All Forum Posts by: Grant Thompson

@Jonathan Felts

You have two options for pulling out equity.

1. Cash out refinance the property (trading equity for debt) and pay out the cash to yourself and your business partners.

2. If you are looking to get out completely, negotiate to sale of your equity to one of your business partners.

@Harpreet Narang I would also be interested!

Nate,

I hope I am following correctly, but typically interest accrues daily on a loan and therefore when you pay off the existing debt you do not owe any future interest on the loan. However, as you said, it is dependent on the terms of the loan and/or contract with your counter party.

Rick,

It appears that based on your numbers this isn't a BRRRR. The quick and dirty formula for a BRRRR is

Purchase price = 0.75 * ARV - Rehab Costs

In your case, you would need to acquire the property for ~$156.25k to make it a complete BRRRR deal.

Side note, rehab costs are very hard to estimate so make sure you verify that estimate and/or allow for a significant margin of error in your calculations.

Jezelle,

We use NREIG for all our Cleveland properties and our company is considered out of state. No complaints with them so far.

Michael,

All our insurance coverages are for $1M per occurrence. We feel this is the right amount to protect our assets in the worst case scenario.

Mike,

My question is in doing a cash-out refi or home equity loan for another property, should I do the loan first and then transfer the deed to the home to an LLC?

My recommendation would be yes, and make sure your lender approves it otherwise you may trigger a due on sale clause.

Will doing this affect my current (amazing) mortgage rate of 2.99% on the original home?

Loans to LLCs typically come with higher interest rates so this likely will impact the interest rate.

Can I keep the loan in my name and put the deed in the LLC's name?

Usually a lender will not allow this to happen and I recommend having all the assets in the LLC to maximize liability protection.

Will a lender allow me cash out refi if they know the original home is a business?

Yes, some lenders only lend to LLCs. Getting a loan for properties held in legal entities is very typical.

Hopefully this helps!

Nick,

Congratulations! Sounds like a good deal. My company also does long distance investing, curious to know what lessons learned you have so far.

Ramiro,

It would be helpful if you could give us a bit more details about your investment goals. If the analysis is true to the numbers then it looks like a good cash flowing rental. However, in today's market getting $1400/mo in rent for a $60k property seems like a red flag, but I cannot verify so I would be sure to double check your rent assumption.

Dane,

I always close in LLCs, but given the option I would typically choose traditional lending as the terms are more favorable. That being said, hard money lenders will finance fix & flips upwards of 80% purchase price and 100% rehab costs which can be useful at times.