was looking for, big mistake. Turns out, this realtor is not an investor's realtor by any means. In fact, all of his advise contradicts almost everything I've learned from reading bigger pockets investment books, along with many others. 

My realtor and I walked through the duplex today, and in my opinion it turned out to be a great property. The property was originally listed on the market for $119,900.00. My realtor said the duplexes in the area do not have any recorded selling history, so I'm basically using my dumb uncle Zillow as a pricing guide. Zillow estimated the duplexes in the area (all almost identical to the one I'm looking at) at about $100k - $110k. The duplex I am looking at dropped its price to $109,900.00, and recently dropped again to $99,900.00. 

From reading "The Book on Rental Property Investing" by Brandon Turner, and "The Millionaire Real Estate Investor" by Gary Keller, both say when looking for a rental property you should try to get the property for 80% of the market value. This gives you built in equity and ensures positive cash-flow. Both books say that you need to set your investing criteria and stick to it. 

The duplex I found meets my criteria, and I would like to make an offer for 80% of the market value (which I'm saying is 100k). My realtor, who had excellent reviews and credibility online, says that he wouldn't offer anything below 6% of the asking price. By offering below he says you'll offend the seller, and they might not want to work with you. 

I told my realtor my goal was to have built in equity into the property and refinance in 6 months to pull the equity out for another investment. He told me that this hardly ever happens anymore and can't be done like times before 2008. He had little faith in my strategy and it started to make me second guess myself. Is this refinancing strategy still plausible today?

The property has all units rented, each renting for $650 a month (similar units rent for $730) for a gross of $1,300 a month. By running the 1%-2% rule ($1,300/$99,900) this give me 1.3% at their asking price. Since I will be living in one unit, my total gross rent will be $7200. This with a cash on cash return is ($7200/$4000, my downpayment) is 180%. 

My question is should I listen to my realtors advise? I want to offer between $75,000 - $80,000, the seller pays closing costs, and a contingency clause that says if something comes up under inspection I can retract my offer. It's worth noting, Fort Wayne is a sellers market for single-family homes, but I've read a lot of times when this happens the opposite holds true for multi-units. 

I'm 21 years old, and am full heatedly wanting to become an investor to leave my software job that I'm depressed at. I'm taking the real estate pre-licensing course so I can become my own realtor in the future. 

Thanks in advance for your thoughts!

Post: Asset Protection in an LLC

Brice AldrichPosted
  • Fort Wayne, IN
  • Posts 14
  • Votes 3

I have concerns as well. To be more thorough I have not accepted any private loans as of now, but I do have lenders interested under the above terms. I will take your advise, and meet with a local attorney. I thought I would give the forums a shot first though. Thank you. 

Post: Asset Protection in an LLC

Brice AldrichPosted
  • Fort Wayne, IN
  • Posts 14
  • Votes 3

I have an LLC formed for asset protection. I am leveraging my business off of private loans from a third party. I have made a commitment to these private lenders that if the business defaults on a property, or does not produce significant cash flow, their loans will still be repaid but out of the owners personal income.

I have made sure to only borrow a limited amount from private lenders so that I am able to keep this commitment. My concern is that this agreement will expose my personal assets to other types of lending. 

For example if I had a property that was partially financed by a bank or owner, and partially financed by private lenders, and for some reason I default on the property. I know I am still obligated to pay my private money lenders back as in the agreement, but does this expose my personal assets to the bank or owner who financed the property? My guess is it does not, because the same commitment will not be made to such financing.  

Thanks for the fast responses and the good advise. I will make sure to construct a closing agreement with those requirements.