All Forum Posts by: Dustin Palls

@Chatree C. I haven't been through the "crash" as you say, but I own and rent nine properties currently... Do you own a home of your own yet? My best advice is to buy a home in an area that will ALWAYS be desirable. These areas usually cost more but  are more secure if things were to fall apart, so to speak. Secondly, purchase only with 30 year, fixed rate loans for your first several properties. This will increase your chances of being able to "ride out a storm". Finally, yes the property needs to cash flow from the start or there isn't much built-in cushion for low rents/bad economy/etc.

I realize a lot of markets can't cash flow, but IMHO those markets are more risky. Maybe someone that possesses more knowledge than I surrounding those types of markets can offer up some advice. But think about it. My strategy is to hold indefinitely... 30 year, low fixed-rate loans on properties that cash flow 400 to 600 a month after expenses... the economy would have to get pretty bad before I would be in trouble, worst case I get a day job until things blow over I figure. FYI, other than equity on paper to increase my net worth to gain access to additional capital, I don't care what any of my properties are worth AS LONG AS THEY RENT for what I want. Values come and go... everyone's strategy is different.

The second major piece of the puzzle is to determine an effective tax strategy from the START. There are MANY different avenues, but for me, buying and holding is the most effective means of legally (which is critical) avoiding tax on large amounts of money.

Again, this is MY STRATEGY, may not work for you, your market, your goals... just works for me. 

Dustin

@Stephanie Medellin Thanks again for the clarification!

@Account Closed I would suggest finding a good broker that knows the regs that's willing to go through a ton of "what-ifs" with you... call every one in the book if you have to :)

But yeah, I've already got some good info at BP too. Thanks everyone.

@Stephanie Medellin So I now have 3 "mortgaged properties", I then take out the blanket loan under the LLC and STILL have 3 "mortgaged properties" (LLC owns and owes for loan but I personally guarantee), then I build and finance the 4-plex, obtain permanent OO conventional financing...

Do I then have 4 "mortgaged properties"? Each unit doesn't count as a "property" correct?

By the way, the 4-plex will be deeded as one property/parcel/lot... i.e. I will never have the option of selling just one unit for example.

THANKS AGAIN!
Dustin

Ok, thank you both... still a bit confused.

My plan is to now go conventional OO... I will build the 4-plex via construction loan, then obtain permanent financing... 80% LTV which will be like putting only 5%-10% down assuming the appraisal comes in where I think it will. I won't have to deal with FHA... thought I was going to get away with only having 3.5% in the deal.

I had a broker tell me that the 3 conventional/conforming loans I currently have count as "3 mortgaged properties" (obviously) but that I will STILL have only "3 mortgaged properties" since the cross-collateralizing loan which I am seeking won't be a "residential", i.e. Fannie/Freddie product (rather he called it a "commercial" loan)... that it won't be "counted" in the sum total of my mortgaged properties at all... and that essentially the "4 mortgaged properties" or "10 mortgaged properties" guidelines apply only to conforming loans... By the way, my LLC will own and take out the cross-collateralizing loan on the properties mentioned above.

What do you make of that?

Thanks again!

Hello All,

I currently own and rent nine properties, 3 of which are financed (conventional), 6 of which are paid for. I have found a lender that will allow me to do a cash-our refi on the 6 and hold title to all 6, but initiate only one loan... let's call this loan "A".

With the proceeds from Loan A, I plan to purchase a lot, on which I will build a 4-plex (I possess these skills from my previous career).

I want to finance the 4-plex and live in one unit... so OO FHA with 3.5% down is my plan. Let's call this loan "B". My questions are these:

If my LLC builds/owns the 4-plex can I (as an individual) purchase the 4-plex with an FHA loan?

Will this be viewed as a refi?

Lastly, if I currently have 3 conventional mortgages, will Loan A (one loan, but 6 properties held for collateral) be viewed as: 4 "mortgaged properties"?... 9 "mortgaged properties"?... just 3 "mortgaged properties" (assuming I get Loan A in the name of an LLC and said loan isn't reported to my personal credit report)?

I'm trying to make certain I am in a position to qualify for Loan B when the time comes. I would hate to build this 4-plex only to find out the best I could do is 70% or 75% LTV.

Thanks in advance for the replies!

Dustin