All Forum Posts by: Denver J Lobo

Hi @Josh Autery, @Arlan Potter, @Steven Anderson,

Does Texas consider prepaid rent a part of the security deposit? Ie if a tenant wants to pay 6 months upfront but then leaves in 3 months, would I owe them the 3 months back or would it be part of the security deposit and used for the cost to turn the unit to the next tenant?

Also, what is the best way to protect the landlord and tenant from reneging on their commitments? Should you do First 3 months, and Last 3 months of lease, rather than 6 months upfront, so that if the tenant renegs, you can evict them, because they have not paid that 4th months rent.

Hi @Colin Newton & @Ashraf Syed, not sure if you gents connected already but 3 follow up questions to your comment above:

1) Lets say I put $30k into the Rehab Line on the HUD - Do I then have to wire the 30k at closing to the title company that will then allocate it to the GC that gave me the $30k bid?
2) Can I control the payments of the 30k based on job completion?
3) If the rehab magically costs $20k, can I do anything to recoup the $10k from the GC, or not pay them that amount?

I have a tenant in Atlanta, GA that left the unit without paying $6,600 in back pay rent. I still have their rent deposit. They are still in state but have not told me their new address. How do I file a small claims lawsuit against them without their new address? Once the lawsuit is filed, how long does the lawsuit stay on their credit reports? Any suggestions how you or other investors you know have handled this situation?

Hi @Mitch Messer!

Thank you for the extremely detailed answers to my questions. To follow up:

1) The reason books say to put the beneficiary in your name first and then assign it into your LLC is that some states view the transfer of a trust where "grantor is not also the beneficiary of the LT" as a taxable event. Whether this is true or not in practice - I really do not know.

2) Should I put myself as the trustee? To be honest, I'm not that concerned about anonymity, my main concern is asset protection. Is there an asset protection reason that I should not have trustee be myself or the same parent LLC?

3) Can I have the parent LLC be the property manager? On your leases, do you rent to the tenant from your LLC or LT? Similarly, is your bank account under the LLC or LT name? If I get a conventional loan through a bank (as I'm still only at prop #6), should the loan be under my name or the LTrust name that I would put on the deed?

I msg'd your number - really looking forward to catching up and seeing how we can work together.

I currently own 6 properties through the BRRRR method in Atlanta, GA. I have read a lot of resources on asset protection that say a LLC is the best way to protect an asset, however I have ran into 2 issues 1) Due on sale clauses and 2) The amount of time and effort it takes to keep each LLC siloed (accounting etc). Therefore I have been looking into the strategy of owning each property in an individual Land Trust and having the beneficiary of the LT be a parent LLC.

I have specific questions on your experiences below:

1) Should I put the the beneficiary ownership of the LT in my name first and then assign my ownership to my parent LLC (Assignment, Trustee Acceptance and LLC Acceptance notarized), or can I put my LLC as the beneficiary as I start the new land trust?

2) Is there any downside of using the same LLC as the trustee and beneficiary of my individual Land Trust?

3) Is title in the name of the LLC or LT? Is the bank account opened under the LLC or LT? Is the tenant lease against the name of the LLC or LT?

4) As I acquire new properties, does my LLC need to be amended to include each LT?

Would love to hear about your experiences and if there is potentially a better / more efficient way to do this, I'm all ears!

Denver

@ Trevor Aydelott, Did you manage to figure out how you got your Rehab costs onto your HUD?

More obvious options:

4) NON-QM / Portfolio loans - There are many Non-QM or Portfolio loans that have either much higher limits on the number of financed properties you can have and some of these loans have no limits. They will only limit the number of loans that investor will do with a particular borrower. However, there are many investors with these programs, so you could buy as many properties as you might want? The rates are a little higher than conventional, but better than commercial and not anywhere close to hard money. To get access to these loans, you need to work with a broker or a banker. Banks and credit unions don't have these loans. Not sure who in your area is closing these loans, call the title companies, they know, they close them for the lenders.

5) Blanket loans - You can get commercial blanket loans on as few as 3-7 properties or more. Blanket loans typically have a minimum # of properties the loan must cover in order to make the overall loan sizable enough that its worth it to the commercial investor/lender.

6) Commercial loans - They have higher rates and are set up with 3,5,7,10 year calls. So plan to refinance every so many years?

For others that this information might help (from other bigger pockets threads):

Recommendation:

1. 1) Try to get mortgages in your husband's name, if this is possible ... I'm sure a lender will correct me if this is not possible.
2. 2) Contact small, local banks and ask for the commercial lending department and ask if they keep loans in house, so that you can continue to purchase homes at fairly good rates, without worrying about the limit.
   
   1. Make sure to ask how they figure out DTI and make sure they use the rental income to offset the debt
   2. Another option could be to use a few of the homes as collateral and try to get investment HELOC's or Line of Credit (terms aren't great though, so I generally stay away from these options).
3. 3) STAY AWAY from PML for long-term investment property holdings.. quick way to get yourself in trouble.

Hi team - I heard from another investor that when you use a blanket loan or portfolio loan for a portfolio of properties, if you ever go to sell one of those properties its a bit of a mess. Has anyone had experience with that being a pain?

Thank you Jared!