All Forum Posts by: Bryan O.

@Tereal Wilsonn be careful recommend things just because there is a video about how. Have you read the loan docs for typical mortgages? Here is an excerpt from one of mine that was a VA backed loan "If all or any part of the Property or any Interest in the Property is sold or transferred (or if Borrower is not a natural person and a beneficial interest in Borrower is sold or transferred) without Lender's prior written consent, Lender may require immediate payment in full of all sums secured by this Security Instrument. However, this option shall not be exercised by Lender if such exercise is prohibited by Applicable Law."

That means deeding it to an LLC triggers DOS. That does not mean the lender cares, but that they have the option to exercise their right to accelerate. The exception comes from the Garn-St. Germain Act. The OP transfer is not this. Most lenders do not care or pursue DOS for these types of scenarios, but it can happen if they choose.

@Tye Mitchell just have him move and do whatever he needs to do. Umbrella insurance is a smart idea. He does not need to change the deed. If he did not already have knowledge about his transfer orders, then he does not have to fulfill the 1 year residency that the loan requires.

@Howard C the lender is usually looking for pretty basic stuff: is it bigger than where you live today? Is it more expensive? Is it newer? Is it closer to work? Is it closer to something that is important (airport for heavy travelers, family for those with kids, etc.). They want to see that it is a "step up" for you. That pretty much meets the FHA needs.

@Adrian Birchler you do not find many specifics because there really aren't any. You can make pretty much any size loan with whatever types of requirements you want. Do you like simple interest? Compound? Fully amortized? Balloon payment? Security? Unsecured? Other rules, like any skin in the game from the borrower? LTV ratio? 1st only? 2nd position? Entity only? Personal? Entity with personal guarantee?

Google "promissory note samples" and BAM! you're a private lender just waiting to find something to loan against. Until you know this, I would strongly recommend staying away from using other people's money to learn your lessons.

@Benjamin Cooke look up your state's fair housing laws. You would be exempt from the federal fair housing rules because it is a room within your personal dwelling space. Many states create their own flavor that is more strict. Most rule out your situation, but some do not.

@Leandro Bidal the first 10 are "regular" personal home loans. You can still operate the properties under an LLC. Once you run out of Freddie/Fannie then you finance the 10 into a portfolio loan (these are offered by commercial lenders). This would be a loan to your LLC (typically). That pays out all 10 of your personal loans when the portfolio loan happens. Then you do it again with 10 personal loans.

@Pauleen B Atkinson ouch. GET OUT OF CA! They are probably the most business unfriendly state in the US. I am not a tax person, but I believe that in CA they do not care if your entity and property are out of state. Since you are in state they want their $800/year for entity fees regardless of if you have the entity or properties there. Check with a professional on that because that is a BIG bite out of your cash flow.

@Leandro Bidal What is a "big portfolio"? You can typically get 10 properties in good, long-term, "normal" loans. You can get commercial loans on them individually as well, but terms are much less attractive and insurance is more expensive for less coverage. What some people do is buy 10 "normal" home loans (Fannie/Freddie). That maxes out their personal mortgages, then have a lender come in with a portfolio loan and refinance the package. Then you have 10 more you can buy with good financing, roll them into the portfolio, etc. There are more ways, but that is just a general method you can choose to use.

I don't want to start an LLC flame war, but I would probably do entities as you mentioned. If you have access to a series LLC it might be worth looking into. Some people (typically ones that get paid based on your # of entities) will say to put every home in a new LLC. Some would say use an LLC to hold a max of $1m in homes, then a new one. I say have a good umbrella policy, figure out your risk tolerance, understand the cost and hassle-factor of maintaining multiple LLCs (different accounts, different books, different tax filings, etc.) and go from there.

@Rick Reeder are they empty-nesters with extra rooms? If so, and they are not "traditional" thinking they could short-term rent a room for cash flow. If they have a mortgage, it is probably at an interest rate that is good. You may be able to beat the rate, or you can re-ammortize it to reduce the payments (another 30 year note), and then when they pass you get the house, which will recapitalize you or go into your portfolio.

@Christopher Blake your residential FHA loan will allow you to purchase 1-4 units. If he has 2 properties and they are 4-units each, then you can purchase 1 of those properties with the FHA loan. There is a commercial FHA loan, but it would probably not work for this deal because it is usually large purchases and has a lot of compliance.

@Rachel LeClaire it doesn't take a carpenter to fix a stair. It takes a handyman/woman. This isn't electrical or gas, this is literally a piece of exposed wood. I agree with the above, just let them know that it is being fixed and leave it at that.