All Forum Posts by: Jeremy D. Flood

Hi Karen! If you went to Quicken within one year of purchasing they have to follow delayed financing guidelines for a refinance - that COULD be the reason they denied it. 

You should have no trouble now, but I would recommend finding a smaller, local lender/broker if possible. A cash out refi will generally have a lower rate than a HELOC and HELOC's may only be available for a primary residence.

As for the LLC, have your attorney right up a quick LOX explaining that you can sign any and all documents for the loan on behalf of your LLC and you should be good to go!

Good luck!

Quote from @Conner Olsen:

Quote from @Andrea Galvez:

Hello Everyone, I'm interested in a building with 6 units in Indiana, but I dont have enough money for a 20% down on a conventional. Does the 5% down applies on buildings with more than 4 units as well? 

And a second question, How much interest should I pay to the people lending me some money? I was going to give them a 10% APY for keeping the money with me for 3 years, is that good? too low? too high? 

 Once you go to 5 units, the property is technically considered commercial property to banks so you'd need to get a commercial loan. Those loans typically require 20-25%. When considering returns to give investors, think about what kind of return they can get elsewhere. What would be the return if they put it in the stock market, bonds, syndications, real estate notes, etc.

 @Conner Olsen is correct. 6 units needs commercial financing and generally requires a minimum of 20% down. There may be some products available through a brokerage that requires less, but you may need to do a little digging. 

As for interest you'd pay on the loan, you would just need to speak with your lender and see what your options are. 

Quote from @Ned Carey:

@Deepak Walia let me repeat in a different way. A new LLC does not need "Business Credit" to purchase property. If it is a small LLC owned by 1 or two people then the lender will look at your personal credit and the deal, not the business credit. For real estate loans you may never get to the point that you do not need to personally sign for a property loan owned in an LLC.

 Good insight!

Quote from @Justin Beasley:

East TN in general is a good investment area. Knox County, Jefferson, and Blount County are all strong long term rental markets. There is major demand for affordable housing, a low barrier of entry compared to other metro markets, and the property taxes are low. Don't love the long term market in East TN? Go buy a STR in the Smokies. There is something for just about every investor in our area.

I agree. The Nashville area has become a hot market and many buyers are having more success in the surrounding counties. Plus, you're closer to The Smokey Mts/Gatlinburg/Pigeon Forge which have been a relatively unknown destination for vacation until recent years. Now is the time to buy in East Tennessee.  

I think there will be a natural correction to the high speed increase in value that we've seen. It's all cyclical - what goes up, must come down. 

A DSCR might be an option worth exploring. Here's some general specs if you're interested. I'd also say find a lender in your area who offers various products, so ideally you'll find the right solution for you.

Debt Service Coverage Ratio (DSCR):)

-For investment properties

-Not qualified based on income 

-For 1-4 units

-Big word for the rent coming in monthly needs to be at least one dollar more than the overall housing expense. Example: 3-unit building, each unit gets $2,000 a month so overall rent coming in is $6,000 per month. If the housing expense (principal, interest, taxes, and homeowner’s insurance) is $5,999 or lower, borrower qualifies.

-Usually 20% down, but sometimes there are exceptions with less

Quote from @Ashley Roush:

A tenant that has lived in one of my units for a year now and works from home (and has just renewed their lease for another year) is complaining about a dog barking, who is owned by a tenant that just moved in two days ago. The new tenant has just relocated here from out of state, and I am wondering how other landlords handle these complaints. It's not a huge issue yet, but I'm concerned this could become an ongoing issue. 

Hi!

I had a similar situation with a tenant that had a barking dog. The dog would bark when he was at work, so he did not even know it was an issue until I called him to let him know there was a noise complaint. He started leaving the television on while he was gone and it worked! No more barking. He was also grateful for the call. Hope this helps! Good luck! 

To piggy back on what @Larry Turowski and @Greg Scott mentioned, if you can use equity from a current property, a HELOC is often a fantastic option! Otherwise, many of my clients are choosing the conventional route with Fannie or Freddie, which is still a great choice when you opt for the right financing for your current/future financial plans.

Robin Simon is correct. There are stipulations regarding both. If you plan to use it as a second home you must reside there for a portion of the year (varies depending on Fannie, Freddie, FHA, etc) and it must be available (i.e. not rented out) for more than half of the calendar year.

Your decision should be based on your current financial situation, future financial goals and residency plans for the property. 

I'd say throw a nominal pet fee on there and say yes to the cat!