All Forum Posts by: Jared McCullough

 For some areas even $1300 a month is considered on the higher end of rent market (i.e. we are not all in CA or NY where absurd rent numbers can be had). As you stated @ $1300 a month on a $200k loan you would barely be making your mortgage payments on a 30 yr. Not to many people in Western Pa want or can spend $1500+ a month on rent. So assume you can get $1500 you are basically getting break even and have to manage a house for 30 years. Again I am sure it make sense in some areas but this model would not work in a lot of areas. This then further exploits the vacancy discussion in that if your rent is so high the population interested may be substantially less because most can't afford. To many variables to say but I think one of the biggest things is understanding the market cap in the area you are interested and then setting price points accordingly. If I am going to struggle to get $1200 in rent no reason to spend over $125k when I can make $750 rent spending $30-40K. People are to quick to assume that just because the house sells for $30K it is a pile of junk in some run down neighborhood. 

This was quite an interesting read lol....

Assuming your mostly investing in areas closer to inner city? I think what many others have mentioned is key is that knowing the demographic and understanding the neighborhoods to avoid because you grew up in the area is probably a substantial piece when approaching these low cost houses. Many cities such as Pittsburgh and it surrounding parts have an abundance of low cost housing. While I could easily be picking up housing in Monessen, New Kensington, or Penn Hills I personally have made the conscious decision to look further out of the city. While these towns I am interested in are still what most would consider "slummy" they are much smaller and attract a completely different demographic (i.e. lower income blue collars). There may not be 100 houses for under $30k but there are still consistently always a handful.

I am in basically the same situation with a 3 way LLC in which a house was purchased but still under renovation so no income was gained. This being said this thread has me somewhat confused because some suggest it needs done while other suggest it doesn't. I am somewhat under the impression this then puts the decision on the LLC which to me seems a little backwards. Is there no "Right" answer?

 Thanks for the heads up. The loan is just in discussion phase right now with a loan officer so no formal document has been drafted at the moment? Do you have any advice of how to pose this question to the loan officer to determine if this is the scenario with the loan I am looking at currently? Would you recommend looking into other loan options at this point?

Jay when you suggest that these 5 year "reset" (i.e. as the bank had referred to them) that there was were an issue that instead of providing a modified interest rate they literally did not approve the loan at all? This was not explained to me by the loan officer.

Jared

Currently working with a lender that is similar to Aj. It is 5.4% with a 5 year reset. I think they offer out to 30 but I am only going with a 10 year so didn't investigate it that much. The loan will be for the LLC with which will allow us to deed the to the LLC. I personally was really hoping to do a HELOC but at the moment the COFR through this bank was the only one I could find willing to loan to an LLC with our current experience (i.e. basically 0 operating history).

I am currently looking at options for financing after a cash purchase. The finance would account for $30k which should be around 50-60% LTV depending on what the appraisal comes back at. The following are the (2) I have found at the moment. Do either of them sound typical or like good deals or should I keep looking?

Option 1:

Personal HELOC through Credit Union at 4.85% for 10 year loan

No application or appraisal fees

The deed can't be quitclaim to LLC

Fixed Interest Rate

Option 2: 

Cash Out Refinance through commercial bank at 5.4% for 10 year loan

Estimate fees at $725

The loan and deed will be issued to LLC

The interest rate resets every 5 years

At the moment the net difference is about $1500 over the course of the loan in which one is issued to the LLC and the other is issued to one of the members of the LLC through a personal note. Based on research neither seemed like bad options but wanted to hopefully get advice from someone who has done this more than myself.

Also any advice on where I could find better rates is appreciated.

In your statement above you suggest the case of a sole member LLC. What if the same scenario was related to a multi member LLC in which the (asset) was deeded to (2) of the (3) members and not the LLC. Would this be handled on the LLC tax return or the individuals.

A second question would be if the property has not been rented but instead was in Rehab for the portion of this year would this even be considered a "rental"? And if so would the individuals claim the rehab costs or the LLC?

A third question would be if the property has not acquired any actual income since it has not been rented as of yet would the LLC have to complete an income tax return since they have not actually made any income?

Thanks in advance for any answers.

I am currently in a LLC with (2) other partners. Our first house purchase was a cash purchase done prior to the LLC being formed so the deed was drafted in (2) of the (3) partners name at the time (i.e. dumb decision now that I realize it). We looked to transfer the deed into the LLC but realized that was going to cost quite a bit of money so decided to forgo that at the moment. This being said now that the LLC has been established I have been reading a lot of threads and have noticed quite a bit of conflict with people suggesting they struggle to get loans and insurance through the LLC versus an individual. This is what my questions focus around:

1. For the existing property should we be looking to transfer this in the LLC immediately? As background once the rehab is done we were hoping to pull a LOC or CORF on the property.

2. For future properties are we better to make our cash offers as an individual or as the LLC? Similar to above we would plan to LOC or COFR to pull the cash back out to make another purchase.

3. For future properties should we be looking to deed the properties in the LLC or through one of the three individuals in the LLC?

4. It is my understanding that we can't get a standard conventional mortgage through an LLC. Will a bank usually give a conventional mortgage on rental properties and if so should this be the route we are looking is to take loans out individually between the 3 of us? (i.e. If I have $18k of working capital to hold in a property do I buy 3 $30K houses on a conventional loan or try to put the $18k at 1 house and COFR to get the 75% LTV assuming it is $30k+)

Bump....? Not sure if this is allowed lol just see that threads get buried quickly.