All Forum Posts by: Damon Wong

Thanks all; this is great info!  Going forward, I feel much more confident in properly servicing these notes/loans.  

Bottom line from what I gather is you need to be compliant with all Dodd Frank, CFPB, and State requirements; but you don't need to have a specific license or registration with any Gov't entity/organization.  Please correct me if incorrect.  

@Terrence Evans This is a great list!  Thank you.  To be compliant with Dodd-Frank & CFPB, do I need to physically register an entity, or just be sure to do the things listed and keep records to pass an audit (should it be needed)?  

BP,

I did my first seller finance sale, creating a note that the buyer is now promptly making mortgage payments to me---going swimmingly well thus far.  After more research, I came across various blogs/posts regarding Dodd-Frank and SEC compliance rules/requirements for formal "loan servicing".  Does anyone have experience or know what is required for this?  I understand that for one or 2 notes it's not needed, but as I look to continue creating and trading notes, I want to ensure I'm in full compliance.  Thanks.

-Damon

Thanks again all!  This has been very informative & helpful.  Structure way-forward is now pretty clear; with so many options it's nice to bounce these quick-Q&As off the community!

@Mike S. @Michael Plaks@Shawn Ackerman

Wow this is great! Thanks all for that input. Sounds like (most things) different states will drive different rules/structures—-so will evaluate each state individually instead of a standardized approach.

Appreciate the quit claim vs warranty deed transfer too. Wasn't thinking about the title insurance/policy. Any other "should do" considerations as I transfer the property from personal into LLC? (I.e. homeowners insurance, etc)

@Robert Burnell Thanks.  Do you know of any considerations/Cons of doing so? I.e. fees, filings, possible states "denying" applications, etc. 

BP Community,

This should be an "easy button" question, but couldn't find a direct post/forum. I have a Wyoming LLC. Can I use this LLC to own single family rental properties in other states? I know the answer is "yes," but I guess I'm asking how have others done it, and what are some considerations. I specifically have 7 properties across 5 states. Some options I've seen so far:

a) Each state (or even property) has it's own LLC and the Wyoming LLC is the single-member of each of those. Seems like a lot of excess state filings

b) Each property held in a trust owned by the Wyoming LLC

c) Wyoming LLC files for foreign business license in each state

d) Is it even possible to just transfer (quit claim) title/deed for each property into Wyoming LLC directly?

Thanks all

I'm writing this today, because I'm torn between a few options for what to do with my home (rental) appreciation (equity)?  I have a few homes, but will use one of them as a specific example for purpose of this discussion.  I bought a property in Las Vegas a few years ago, and have been renting it out with a decent cash flow:  $300/month.  I just checked my homes value, and it has appreciated a good amount:  +$50,000.  I originally financed my the home conventionally (20% down, 30yr fixed).  I am weighing a few options, and would like to get any opinions and considerations for choosing one....and if there are other suggestions, I'd be open to them too!

Options:

1.  Cash out Refinance:  If I cash out refinance, my new mortgage+ins+tax payment increases about +$300/month and therefore will not be cash flow positive (after factoring repairs, mx, capex, etc).  But I would be able to use that cash-out (~$50K) for a new down payment on another similar rental that will cash flow about $300/month (so I'd consider a $150/month/rental net cash flow per se; but would have 2 properties). 

2.  Sell & upgrade:  By selling, I could possible take that $50K gain and 1031 exchange into a bigger/multi-unit home that could potentially get me an increased cash flow/month. I haven't found such a property yet (haven't looked for one), so this would be theoretical; and maybe my cash on cash return is lower, but my goal of increasing passive cash flow takes a positive step forward.

3. HELOC: I could establish a HELOC for the $50K (or more) and utilize this as a bridge to securing longer-term debt on the new rental property, or any other project. This would be similar to my fourth option, but can begin thinking of creative ways to use this equity on credit line basis. I don't have a current project in mind yet.

4.  Do nothing:  My original strategy was to never sell a property, and to eventually get them all paid down to where I can eliminate my debt service on them (and thus increase my cash flow) toward retirement.  So, this option is in line with that aspect.  Plus, not knowing how the market & economy can fluctuate in the future, it may be nice to have some of that padded equity to lean on if needed.

My overall goal is to continue growing my current (and future potential) cash flow ($$), not necessarily maximize ROI or cash-on-cash return. I don't necessarily need this equity to buy my next property; I'm currently postured to continue using other people's money and other streams of income to finance future deals. But with this good bit of appreciation I have (on this property and a maybe a few others), I'm interested if there is a smart way to leverage it in line with my growth strategy.

Thanks for reading, and hope to glean some considerations to factor.  Thanks.

Cheers,

Damon

Thanks @Jake Hottenrott!  I will definitely reach out to.