All Forum Posts by: Chris Drury

My business partner and I have purchased an investment home that recently went to closing. We did not title it in the name of our LLC due to complications with financing, so it's titled in my name with converntional financing 30yo fixed. We are looking for ways to move it to our LLC. After reviewing the Garn - St. Germain Act of 1982, it is apparent that we can put the property into a land trust with both of us as beneficiaries without violating the due-on-sale clause (as long as the original owner is a beneficiary). Could we make the LLC the beneficiary of the trust and then co-own the LLC without violating the due-on-sale clause? Or, thinking a bit outside the box, could the original owner be a 1% (or less) beneficiary of the trust and the co-owned LLC a 99% beneficiary? Or is this just silly?

Also, we are purchasing a second property in a couple months and plan to assign the deed to a land trust on the day of closing. Similarly, how should the beneficiaries be listed?

Any help you could give would be much appreciated. Feedback from lenders would be appreciated as well.

Loan was recently sold to BB&T.

Goal is to eventually have the LLC (equally owned between my partner and I) be the owner of several properties. Currently he and I are splitting the 20% down payments to aquire income properties which I am settling in my name due to lender restrictions for settling into an LLC.

Thanks

Another rock-villain here. Welcome to the site. I am picking up some properties in PG county right now. Not exactly best neighborhoods but that typically helps the cash flow.

Have not looked at Frederick and Hagerstown but there is a lot of business growth up that way.

I am settling on 3 new properties which will bring me up to 5 fnma backed loans (including my primary residence and another underwater house).
I have also been told that I will not be eligible for additional loans at this point.

Any suggestions? My lender has suggested a "portfolio loan" but it looked to be adjustable rate and less attractive for my buy and hold strategy.

Hi guys

Similar position to this poster but purchasing 3 small houses in maryland for 60-85k each.
Closing costs seem high though they are including 14 months of prepaid taxes and homeowners insurance in their figure.

On a $65k loan
Prepaid
Origination fee $726
Tax service to first American $89
Flood certification $8
Title services $750
Total prepaid $1550

Origination fee $250
Appraisal $575
Credit report $75
14 mo homeowners insurance $700
14 mo taxes $2880
Title services and lender title insurance $422
Owners title insurance $300
Recording fees $175
Transfer taxes $2000 (split with seller so mine are $1000)
Survey $250
Misc fees $160

Total CC $9797.80 minus the $1000 transfer tax split is $8797.80

Kicker is I have 3 houses at this cost. So on a $220k sale price (for all 3) I am paying almost $27k in closing.

Seems high??

Thank you guys for your responses

I spoke with another financing partner and have come up with 2 options

1. Traditional financing
Best loan rates and 30yr fix with 20% down
We may have issue with # properties allowed. Fannie rules limit to 4 or 5 properties total which I am hitting now.
We would close in my name and we could "possibly" move to LLC later but no guarantees they won't call the loan. Not sure how soon can we move it after closing?

2. Portfolio loan
6% rates with 5yr arm (10yr loan) and 25yr amortization schedule which is not ideal since I can't lock in. Rates are bound to increase soon.
Commercial loan will allow me to close in LLC
Lender Suggest single loan for all properties to reduce closing costs. Not sure?
No limits on additional properties

I can't tell if its worth the LLC option. Figure a $1M umbrella policy should cover my family assets which are pretty limited and leveraged anyway.

My 50% investment partner is obviously interested in LLC so he can have ownership but he is not on the original loans and PGs. He is giving me a little extra to avoid having to sign guarantee.

Any suggestions?

Hi BP team
I am looking at purchasing 4 properties in the next 30 days but would like to put them in an LLC with my investment partner. Primarily to protect my other assets but also so we can claim expenses for taxes and not have to deal with the passive loss limitations. (I am not real estate professional). I am still going to have to personally guarantee the loan but that is ok.

Most of the banks require putting it in one of our names and then moving it over through a quit claim deed. I am not too familiar with the process and wanted to know what is involved or if this is the correct process.

I have 20% down and we are ready to proceed but I wanted to make sure I had the process down with an exit strategy for moving to the LLC. I have a good relationship with the settlement firm and may ask for a discount if they are needed twice to process the quit claim.

Please offer any direction.

Thanks
-Chris

Thanks Brandon
I think my friend may be able to swing the other 50% (45k each) but even then I would be close to tapped out.
Ideally if I could do the finance part of the 20%- 25% with a private backer or do a heloc on my home (not a ton of equity though) to keep from getting stretched too thin on cash reserves.
I don't know anything about wholesaling but could be something to look at.

I believe these numbers are pretty accurate and would hate to pass on a potential home run and I could definitely use the cash flow.
I guess I am looking to see if this fits the "home run" scenario.

Hi BP friends

So my uncle manages a bunch of properties in the DC area. He had introduced me to a potential great deal a few months back but already had an investor. Fast forward a few months and his investor ran into a financial mess and had to back out.

This would be my first foray into the investing side and I wanted to get some opinions. The down payment is a huge hurdle right now as I am trying to build up my reserves.

Here is the deal:
(Buy and hold)
4 houses in a C+ neighborhood all owned by a 85yo for last 20+ yrs. he is trying to get rid of his portfolio given his age. My uncle has managed them for the last five years and has a pretty good scope on the costs, pitfalls, ect.

Asking price (and matching recent 3rd party appraisal) $320k
25% down = $80k
Estimated closing costs $10k

All 4 houses are rented for a total of $5k gross ($60k annual)
(Many tenants for over 10yrs and 2 due for rent increase)

Mortgage ($240k) @5% =$1320
Taxes $8k
Management (uncle continues to manage) $6k
Insurance $3200
Maintenance $4k
Total expenses = $37k

Net =$23k

Assuming $90k investment, that comes to 25% return on cash!

My hurdle right now so I am looking at 50/50 partnership with a friend. I may need to split this again but hoping I can swing it.

Does this look like a good deal?
Any recommendations on partially financing the 25% down?
I may ask for some seller concessions to help with closing or holding a 2nd note, but he probably won't go for it due to age.
Do banks ever consider less than 20% down on investment props?

Thanks in advance!

Likewise. Welcome! I'm in Rockville and happy to meet up for lunch.

Thanks Ned. I just sent out some colleague invites for those on this thread. I got into the landlord side since being underwater in our first home and not being able to sell. I have learned a lot so its been a blessing in disguise. I would definitely be interested in looking at some teamed approaches for buy and hold, flip, or rehab. I have a pretty good network of inexpensive contractors since I have had a fair amount of repairs and renovations on both my houses.

I live in Rockville and work in Beltsville so meeting up for lunch/coffee would be easy just about anywhere in the DC/Baltimore area. If anyone else on the thread wants to join up that would be great.