All Forum Posts by: Ed Goble

@Joe 

@Joe Splitrock, EXCELLENT!!  Thank you.  This is getting clearer and clearer now!

@Mike Lee, thank you also for the suggestion of hard money lenders.  I have looked into this a bit too, but I have really good credit, and don't have a problem getting credit myself through the conventional means, if only I can get these wrinkles figured out, but I have actually already been talking to a few hard money lenders as I have gone along in the process I have been entering into, and a few have given invaluable advice.  But for just getting started in this, I haven't seen the need yet to go that direction until I have a lot of properties.

The answer may be as simple as making sure I have an LLC in my state and going to a commercial lender.

thank you.  Great perspectives!  I will have a talk with my realtor to adjust her expectations and tell her that I may have to switch to a lender, as you say, that does commercial.

The LLC in my state is something I suppose I should get my CPA to help me out with.

It seems that there are a number of details that I keep finding out about along every step of the way that make it complicated.  I hope I can get these all ironed out and do this the right way.

I may have to find a real estate attorney to do it right, but the one i was talking to yesterday wants me to retain him, and won't give me advice just by paying him hourly.  I assume that is probably standard procedure, but I don't think I need more than an hour or two right now.  But the further I get into this, the more fees and this and that and the other I have to figure out.

Thank you.

Long story short. I got a Wyo LLC in order to have anonymity.

I want to buy the houses in the name of the LLC and not my name. I have been told that is ok, even though the properties will be in another state and not Wyoming, because that income from rentals will be "passive". I have also been told that in order to do fix and flips in my state, I ought to get yet another LLC in my state, because that is "active".

I was referred to a Loan Officer by my realtor.

Now the Loan Officer tells me that the mortgages for the properties that will be bought and held for rentals have to be in my name and not in the name of the LLC, but the title to the properties will be in the name of the LLC. And I'm like, What?? How does that preserve my anonymity if the liens on the properties are in my name? Cant people look up in a discovery process, heaven forbid, that I am associated with the liens on the properties and it doesn't preserve my anonymity. What's the use of having an anonymous LLC if they can discover who I am by looking up the liens? It doesn't sound right to me. Should I be looking for another loan officer?

Thoughts?

As for my last question, I found articles about it.  Thanks.

Thanks everybody.  Really good thoughts to open my mind to.

However, I was under the impression that unsecured debt could not be used to fund a down payment.  Please elaborate on that if you could.  How could that be done?

Oh, and I should add, that I get it that some will say, "Sorry Ed, that's the way the world works."  Ok.  Fair enough.  I guess I will find my partners after a lot of work that are willing from what I can actually bring to the table eventually.

It makes sense according to your philosophical position and values, which are not mine.  The one flaw, which is not judgmental of your position either, but rather a fact that bears itself out over and over, as pointed out by Nicholas Nassim Taleb, having studied his materials very carefully, is that with the black swan manifesting itself, as a bad roll of the dice in Vegas, I could end up not only cash poor, but house poor too at the same time, and then really in a bad position.  Thanks for your input.

Certainly, my investment career will be more difficult with my values, but not impossible.

I can't blame you for not wanting to partner with someone with different values.  That is your choice.

I have to find partners that are willing to take what I can bring to the table without risking what some, perhaps the grand majority, think as fundamentally necessary to risk.

The irony, of course, is that I actually pay my bills off entirely and completely when given the chance, almost obsessively.  You would think that would be a virtue that is valued by those that lend.  It is not necessarily valued when it it is a fundamental value that is not shared by those who lend.  For example, if I had $100000 of credit card debt, but $80,000 in the bank, I would be a great candidate for a partner in your world perhaps.  But mathematically, the money doesn't really exist.

Thanks for the comment.  The answer to the question of why not the home equity line is because I'm a Dave Ramsey-ite of a sort, and there has to be another way.  I fought very hard to be in the position to have that paid off, and cannot.  I realize that most here philosophically would think I'm crazy.  But if I don't get too depressed and if I'm persistent, I may find another way someday.  I realize that the skin in the game thing comes up over and over again.  If I had money in the bank, then I would be perfectly happy to let that be the skin, but contractually, there ought to be some other kind of skin to figure out in some unconventional arrangement.  And some people, including my real estate mentor who is a seasoned investor would tell me that risking my paid off asset represents the only rational way.  However, another seasoned investor in my neighborhood tells me its an incredibly bad idea, which I agree with.  How many people have lost that asset in this pandemic, and in 2008 because of hard times?  Therefore I cannot and will not, even if some here think that there is irrationality involved.  But for me, it boils down to the rationale that when I fall on hard times when the black swan comes around, I will not lose that precious asset, even with the worst of situations hitting me, because only uncle Sam could take it away now, but compared to other bills, taxes are cheap (at least relatively, my property taxes are cheap for now).

Here's the catch 22.  My house (primary residence) is paid off.  I have perfect credit.  Regular investment mortgages would be easy to get.....  if only I had a down payment, because they only cover 80% most of the time.  Because I have no debt, I have no savings.  As a matter of principle, I will not use equity from my primary residence to fund the acquisition of others, and it will take many years to save up a down payment to get in to my first investment property.

I talked to hard money lenders/private money people today, and they will not only not fund a second mortgage for the deficit, but they also charge a large down payment.  It seems that I have no recourse, and my hopes are dwindling.  It seems like the banks intentionally stack things against the little guy unless he puts it all on the line and risks everything to even get started, or work many years for a down payment.  It seems that private money lenders do not exist that will cover 100% of the cost  How is somebody supposed to break through this problem while not risking a house that is paid off and trying to stay out of debt in that house?  I'm starting to lose hope.