All Forum Posts by: Jeff L.

As robert has said garrett sutton has a lot of great info out there to really since he breaks it down to laymen terms it had really helped me get a great understanding of what i wanted to do personally. I had the same question as you did and after doing my own research i decided to use a professional to set up my LLC.

1) What did the attorney do for you that you couldn't have done on your own?

2) What did the attorney do for you, did he file everything with the state or did he just draft something for you and have you mail it yourself?

3) It is a one time event where he sets it up and gives you some advice and then you're off on your own, or is there continual service? If the latter, do you pay for the continual service?

4) If you were to do another LLC, would you have the same attorney do it for you or would you be comfortable setting it up yourself?

5) How much did the attorney charge you?

1 Vote

Originally posted by @Account Closed:

@Jeff L.

That will depend on who you ask. I would like to suggest an audio book by Garret Sutton. He was a "Rich Dad Poor Dad contributor". If you cancel your subscription to the audio for free. I have all his audio books on real estate and running a business. It is excellent as a baseline. If you use a company like company corp it is easy and affordable. Folks like said author do not advise such practices and believe you should use an attorney. The claim I have heard is that LLC are highly customize able and the operation agreement needs to be setup properly. I have used the company corp to setup 3 LLCs and one C-corp. No problems, but I also have never been suede. If I had to do it again, I would go back to the Company corp. Just my opinion.

Thanks for your perspective on setting it up through an online service. I don't know if I trust them enough in place of an attorney though. I'll check out Garret Sutton's audio books.

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Originally posted by @Ned Carey:

Will this is be a single member LLC? How much do you know about running an LLC, the required formalities, and under what circumstances it might be pierced?

Do you now how to create an operating agreement?

If you don't know you should see an attorney and perhaps a good CPA familiar with real estate.

I recommend you don't simply rely on an attorney. I suggest you educate yourself on some of the issues above so that you can better work with your legal and accounting professionals. I recommend the NOLO Press site

I have read a lot about the basics of LLCs, piercing the veil, etc.. It will probably be a single member LLC. There are templates to create an operating agreement. There don't seem to be as many requirements as other types of corporations in terms of holding meetings and stuff like that.

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I need to create an LLC for financing as well as liability reasons. This thread isn't about the pros and cons of forming an LLC.

Rather, my question is:

Should I hire an attorney to do it "right", or is it good enough for me to do it myself, or something inbetween?

It's not that I want to save every penny, I'm just wondering if attorneys will charge too much for something that doesn't take too much effort and knowledge to do on my own. At the same time, I don't want to screw it up and open myself to future problems due to doing it on my own.

1 Vote

Originally posted by @Mark Creason:

Jeff,

I am assuming these properties are all in Indianapolis. I have a program for the DFW area, but have nothing for Indy.

Mark

Yes, all of my investments are in Indianapolis. Thank you though, I'll keep you in mind if i ever invest in your area.

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Hi BP,

I'm a real estate investor from Southern California who buys single-family houses in Indianapolis.

As you may know, Fannie Mae doesn't allow me to get any more conventional mortgages after 10.

I'm closing on my 10th property soon, so I'm urgently seeking a financing solution to move past this limit.

From what I've researched, possibilities include:

Portfolio loan
Commercial loan
Blanket loan on my current houses so I can start over the 10 conventional loans
Something else

I move fast, and I'm trying to buy as many solid properties as fast as I can. I'm looking for a mutually beneficial, long-term relationship with a lender to grow my portfolio quickly.

If you have any products or ideas that could help me continue investing (or can refer me another lender that does), I'd love to hear about them.

If you're a lender, please either send me a private message or post your contact info in this thread, and I'll get in touch with you with more info on my existing properties and loans.

Thank you!

Keywords: Indy, portfolio lender, unconventional financing, creative financing

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Originally posted by @Justin B.:

The limit you are asking about is for personal mortgage loans in your name (traditional mortgages). Properties in a business entity (like an LLC) will not count against your personal limit. That's because they aren't "mortgages" in the typical sense. They are usually "in-house loans" or "business loans" collateralized by the property.

The drawback is the terms are usually worse than traditional mortgages in your name. They are usually amortized over ~20 years with a 5-7 year balloon and 1-2% higher interest rate than "mortgages" in your name.

That contradicts what it says in the Fannie Mae guidelines linked earlier (I simplified the wording slightly):

Ownership of property that is held in the name of a LLC where the borrower has ownership in the LLC of 25% or more, regardless of the name on the mortgage. Counts towards your limit
Ownership of a property that is held in the name of an LLC where the borrower has ownership in the LLC of less than 25% and the financing is in the name of the borrower. Counts towards your limit
Ownership of a property that is held in the name of an LLC where the borrower has ownership in the LLC of less than 25% and the financing is in the name of the LLC. Does not count towards your limit

So the only way properties in an LLC don't count towards your limit is if you own less than a 25% share of the LLC, and then only if the property(s) are in the LLC's name.

However, it says that properties/loans held in the name of a corporation or S corporation don't count towards your limit, so that seems promising. Is either of those a decent substitute for an LLC? I don't know much about them and would love any thoughts on that.

1 Vote

Originally posted by @Upen Patel:

Originally posted by @Chris Mason:

Mah fellow lenders, lend me your eyes.

@Jonathan J. Miller @Upen Patel

https://www.fanniemae.com/content/guide/selling/b2...

> If the mortgage is secured by a second home or an investment property, the borrower may own or be obligated on up to ten financed properties.

> These limitations apply to the total number of properties financed, not to the number of mortgages on the property.

Hey! Chris,

I think we are saying the same thing.

* An individual can have up to 10 mortgages, if the mortgage is for 2nd home or investment. I.e. This limitation does not apply for primary residence. You can have 20 loans, but if the new loan is for a primary residence then it does not matter.

* Since there can be only 1 Fannie/Freddie/FHA/VA/USDA loan per property, "limitations apply to the total number of properties financed" is stating the same thing.

The link (thanks Chris!) seems to state that a blanket loan wouldn't work, because Fannie Mae counts the total number of properties you have financed, not the number of loans themselves (and it doesn't matter if the loans are sold to Fannie Mae or not):

These limitations apply to the total number of properties financed, not to the number of mortgages on the property or the number of mortgages sold to Fannie Mae.

Do you guys interpret this the same way?

1 Vote

Originally posted by @David Dachtera:

@Jeff L.,

That sounds like a wise move: get your properties into a business entity structure and out of your personal name. The greater your net worth the more likely someone will try to take it from you through a frivolous lawsuit.

Once your business entity structure is established by that, use it to acquire properties in a business rather than buying them yourself.

To avoid being the target of a lawsuit the rule is: control everything, own nothing.

@Therese V.,

The "work-around" is to move your properties into a business entity structure and out of your personal name(s). Even if you hit some limit and the business can't buy anymore, start a new business and "fill that up", ... lather, rinse, repeat.

Financing is not primarily controlled by ownership. It goes by the debtor, not the owner (they're not always the same!).

That said, bounce the rest of your question off an attorney. If both your names are on the paperwork, you're likely to be considered a single entity and, therefore, subject to the lower limit.

David J Dachtera

"Success is not a destination. Failure is not an event. Success is a process, failure is a choice."
- DJ Benedict

Hi David, thanks for the reply. Do you know for a fact that if a property is under the name of a business entity, that it doesn't count towards your conventional mortgage limit? Or is that your guess?

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I can't seem to find a definitive answer to this.

Some people say that the limit is 10 properties (not loans), so even if all 10 properties were under 1 loan, you would be at the limit. Is this the case?

Also, does it make a difference if the properties are under an LLC?

My lender thinks that if I roll my first 10 properties (current separate loans) into a single blanket loan, under an LLC, that I can effectively start over at 0 properties. Is this true or false?

1 Vote

All Forum Posts by: Jeff L.

Jeff L. has started 51 posts and replied 108 times.

Post: Do I need to hire an attorney to create an LLC?

Post: Do I need to hire an attorney to create an LLC?

Post: Do I need to hire an attorney to create an LLC?

Post: Do I need to hire an attorney to create an LLC?

Post: Stuck at 10 Loan Limit! Seeking lender/financing to move past it!

Post: Stuck at 10 Loan Limit! Seeking lender/financing to move past it!

Post: The 10 mortgage limit: is it 10 LOANS or 10 PROPERTIES?

Post: The 10 mortgage limit: is it 10 LOANS or 10 PROPERTIES?

Post: The 10 mortgage limit: is it 10 LOANS or 10 PROPERTIES?

Post: The 10 mortgage limit: is it 10 LOANS or 10 PROPERTIES?