All Forum Posts by: Jeff Wills

Yes, I would defer to a tax attorney for best practices in your state, but yes I have my holding company, then a new LLC for each deal/investor. This way, you insulate yourself from any singular bad deal taking down your entire empire you are building.

If you find a broker who is also a direct lender (Gershman Mortgage, as an example) then they will be able to do that for you. They have access to over 33+ lenders, and can do NON-QM loans internally allowing you flexibilty. With the right lending partner, you can forgo this route entirely. A soft pull is likley required here, but at least it will not be multiple soft pulls. 

Agree that you should use the Real estate to help payoff your debt, this is the cleanest easiest way to do so. Owning for 2 years should have allowed decent appreciation in addition to the cash flow. 

Find a credit union or solid broker in your market to help you, that is your best bet. 

Be cautious here as others have said, but you should set your own lending guidlines, and let it follow as such. 

If this was presented to me, I would only offer my terms, not accept hers. Title has to be clear, my attorney will draft docs, held in an LLC, then 12% annual and 6% origination on whatever amount she needs.

Should they decline, that's on them, but will weed out any scams and ensure your capital is secure and you are not breaking any usury or other laws. 

Another option you may have not yet considered would be a blanket insurance policy, this could save you substantial operating costs, which would boost your funds available on a refi due to lower operating costs. 

Depending on your portfolio size, Mortgage Automater is a great tool but may be too pricey to make sense for you yet. 

Refi's in my humble opinion should only be utilized when the market rate makes sense to make another purchase or improve the property, and that expected return is about 25% above that rate. Otherwise, the renewed PITI may hurt you more than help in the long run.

Rate Opt, find a good lender that acts more as a fiduciary/partner than a lender. This way, they will look out for you and actually show you how to get the best rates. Most lenders wont tell you, but you can actually buy down any rate to the lowest possible, but the cost is the biggest crux. Most time the pricing will be put you over the golden ratio of 36 months to recoup the savings on the lower rate. If you can buy down the rate, and recoup within 36months, it should make sense in the long run. 

Keep in mind we should see rate cuts this year, so patience on that front will likley be your friend. 

All the people that I have tracked that survive all markets are the ones you do not lever more than 70% LTV on any asset they have. This hurts growth yes, but ensures you are around in the downturns, which should allow you opportunities to pick up on others higher levered mistakes as well.

I would say that you certainly need an attorney who specializes in lending law in your state to draft you lending docs. You should always be first position, and only lend on the borrowers LLC to avoid homestead/owner occupied foreclosure proceedings which are always less favorable to you.

Personally I do not go over 70% LTV AS IS, but terms are at your discression and comfort level.

Right now, I charge 12% interest to borrowers, and return 9% to my investors Annually. I then charge a 6% origination fee to the borrower, but no other fees apply. 

I think you just set up on LLC/Company, and then all loans should be "originated" from there. If you plan to coinvest, or invest personal funds as well, use a seperate LLC so that you become a client of your parent company, further insulating your liability.

If you have any questions please do not hesistate to reach out, sounds like you have a great foundation already. 

Where is the property located? We can lend on this property given the AS IS Value, or use other properties as collateral, we just require to be first position and has to be held in an LLC. No red tape with me either, all asset based, no credit checks etc.

Avoid 2nd position like the plague, and consider saving up until you have roughly the median sales price of homes in your area. This will give you wiggle room when you find your first client. Never go over 70% LTV on exisiting, ignore ARV values. Only lend on what you can see today, everything else is speculation and where you stand to lose the most money. Ensure you have a great Attorney who specializes in lending law to draft docs for you and your clients.

Lots of great info in this thread already, so I will only add to what has not been shared. 

Ensure you have a great title and attorney team for the docs, as those can make or break both the lender and borrower, and ensuring both sides have equal footing is crucial. 

I would say to get started, you need to have roughly the amount of your Average median home price in your area, but should only ever loan to 70% LTV. This will ensure you avoid all but the absolute worst downturn in an area. If the market drops 30% overall, we have much bigger problems most likley. I have been learning from the group in my office for over 10 years now, and they have been in business for 12+.

Take your time, start small, and be diligent in picking the right first few deals. Once you have a proven system, raising capital should be fairly easy to get others on board. Only do Asset based lending with ownership in an LLC, this will help you avoid any homestead laws that will drag out a potential foreclosure. When you foreclose on an LLC, the courts and system have far less sympathy than a owner occupied.

My funding partner has amassed over $100M in AUM currently and growing, with an average LTV around 55% and with over 800 loans fewer than 10 have defaulted to my knowledge, and even then the investor made out handsomely due to low LTV and default interest rates. YTD they have paid out over $2M to their investors while closing about $20M in loans.

Being reliable is the biggest asset you can have, never accept a deal unless you are sure you can fund it. Over time, you will have people beating down your door.