All Forum Posts by: Daniel Kong

The original loan was for $64,000. Lets say after 3 years you pay off $4,000, so now you owe $60,000.

If your property is now worth $150,000, you can borrow 80% of that $150,000. So you would take out 80% in cash ($120,000), pay off the $60,000 you still owe to the lender, then you would get to keep $60,000. 

Your new loan is for $120,000, but you have $60,000 in cash.

Of course there are other costs involved like closing costs, lender points, etc, and you may only be able to borrow 75% as well. It all depends on your lender. Hope that clears it up for you. 

I have a question. Lets say I wanted to buy a property for 70k. If someone gifted me the money for the property (the down payment on a mortgage), I would have to wait 2 months worth of bank statements for the funds to qualify as "sourced". 

If I dont have that type of time, I could alternatively pay 70k cash with the gifted funds to purchase the property and then refinance after the fact. Would I be able to refinance immediately, or would the funds used for the purchase still need to be sourced? Does anyone have any thoughts on how to make this happen?

Thank you!

Daniel

Highly HIGHLY recommend the The E-Myth Revisited by Michael E. Gerber.

Good luck!!

Ah ok thank you @John Mocker . That gives me a lot more peace of mind lol. 

I've got a liability insurance policy on my rental, which covers me up to $1,000,000. However, under the terms, it looks like a single persons medical bills coverage would max out at 2500. It seems like if someone got hurt on my property this would be the number I would have to worry about. The $1,000,000 limit seems almost inconsequential in that case. Does anyone have any insight into if this is normal or ok? 

@Ned Carey You are not picking on me at all. I was simply making the point that IF you are going to use LLCs for asset protection, then you would need separate bank accounts for each one - the original posters question. Personally Ive chosen the umbrella policy route like @Bill Brandt for simplicity, less cost, and being able to keep things in my personal name for the financing benefits.

@Nicholas Munford absolutely cash is the way to go. But say you only have 50k cash. Now you are limited to a 30k property, maybe 15k rehab. You will need some reserves. If the rehab/refi (closing costs) ends up going over to 25k what do u do?

Instead, If you took out a loan with 20k of your 50k, got say, a 50k house- now you have 30k worth of funds for your rehab/refi as well as a higher priced house.

Loans just give you more options.

@Bill Brandt I really like the simplicity of this. However, my cpa tells me that unless I keep a separate business bank account for each LLC, then there is no reason to have LLCs for asset protection as it will be very easy to "pierce the veil". She called it co-mingling with personal assets. Any tax attorneys/cpas wanna chime in here?

I actually was looking into this for a little while myself too. The leadership training and self-improvement aspects are awesome. The downside was that the products you are asked to sell are not name brand and cost about 4x what something similar would cost at Amazon or Walmart. I actually mapped out a spreadsheet of about 20 items I would consider buying for myself (shampoo, laundry detergent, etc). The cost, even after the kickback, came out to 3-4x the cost of name brand products I could buy off Amazon. I couldn't in good conscious pitch the products to my friends and family after that. 

Thanks for the tip @Duc Ong . Unfortunately, when I went in, BOH told me I had to register here in Hawaii first lol. I'm Planning to open a bank account here, but also one online so it looks more legitimate to clients who are using my LLC's services.