All Forum Posts by: John M.

Thanks for the replies. Maybe I'm just a little dense, so please bear with me. I see now that transfering the property shouldn't compromise the lenders lein on the property -- it would be like buying/selling subject to the existing financing. So how should I communicate or talk to the lender about it? Should I just do it and not tell the lender anything? Don't I need to change the mortgage into the the LLC's name and address to establish "separateness" and liability protection. If my name is on the mortgage and I'm making the payments and receiving the statements, etc. it seems that would seriously compromise my liability protection and defeat the whold purpose of transfering the deeds. It seems to me that I need to get the lender to allow an assumption by the llc, right?

JMac

Jon,
If I do that won't the bank loose their security interest in the property? I'll still be on the note and responsible for the debt, but they would loose the ability to foreclose if I were to default. I've heard the same advice also, but IF the lender was to call the note due, I would be faced with the very difficult situation of having to pay off the properties or attempt to re-finance under much less desirable terms than I currently have. In short, I can't just cross my fingers and HOPE they won't call the notes due without some addional assurances because if they did, the consequences could be devastating.

I've heard people say that the bank would be foolish to call in a performing loan, but I also think that in todays climate they are more concerned with maintaining solvency than maximizing profit.

JMac

Thanks Chris, that's the same conclusion that I came too, but I was hoping that someone might know some way to get the info on the 1st. The homeowner has vanished as evidenced by the foreclosing attny attempting service at about 8 address scattered around the country, so contacting them is not an option. I'll have to let this one slide on by even though it looks like it could be a good deal.

JMac

I'd like to move some rental properties that are currently held in my name into my LLC for liability protection. These props. have mortgages which, of course, have "due on transfer" clauses.

I'm guessing that the only way to move them to the LLC would be to refianace them, but am hoping somebody might have some other ideas. It would be nice if the lender (Wells-Fargo) would allow an assumption by the LLC, but I don't think that's likely since they would lose the ability to go after my personal assets if I defaulted. In my opinion, that doesn't seem like much of an issue since the loans are all at less than 80% LTV. If they allowed the assumption, they would benefit by keeping good performing loans versus loosing them if I have to refinance. I think maybe with current events, they would just as soon have the cash from a payoff.

Anybody have any ideas? Thanks.

JMac

I'm looking at buying a property at the upcoming auction. The 2nd is foreclosing and the sale is subject to the 1st mortgage. Is there any way to determine what the payoff is on the first mortgage?? I know what the original loan amount is, but don't know how much it may have been paid down or what back interest may be due (certainly it must be in default also). I haven't tried, but I feel certain the company won't discuss sombody eles's loan with me.

Any suggestions?

JMac

Tim, talking about race horses, a fellow named W. Cothran "Cot" Campbell pioneered the idea of selling shares in race horses back in 1969. Wouldn't happen to be the same guy, would it?

JMac

While on this topic, should I have a separate PO BOX for my LLC? The LLC doesn't really receive enough mail to justify the expense, but I don't want to compromise my liability protection by having company mail sent to my personal PO Box. What about having mail sent to the LLC care of: my name and address?

Also, if I transfer a property that I already own and have a mortgage on into the LLC, what is to prevent the lender from calling the loan due? I realize that they are unlikely to do that, but I'd like something a little more concrete.

JMac

Maat55,

Using the typical rules of thumb, and some assumptions about the loan:

80% LTV, 30 year fixed on Non-owner occupied...say 7% would cost $320/mo.

Expenses, including insurance, taxes, maintenance, repairs, etc. should run 45-50% of fair market rent over the long term, which equals $326.5 (using 725 rent and low end of expenses since property has just been rehabbed)

So...
725 monthly rent, minus
320 mort. payment, minus
327 expenses, equals
78 positive monthly cash flow

Or, looked at another way: Zero cash invested to yield $78/mo., plus equity paydown, plus the possibilty of appreciation...seems like a good return to me, especially if you can repeat many times.

JMac

Wow Annie, what a nightmare! Good luck with the litgation. I have to ask, though: it seems the electronic payment's were key to the issue; why not just mail the payments in?

JMac

It won't save you the time of showing the place, but I charge a non-refundable application fee that covers most of my cost of running the credit check. While showing the unit/interviewing, I explain what my general income and credit requirements are and that the next step, if they are seriously interested, is to fill out an application and submit the fee. I don't think any serious tenants are going to walk because of a fee like this. Anyone who does walk has probably realized that you are thorough and are going to find the skeletons in their closet.

I use National Association of Independent Landlords to run my credit checks. It's fairly easy and costs $15 (plus the annual membership fee). Does anybody know a better / cheaper of running credit?

JMac