All Forum Posts by: Joe Salimao

If you can find a broker who will offer me residential terms on a commercial loan then I would be thrilled.

Residential rates are around 4.75% fixed for 30 yrs. The cheapest rate I found for commercial loans was 5.75% fixed for 15yrs or 6.75% fixed with a balloon payment after 15yrs.

These are really good terms for a commercial loan. Most I have talked to offered around 7% with points with and adjustable rate. Also not to mention the fact that you need to put down more money.

I would much rather go with a broker who will place the deed in my LLC but give me a residential mortgage.

I am under the impression that this is a legit way to do it. I still think you have the seperation that the LLC provides to you. Now you are breaking that seperation of you and the property a little bit but I think this is the way most investors do it. The only way to know would be to have an attorney comment on past cases and whether or not it holds up in court. All of this stuff is just theory so there is really no telling for sure what will happen but hoepfully you will never have to find out.

The thing I don't think anybody can really answer is what protection the LLC gives you over an umbrella policy which you probably should have anyway.
Any attorneys out there that can answer this? I know there is a supposed extra layer of protection but if I have a 2 million dollar insurance policy is that good enough?

I have had a few people say this to me. It isn't hard or more expensive to obtain financing when you have an LLC. I think you are under the impression that if you have an LLC you have to get financing through it. Yes, if you are going to obtain financing in the name of the LLC this is going to be difficult and more expensive. What most people do is hold the deed in the name of the LLC but finance it in their own name.

Hi guys,
I know it has been asked in many different ways before but I am looking for a more specific answer. My question is: Why have an LLC when you can just get an umbrella policy for 'x' million dollars on your properties. What will the LLC do for you that the insurance policy won't?
Let me just say I have an LLC and I think they are the way to go. My attorney, accountant and bascially every investor I have talked to said they are the way to go but I recently had a group of investors say that an insurance policy is good enough and the LLC isn't worth the hassle.
After thinking about it I am not so sure there is an advantage over the umbrella policy. What are your thoughts?
Joe Salimao

Anybody else have any ideas on this?

Doug,
I am in the same boat as you. Take a look at my business plan and see if it makes sense to you. Let me know how you make out with everything.

http://www.biggerpockets.com/forums/109/topics/31096-my-business-plan

David,
I see where you are coming from now. I too think it is very risky to purchase properties and refi all the equity out. I think it is dumb because when you go to refi and the bank gives you an appraisal it is a guess...maybe a little better than a guess. But the true number is what someone is willing to pay for that property. So if you need to sell immediately and you don't have that buyer who’s willing to pay appraisal value than you take a loss.
With that said this isn't my plan. I think it is possible to build a portfolio when starting out. You don't have to pull all your cash out...actually can you even do above 70% LTV refi in this market anyway? I plan to buy low like everyone else, fix it up, rent it out and refi to 70 or 75% LTV...as long as 75% cash flows. I plan to keep doing this until I have acquired enough rentals to give me some nice income.
I am not experienced but I don't think that there is much difference in doing it this way than say flipping. I am looking for the same discount except I am just looking to hold the profit, which I would make from selling, as equity.
Dave if you are interested and have a second you can take a look at a brief summary of my business plan.
http://www.biggerpockets.com/forums/109/topics/31096-my-business-plan
Joe Salimao