All Forum Posts by: Chad Deihl

Do you know how many Landlords are successfully sued for more than their homeowner policy will cover? It's probably in the ballpark of being struck by lightning twice or winning the lottery. I manage 400 rentals, 13 years experience, and I've never been sued once. I don't know any investor that's been sued for more than a security deposit dispute or a slip-and-fall that was settled out of court for small potatoes. I've asked on this forum many times over my 13 years and I think there was only one guy that claimed a friend of his was successfully sued for something and he lost, but he couldn't even give details.

Insurance companies are in the business of making money. They sell umbrella insurance cheap because they know the odds of a claim are small, the odds of winning are even smaller, and the odds of winning more than your standard insurance policy will cover is even smaller.

Thank you Nathan, just one more angle to consider. Appreciate it.

0 Votes

Las Vegas, Nevada

Thank you for the detailed responses. We do already have a trust setup. We were thinking about adding the new properties into the name of the trust to avoid any probate issues should anything happen, which I feel is very smart. But then that begs the question, would both people in the trust need personal umbrella policies? Sorta sounds that way.

0 Votes

Las Vegas, Nevada

We own one house and will be purchasing two smaller rental units with cash in the near future and potentially a second home. We have roughly $500,000 in the bank. We will likely start out buying in our trust or an LLC but the main question is how much umbrella insurance is typically purchased when starting out? Is $1 million enough or do you feel safer with $3-$5 million with just a couple rental units?

1 Vote

Las Vegas, Nevada

Quote from @Stephanie P.:

Quote from @Chad Deihl:

Quote from @Steven Goldman:

Quote from @Patricia Steiner:

An LLC does not define the mortgage type any longer. Fannie and Freddie now permit properties to be acquired in an LLC so conventional mortgages apply. Commericial Lenders will want to avoid a property under 4 units due to the disclosure requirements that come with 'residential properties." So, directly to your question, you would be financing with a conventional mortgage.

Hope this helps.

An entire lending industry exists which originates 1-4 unit non owner occupied purchase and refinance mortgages based on the following criteria:

1. 75-80LTV
2. DSCR1.0 or greater
3. Credit score, higher scores lower rates. Generally 66o minimum for a 30 year. Some lower.
4. Reserves such as, checking, savings, IRA or 401 K or cash value life insurance 6-12 months of mortgage payments.
5. No lates payment on mortgages of any kind
No tax returns just application, bank statements, LLC docs and the other stuff. Underwriting around 30 days to close. Rates are around 7.75-9.5.

These loans are a good alternative to conventional loans. No limit on number or amount of properties so long as you have adequate reserves. Obviously they are property specific since the rent has to support the loan amount. These lenders do not discount the rent significantly for vacancies or expenses. Short term rental mortgages are available at slightly higher rates either based on historical income or AIRDNA stats. Good luck and keep moving forward.

Thank you, this is great information and seems to fit what we are looking to do. Now will need to put the time in to generate those requirements. We have enough cash to buy one rental property outright. This should allow us to generate monthly income for the LLC for awhile which will make the DSCR really great when it comes time to buy the second unit. Will need to work on the rest of those reqs. Thanks again.

Chad

Congratulations on your success.

If you have enough to buy one property outright, leverage that money to buy 5 with a DSCR loan. Use other people's money to scale your business. One girl's opinion.

Stephanie

LOVE THAT PLAN!

0 Votes

Las Vegas, Nevada

Quote from @Steven Goldman:

Quote from @Patricia Steiner:

Hope this helps.

0 Votes

Las Vegas, Nevada

Quote from @Patricia Steiner:

Hope this helps.

Great, thanks for that bit of info. Much appreciated.

0 Votes

Las Vegas, Nevada

Once you form an LLC, what are some of the fastest and best ways to build business credit with your new tax EIN?

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What does a lender typically require in terms of issuing a mortgage loan to a newer LLC for its first property purchase? if it matters, this would be for state of Nevada or Arizona.

Thank you

1 Vote

Las Vegas, Nevada

I understand that forming an LLC can be a great way to build good business credit for purchasing investment properties while protecting yourself personally from any lawsuit that could come up, on top of other tax benefits.

1) Once you form a Delaware LLC, what are some of the fastest and best ways to build business credit with your new tax EIN?

2) Approximately how long does it take to obtain a great credit score for being able to obtain your first LLC business loan to buy properties?

3) When forming a Delaware LLC, is it best to choose taxation as a sole proprietor, S-corp or C-Corp if hte LLCs primary purpose is to purchase investment properties?

4) What does a lender typically require in terms of issuing a mortgage loan to an LLC for its first property purchase?

Thank you in advance for your help with these questions!

- Chad

1 Vote

Las Vegas, Nevada

@david barajas I sent you a connection request. Once accepted I can send you messages. Thanks!

0 Votes

All Forum Posts by: Chad Deihl

Chad Deihl has started 5 posts and replied 49 times.

Post: How much umbrella insurance should we obtain?

Post: How much umbrella insurance should we obtain?

Post: How much umbrella insurance should we obtain?

Post: Mortgage Loans for an LLC

Post: Mortgage Loans for an LLC

Post: Mortgage Loans for an LLC

Post: How do you build credit for an LLC?

Post: Mortgage Loans for an LLC

Post: I need some help with some questions about a forming a Delaware LLC for property

Post: Anyone finding success in the Sacramento area?