All Forum Posts by: Chad Kiel

I think for now, I'm going to just do it the old fashioned excel way. I haven't found any software that really supports a smaller scale like this, at least for house hacking. I'm doing what you probably are, with tenants in one side. I also am having roommates as well. I think it's a bit easier to deal with since you're physically right there, and I'll have leases signed for them as well. I guess the goal is to get to scale fast enough to make it worth it???

I kind of want to bring this back. I just bought my first house hack, and my business partner used Cozy about two years ago on his duplex to set up his tenants in one side and loved it. I went to sign up, and got directed to apartments.com. I am trying to valiantly to use, but my gosh it is TRASH. The create a lease section refuses to load. It doesn't allow you to list roommate searches. Having the applicant pay for application fees seems to be gone, as I am getting hounded to pay $99 and I'm not sure for what exactly, because the list of features and benefits is...behind the paywall. Very disappointing. 

@Matt Browning Thanks for sharing. I think the problem that we are seeing, and this is starting to vary by state, is that you can no longer use a Frannie loan to get back the cost of the rehab. It is strictly the purchase price. The lenders we have spoken to here in central Indiana have indicated that Frannie has stopped accepting this and will only give you back the value you paid for the house - a huge limitation. The third option he presents is interesting though - if it would "go through". Thanks for sharing!!!!

@Eddie Brady, @Mike D'Arrigo Thanks all. I guess I still am not sure about our questions. We understand the process of a quitclaim deed, but are you saying that if we purchase the house personally, we can use the quitclaim deed process to transfer it to the LLC AND keep the Frannie financing? Our understanding is that Frannie will not accept an LLC on a mortgage, and would thus call the note due. We have also read that some investors roll the dice here and do the quitclaim process and hope this doesn't happen - seems very risky?

As far as the financing, that answer will somewhat be determined by the first question, but we are thinking we may be able to find a small bank/credit union that will work with us. 

@Marlen Weber Hello and thank you for the welcome!

Hello Bigger Pockets!!!!

My partner, Nick Wiggins (not sure how to tag yet and I wanted to introduce ourselves here to the community – and hopefully have this be the first of many, many value added discussions. We look forward very much to connecting with many of you, building relationships (and wealth) together.

In addition to saying hello, we wanted to take a few minutes to tell you about ourselves. We are based in beautiful Indianapolis IN, and have each lived here for most of our adult lives. Our model is constructed primarily around the BRRRR strategy, while being open to other opportunities that occasionally arise when you build a real estate company. We are forming ourselves as an LLC, have completed a business plan, have our attorney and CPA lined up, and are engaging hard money lenders as well as mortgage professionals to finance our first deal or three. Our long term goal is to acquire distressed properties to BRRRR, and then to use the 1031 strategy to move into multi family units.

Besides our business model, Nick is a professional licensed architect and licensed realtor, and I am an engineer and MBA. We both view real estate as a sustainable path to diversified income and wealth, not overnight, but over many years with hard work and dedication. We are avid BP fans, with Nick having listened to pretty much every single podcast, and myself having gotten through the first fifty or so in the last month. We look forward to engaging on these forums and adding value, as we believe the pie is more than big enough for us ALL to succeed!

As we mentioned above we have most of the details, we are moving forward and have begun our search for our first properties, and have our first private money meeting with potential investors this Thursday, so we are very excited! With that being said, we are hoping the team here might help us out with a couple of questions that have come up during our formation process:

1. As an LLC, we intend to have this entity execute our leases. Our attorney is pushing for us to use commercial lending on the investment property for our cash out refinance instead of a Fannie/Freddie loan. The draw back here is not only a higher rate, but also a shorter term, along with higher transactional costs and the need to refinance every five or so years. The reason we need the LLC of course is personal liability protection. What we would like input on is why we cannot have the cash out refinance done in our names with Frannie, and the lease via the LLC? This would seem to be the best of both worlds.

2. When speaking with one of our potential hard money lenders today, we learned about something that seems to be relatively new, called the delayed finance exception for Fannie & Freddie mortgages. It is a situation that forces you to make a choice during the cash out refinance process of a BRRRR. Of course, the goal is to complete the rehab and lease the property to cash out refinance as quickly as possible. With the delayed finance exception, Fannie/Freddie forces you into a choice. You can do the cash out refinance as fast as your process allows, but if it's under six months, you can only finance the exact amount the property was purchased for, NOT including the rehab costs, which of course essentially increases your equity in the property by the amount of the rehab and other miscellaneous costs since you can't refi them. The other option is to wait six months, where you can then do a "true" cash out refinance. Of course, the kicker here is that you're stuck holding hard money for six months at a much higher interest rate. We wanted to see if anyone here has run into this and how you might have handled it. One idea we had was to work with a small community bank or credit union (if you know of any in Central Indiana) that would be great!) that actually would hold the loan, and not sell to Fannie/Freddie, to do the cash out refinance. The other option we thought of was commercial, but again, you're running into some of the same challenges we mentioned in point one. Hence, we would love some feedback!

As we are new to the process, we would love to connect with anyone in the Indy area. We are extremely excited to execute our plans and become as active as we can here. Thank you in advance, wishing everyone the best!