All Forum Posts by: Jeffrey Klawitter

I just looked and it does not appear in the loan details but if you know what that expense is every month you could add it in Other expenses to account for it in your calculation.

Originally posted by @Scott K.:

Originally posted by @Jeffrey Klawitter:

Was speaking with my attorney last night and he had indicated there was some case law around the due on sale clause and how you do not trigger it when placing rental properties in a LLC.

Below is the exact language I found with regard to that.

Hope this help elevate some fear we may have around that clause.

Fannie Mae published new guidelines for lenders on November 8, 2017 that allow transfers to LLCs! Here is the exact language:

This means that as long as the loan was obtained on or after June 1, 2016 and the LLC you transfer it to is controlled by you, the borrower, then the lender must allow the transfer to occur without triggering the due on sale clause.

 Gotcha, so you're saying that its very easy to transfer a personal asset into an llc asset in terms of the lender being forced to approve it, but I believe this would still trigger transfer taxes correct? As well as refinance charges?

 Transfer taxes are location based and I would not paint with that broad of a brush.  I know in my area that would not be the case. 

You would only incur refinance charges if you where to refinance the original loan. But you would have that regardless if you where or where not putting it in an LLC. Placing it in a LLC would be done after you have closed any loans on the property in question.

Was speaking with my attorney last night and he had indicated there was some case law around the due on sale clause and how you do not trigger it when placing rental properties in a LLC.

Below is the exact language I found with regard to that.

Hope this help elevate some fear we may have around that clause.

Fannie Mae published new guidelines for lenders on November 8, 2017 that allow transfers to LLCs! Here is the exact language:

This means that as long as the loan was obtained on or after June 1, 2016 and the LLC you transfer it to is controlled by you, the borrower, then the lender must allow the transfer to occur without triggering the due on sale clause.

@Simmy Ahluwalia,

To answer your question yes I did I have a file that has all required info in it an soon as they ask I upload the file.  They only thing I typically have to update is current pay stubs.

I seems to be an easy process once you know specifically what they want or are going to be requesting.

Only thing driving me nuts now is the amount of time it is taking to get to closing typically 45 days.

I prefer 30 or less but with everyone refinancing now they are over whelmed with work and as he puts it they are all drinking from a fire hose.

Just did 3 Loans and working on 4th know. First 3 where cash out refi's 3.5% to 3.6% with 75% LTV  Rates can be different by location as my property in AZ had a lower rate then my properties in IL
The forth I am working on now is for a purchase 75% LTV 3.5%

Basically my finance guy told me you get the best rate with 25% down  There is no benefit with any additional down and rate doesn't change by higher credit score once you are over 740.  Rates change as you reduce the amount of down payment and bank assumes more risk on the loan 20% down you need to add ~.5% to the rate so he was saying 4 to 4.125  at 10% down the rate was right at 5% as I recall. 

Since I am a buy and hold investor I prefer the lower rate for the long term.  If I was a short term investor I would put as little down as possible and price the increase rate into my short term holding cost.  Just my 2 cents on the subject.  Hope that helps someone.

If you have any question please feel free to reach out to me would love to connect with other investors and help anyway I can.

Just a thought on the converting a primary residence to a Rental and then to a LLC.  This is a great way to start the Rental property journey but there are some advantages and disadvantages as well.
It's my understanding if you sell the house sometime over the next 5 years if it was still in your name and you can show you lived in it as your primary residence for 2 of those 5 years you would not pay Capital Gains Tax on the appreciation of the house. But once you convert it to the LLC you instantly loss that potential benefit.

Everything will depend on your long term plan for the property.  Consult your attorney or CPA for clarification on this.

Good Luck on what ever you decide.

Opinions on market conditions will always be a hotly debated topic.  When will it go up and when will it go down, no one will ever know the exact bottom or top. I have spent a lot of time watch and investing in all different types of markets going back in to the 80's   I remember double digit interest rates.  I remember if you got a 10% rate you where thanking your lucky stars. And it was ease to calculate $8.78 per thousand borrowed would give your payment. LOL  40 yrs later and I still remember.  In all this time the one true constant is change.  As investors we need to learn to adapt to the market.  We can not control it.   Back in the 80's house where still selling when interest rates where at 18%  the only difference was you had to be more creative in how you structured those deals.  Smart investors realize this.  There are no rules of thumb that can be universally used on all deal.  Be smart understand your risk tolerance, structure your deals so they make sense to you.  Don't be overly optimistic with your projections and put deals together that make sense.

If the market goes up or down smart investors position themselves to make money either way.

Sitting on the sidelines waiting is never the answer. If your not in the game you can't win.  But for some on here they will say you can't lose either.  What you lose is time for the appreciation to kick in.  And time is one thing you never will have enough of.   Be flexible, stay liquid, don't over leverage and everything will be fine. This is a marathon not a sprint. 

To all of my fellow investors stay safe and healthy I wish you and your families all the best.