All Forum Posts by: Cameron Pendergraft

@Laura P.

@Matt Moylan with Thomas McGee recently priced out insurance for my wife and I on our personal items as well as rentals and we were able to save money without going with a high deductible.

Cameron

Scott,

I had that exact concern, and there is a podcast I listen to called the Refresh your Wealth Podcast that is hosted by two tax attorneys, one of whom is also a CPA. Occasionally they will do a live-caller/email question and answer show and so I submitted this question to them and it was answered on their June 19, 2019 open forum podcast. You can find the show on itunes if you want to listen, it's the first question they answer roughly 4 minutes into the show. Unrelated, but it is a good podcast.

Anyway, I'm not a lawyer so seek your own advice etc. but their suggestion was that if everything else is under the llc, (lease, listings, bills, payments, etc.) that just having the loan under your personal name wouldn't be enough to lose the asset protection afforded by the llc. It seems that under that scenario, the loan would be viewed more as a co-signer and less as intermingling. 

Cameron

Scott,

For Fannie/Freddie, they're going to want to see your income to qualify the loan. Your llc I'm assuming hasn't had any income so there's the rub. 

I've heard commercial lenders will lend on the investment alone but this won't be a traditional home mortgage and you'd be looking at higher rates/shorter amortization possibly.

There's also the crowd that will say to deed the property back to your own name, finance it, and then deed the property back to your LLC. This would potentially trigger the alienation/due on sale clause of your mortgage but there's a long history of most banks letting this go as long as the mortgage stays paid to date. The risk there though is the bank does legally have the right to call your note if you transfer title. I honestly don't follow interest rates that well but if they're stagnant or decreasing, a bank has little incentive to call a performing note. If rates start rising, it might be more appealing for a bank to enforce that clause. There are pros/cons to this, I haven't done it yet but am considering it.

Hope this helps,

Cameron

First, I would total up the amount of cash you have. Then total up the sum of your debt payments versus your income. Are you in a flexible enough position to handle things not going according to plan in the first few months of ownership? What type of investing are you looking to do?

Not sure if it's necessarily true but "failing big is less expensive than thinking small"

""You miss 100% of the shots you don't take"-Wayne Gretzky"-Michael Scott

Jason,

I think we all agree real estate is great for the tax benefits but you should also note that your depreciation is a deduction and not a dollar for dollar credit against your taxes owed to create a zero tax scenario. There is also your standard deduction, personal exemptions, etc. playing into you having a low/no effective tax rate. Also, as Justin said, these paper losses are capped unless you're a real estate professional.

That's awesome on the tax free situation you're in though! Congrats!

Cameron

@Martin B Andersson

What zip code are the properties in?

@Ted Tronnes

If it's single metered, you could still look into r.u.b.s. and smart thermostats to bill back the tenants. Is the duplex a conversion from a single family home?

Cameron

Ted,

Is the duplex not separately metered for utilities? I'm not sure you'd have to carry that cost.

Cameron