All Forum Posts by: Jordan Bowley

if you have a large group of investors then you should make sure that you are in compliance with SEC regulations. That gets very expensive. You can't just find a deal, shop it around to the investors and have them put money into an LLC. That violates SEC regulations and can get you in a world of hurt

Ann,

Thank your for looking out! We are an Investment Club and are complying with all SEC and IRS regulations, before I got started with anything I did extensive research to ensure we never missed a legal step as we progressed our group portfolio.

1 Vote

@Ann Bellamy

No sugar coating needed here!

I appreciate the perspective from the other side.

To be honest I want it all very separate because I have such a large group of investing members and I would like to say “it’s all separate” without having the disclaimer of saying I’m personally guaranteeing anything. But what you’re saying makes perfect sense too!

Of course the legal action is a concern of mine, but one I continue to be fine with as I will continue placing assets in LLCs and have very little personal equity to sue against. Again, thank you for the advice :)

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@Ann Bellamy

So then what's the point of having an LLC if piercing the corporate veil is so easy if/when there's a mortgage lien against the property?

Do you know of an approach to starting all of this off that will avoid the need for a personal guarantee? I am really trying my best to keep things totally separate! Thanks for the responses btw!

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@Ann Bellamy

So you’re basically saying if I want to avoid a personal guarantee I’ll have to take another loan against my first property to provide a substantial enough DP on a new one? I’m willing to do it, just not what I want to do haha.

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@Curt Neider

Since we own the first property outright, I’m trying to not have two mortgages when I could live with just the one. This will also provide us the ability to save enough for our next investments DP, avoiding the need to continue doing Cross-C type transactions. Of course if I can’t find favorable terms then I’ll basically do what you’re saying, but it’s my backup plan

1 Vote

@Mack Meyer

Looking forward to it, thanks!

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@Matt Dinofia

The plan is to just use it this one time in order to save all the reserve capital for remodels/rehabs and then instantly start saving for the next purchase.

Like you said, I definitely don’t want to build a house of cards!

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@Nick Barlow

Thanks for the insight nick! I’m hoping to only use this one time... but if it goes well or build a relationship with the lender then I might use it again.

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@Curt Neider that’s a great mindset point. Thank you, but as far as LLCs go I have a lot of Members to consider since it’s not just myself involved.

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Originally posted by @Jill F.:

@Jordan Bowley Our lender is a portfolio lender I don't think you could do that with a regular non-commercial lender-- We use a regional bank, Wayne Savings. The down sides I can see for these types of deals are exit strategy, all of our properties are tied up together and we have less flexibility to get out a particular property, and having all our assets tied to a single lender means that if one deal goes south every thing tied to it can go south as well. In addition, we are personally guaranteed. It is a risk and it is not an insignificant risk. Where we are in our business, If we want to grow now rather than later, and we do, it is for us the best risk alternative; other types of risk, (partners, hard-money (no personal guarantees but higher interest, or more depleted personal cash reserves), are all less attractive to us . Everyday people take risks that would terrify me: doing things like flipping with hard money, or funding deals using "other people's money." That doesn't mean they're wrong-- They are just willing to tolerate different risks than me. Everyone has to figure out what type and level of risk they can live with.

Also, everyone I talked to wanted a personal guarantee for LLC real estate purchases (except some hard money places with really high rates). Did you find a reputable lender doing LLC loans at reasonable rates without a personal guarantee? what type of assets and history did they require?

Jill,

If you don't mind me asking, how much equity was in the Cross-C? Or was the personal guaranty just a blanket requirement?

I have yet to speak with a lender just yet, I have started compiling a list to reach out to... I am a few months out before this decision is going to be made so I am just trying to get others opinions or experiences to better prepare myself.

0 Votes

All Forum Posts by: Jordan Bowley

Jordan Bowley has started 3 posts and replied 25 times.

Post: Unique Approach to Mortgage Loans (cross-collateralization)

Post: Unique Approach to Mortgage Loans (cross-collateralization)

Post: Unique Approach to Mortgage Loans (cross-collateralization)

Post: Unique Approach to Mortgage Loans (cross-collateralization)

Post: Unique Approach to Mortgage Loans (cross-collateralization)

Post: Unique Approach to Mortgage Loans (cross-collateralization)

Post: Unique Approach to Mortgage Loans (cross-collateralization)

Post: Unique Approach to Mortgage Loans (cross-collateralization)

Post: Unique Approach to Mortgage Loans (cross-collateralization)

Post: Unique Approach to Mortgage Loans (cross-collateralization)