All Forum Posts by: David Garcia

Yup it's just a simple personal guarantee for the LLC lease.

Aloha,

You do not mention whether the back unit is zoned for commercial or business use. If you are in a condo/HOA this will be a particularly big problem, but also depending on type of business can be problematic anywhere upsetting neighbors with excess traffic/activity on the property.

As far as the rental agreement, you need a personal guarantee for ANY entity that is not an individual, on any residential property. If your second unit IS zoned properly, we also require personal guarantees on commercial leases, unless you are dealing with a national company.

@David Garcia have them cosign for their LLC

@Jane Ng - If you search BP for Section 8 you will find TONs of info.  I have 85 SEC 8 leases and love the program, but it is not investing 101.  You really need to know the rules of the program so you can protect yourself.  If you do that, it is a very good program for investors. I got tired of typing the same thing over an over so I put my experience and suggestions in a blog.  Here’s the link.  https://www.biggerpockets.com/...

I’d ask a local expert. But I would either lease to the llc and both people or to the llc with both people as guarantors. I’d also have a good idea of what they say they’re going to do in the empty space. If you’re ok with what they say they’re going to do, I would ban everything else. “The space to be used EXCLUSIVELY FOR…”. You don’t want it to suddenly be a car body shop or a short term rental. 

@David Garcia, DSCR sounds like the way to go if you aren't going to live in the property. Your DSCR options will depend on your credit score as the lenders will take the middle of the three credit scores which will be the deciding factor as to what program options you'll have access to such as property loan amount, required down payment or whether you'll have to have reserves (money for multiple months of property expenses). Also, another benefit of a DSCR loan is that the lender won't consider any debt you have which can often be a problem for trying to qualify for a loan as debt to income (DTI) ratio is capped (usually at around 50%) so all debts including the property associated payments have to be less than half of your income. It gets a bit more detailed - that's the general overview. DSCRs are ideal investment loan products since I have clients who 6 or more investment properties and all that matters to get the next loan is the borrower credit score, down payment amount and current or projected rents. Great loan products to build financial freedom.

I'm a mortgage broker that works with wholesale lenders (lenders that don't work directly with the public). The benefit of working with a mortgage broker is you have access to multiple lender programs and interest rates instead of just one. Lender requirements vary based on what they require for a credit score, down payment and offered maximum loan amount. I have over 20 years of experience in property investment. I can give you a complimentary consultation to see what would work best for your goals. Let me know when would work for you to discuss further.