All Forum Posts by: Jared H.

I'm going to request a copy of the full report soon but I haven't heard any update from the lenders on the applications yet, so I'm waiting for them to call, in case they're busy with other tasks, I don't want to burden them since it's mostly curiosity. I didn't really get a straight answer when I asked last week, other than they use mid-score. Thanks for checking @Caroline Gerardo

This is not legal advice and I'm not an attorney. If the purpose is solely for legal protection, remember that it is limited. After a lot of research on this subject (and some formal education), I personally think it's not worth it to form a SM-LLC, that veil can easily be broken in court and you're now liable again. The additional hassle of costs, rules, paperwork, etc... It's simple to form but I don't think it's beneficial for RE investors aside from surface-level anonymity (Members can still be revealed for anyone serious about finding out). I do form for other purposes but not for real estate and I do it myself through the secretary of state, I don't recommend hiring anyone for filing, it's easy.

Where those protections would be most beneficial is in a legitimate business setting, no mortgages/loans under your name, all financed to the LLC, employee's and other business partners (MM-LLC), etc.. Complete separation of you as an individual to these properties, no commingling. In this case, it would be difficult for a court to pierce the corporate veil.

Overall, not necessary unless you run/prove in court, a legitimate business where you can truly take benefit of the limited-liability aspect.

Also, I was told that as a direct lender, they handle the entire process in-house (originate, process, fund).

@Caroline Gerardo
Sorry for any confusion or lack of proper terminology, this is all just strictly info from the simple one-page credit score report we just got in the mail sent from the lender. The mortgage is still processing. The "serious delinquency" is noted as a factor that adversely affected her credit score on the simple one-page credit score report, and I thought it was a bit crazy to have a 45 point difference when our first mortgage application (years ago) credit report was within +/- 10 points of our consumer-accessed reports. But I understand different score models are used.

So, you are saying of those three models from each of us they will select and display on their one-page credit score report, only the model that was used with their guidelines (lowest-middle score), which could be why I'm only seeing one score and one model for each of us which happen to be different score models? That makes sense now if so, thank you very much! Also, thank you for the offer in explaining the scores, I will see if the lender will go over them so I can identify what delinquency exists and I will request the full reports, I'm almost positive there are no delinquencies, our consumer scores vary mid-high 700's and low-mid 800's. There was no tradeline history on the score report, I assume I'll need to request the full report for this.

I'm applying for a second mortgage with my wife as a primary residence with a direct lender. I remember on our first mortgage (using a broker), our credit score report was given back showing the same credit score models being used for each of us and reflected pretty accurately. However, I just received the reports back for this application with a direct lender and it seems that the models used are different for each of us, which mine displays slighter lower of all models that I was able to access (Credit Karma: Transunion, Experian and AMEX: FICO). My wife's score displays significantly lower than I could access on any of those sites which would definitely result in a higher interest rate. The model also states serious delinquency negatively affecting credit score and there are no delinquencies on her credit from any reports I'm able to access and I know there shouldn't be because I help manage her credit/finances.

The models used were Transunion/FICO Classic (04) for her, and for me Experian/FAIR, ISAAC (VER. 2)

Is this normal practice? I'm confused as to why a lender would pull different models for different individuals on the same application unless it were to find a reason to lower the median score to offer higher rates (which sounds strange, considering how rates are plenty high right now and could result in DTI denials). If a broker is a direct lender, should I be trying multiple direct lender brokers or is that unethical to make multiple people work for only one to get paid in the end? Or does this only applies to normal brokers and not direct lenders?

I'm trying to learn as much as I can through our second time around and definitely don't want to be stepping on any toes here.

I just wanted to update after five years:
- I did not pay the property down extra
- I did not sell it
- I refinanced it to a lower rate of 2.25% when rates dropped later on and have been break-even on cashflow.
- I did invest in another property (OF deal, major 3yr DTI tie-up, 1k cashflow now, 200k equity there too) and after PCS, I did rent out rooms individually.
- I currently still hold this property and have built 200k equity on it.

If I had sold on upon leaving, I would have made about 20-30k and missed out on about 170-180k of equity. Within the next few years it is likely to begin (finally) cash-flowing positively. I'm going to continue holding until I can utilize it for a 1031 or other equity-related tools in the future. I've learned a lot in the amount of time since this topic was created and quickly realized everyone has their own strategies or personal rules for investing. While this property was not great for cash-flow from the start and a bad investment to many, it ended up being a great hold to use for future investing strategies that costed me very little and did not tie up my DTI.

Yes, there are various ways that may have been more efficient and better strategy-based without relying on appreciation so much. But the HI market trends due to the supply/demand there made it an easy decision to hold, with the added advice of some. Thank you to all who contributed with their experience and knowledge (I realize now that one comment was not accurate for that market but I appreciate the effort, regardless).

I self-manage two properties remotely in other states (one renting out each bedroom) and use Innago (online), it's been great! They only charge a small $2 ACH transaction fee which either you can pay or the tenants can pay (autopay options, even pay with credit card), features a maintenance portal, background screening options, expenses, report sheets, signature system for lease agreements/notices, essentially all the features you could want.

I've saved well over $20k in the past 5 yrs by self-managing. That's significant if you don't have high income, but yes, there is more work involved. For the hours put in, it's about $100+/hr for me, which is well worth my time currently. I could just use excel or something old school, but this is much more convenient & clean, costs me very little and I can export to excel quite easily. I'm only going to switch to PM once the numbers make sense.

Sorry it's been so long since I've logged in!

@Doug Spence It has been a long time now but the story did get more interesting later on.. I believe back then, he ended up moving out on the last day prior to going through with the eviction process, thankfully. He never did pay for the car (it was a cheap island beater, that didn't bother me much, it was better that he was finally gone) and the great part about that was about 4 months later I get a call from a debt collector asking for a significant amount of money due to an accident the vehicle was involved in without insurance or valid registration (he never got the title transferred!). Easy enough to prove that he was responsible for the vehicle so it was no big deal on my end but still... That's when I got a hold of his commander and was informed of his chapter (@Jim Cummings was right on the money about that). Never heard about him again and I hope I don't.

Since then, I don't play any more compassion games... Strictly business now and I haven't had a single issue. It certainly was a good lesson and thank you for all the advice!

Thanks for the info, he said he was in North Shore. Not sure if it were raining up there or not but it sounds like it may be a lie then. 

Would there be any complications evicting in the situation with the COVID restrictions, or does that only apply to COVID-related pay issues?

I'm renting out rooms in my home on Oahu (I don't live there) on 6 month leases and have a tenant who is in the National Guard who came to the island to transition to active duty and work there. He moved in December, paid the $900 deposit and I gave free rent to assist in his move until Jan. He was late on his Jan payment but understandably due to the move. Feb came and he told me he didn't get paid yet so I told him we'll use his deposit to cover that month and he can pay back the deposit over 3 separate payments/months to help him get ahead financially. March is here and I issued a 5 day notice, he told me he'd have the rent paid yesterday. Still nothing, I contacted his NCO in Oklahoma and he never finished his out-processing there yet & he was considering chaptering him as he was already given a counseling for it and still has made no efforts to finish his out processing. His NCO told me he was paid for February (so there should be no reason he couldn't pay for March) and they're not paying him for March until he finishes out-processing. He also has not paid his share of electricity with the other roommates. He still has until Thursday to pay but it's due to negligence that he has taken so long to finish out processing before he can transition there. 

When I contacted the property manager, she said he was not there the past few days. So I contacted him and he said he was out camping for the past few days and this just confirms he's being negligent about both his career and rent. (I also gave him a cheap car I wasn't using anymore and told him he could pay me for it later -I don't expect he will) but my bigger concern is I still have the mortgage to pay, he has no deposit now & I'm sure he'll be late or not pay rent.

Currently it seems there are restrictions on eviction due to COVID. This is not due to COVID, am I unable to evict him or file through claims because of this? I'm active duty myself so I'm trying to do everything through the military side of things starting from the bottom without getting him in trouble & not have to evict him but it's looking like there's no other way.

I appreciate any input as to what should be done & what I cannot do with the restrictions in place. Thank you.