All Forum Posts by: Kelvin Urena

If I may, why Jersey? I am from NY so I understand that side of the coast better than most, yet I just wanted to get a better insight into what your goals were for the future. 

Fantastic! It's great to see other investors doing amazing with STRs. If you wanted to connect, I'd be more than happy to provide some insight that I have learned from the STR portfolio I managed to create in Austin, TX!

As always, I would suggest speaking with legal counsel to better assess the practicality of doing so, yet my suggestion would be to consider keeping the Ownership Interest the SAME as seen on the paperwork when you purchased the property (ie. 100% Ownership Interest in [Enter LLC Name here]) to avoid being flagged for suspicious activity and provoking the enforceability of the Due on Sale Clause.

There is a common clause in most contracts that lenders provide, known as the Due on Sale Clause. In case you - or any newer investors - are unaware of what the clause actually is, it generally allows for a Lender to demand the loan to be paid in full after the "liquidation" of the property. Since, in most instances, transferring property from an investor's name to an LLC is considered a "sale" in the lender's eyes (especially if the LLC has different ownership than what it was when it was in your name!), that is a risk you would be taken if you were to put the property into an LLC.

I will say, however, that such a practice is becoming more common as time progresses and the need for Litigation Protection against Landlords/Investors becomes more important, so most lenders are adjusting the language in their Contracts to reflect this. As with any advice, you'd be wise to discuss this with legal counsel. 

Connect if you want to speak more!

Would it be possible to have a glance at the notes as well? I'm curious as to how they responded, albeit I have a general idea. Nevertheless, great advice especially regarding the insurance. Even with STR, insurance goes a long way when it comes to covering discrepancies that LLCs or other legal entities won't.

I am glad you're open-minded in regard to learning more about the industry. As a Marine and Investor in Austin, myself, I can say you have my respect for wanting to dip your feet in the water. There's a variety of places we can obtain information from, and - similar to what @Scott Johnson mentioned - I would say that the forums, BP Books, the BP Podcast, & Networking with other investors locally is a FANTASTIC way to learn more about the niche you're interested in overseeing. 

The biggest teacher is Experience. Jumping into it - backed by numbers and logic, of course - is a great way to not only build a track record, but also provide insight to others about what you've learned throughout your time investing, too! 

I'd LOVE to give you tips and advice on how you can get started with carving out your path to being a successful buy-and-hold investor. Reach out to me if you want to talk.

One piece of advice I would have would be to consider utilizing HELOCs against the property's value. It would - as suggested below - give lenders some insight into your "skin in the game",  but also gives you leverage. However, we can also play with this in a creative way. Many are concerned about downpayments (as you mentioned), yet why not get your preapproval and ask the seller if he/she is comfortable with Seller Financing the Downpayment? If the deal makes sense, you could even offer slightly more on the backend because you'd be paying them directly for the downpayment 

Example: If you're looking at a $250,000 SFR, and the Downpayment is $12,500 (5%, for the sake of simplicity), you could ask the seller if they're willing to agree to Seller Financing if you raise it by $2,500 (to $15,000). 

While the obvious caveat to this is a slightly higher purchase price (if you choose to do so), there are a variety of benefits to this strategy as well, such as:

- The idea of getting a Lump Sum Payday (from the bank) AND a steady stream of Passive Income from you as an investor for the downpayment is incentivizing to most. 

- If the seller is desperate to close (due to health issues, family problems, liens, etc.), they may agree to Seller Finance the small amount in order to ensure the deal makes it to the closing table. 

- You're minimizing how much is coming out of pocket when closing arrives. 

Worst case scenario, you can also offer to pay half of their closing costs in order to incentivize them to accept your offer, as well. In conclusion, there is NO LIMIT to how creative one can become with financing deals. 

@Scott Johnson said it best. It would be easier to assist if we knew what your goals were. Are you looking at a certain property (ie. Single Family? Multi-family? Square Footage?). How about the strategy you plan on overtaking (ie. BRRRR? Long-Term Rentals? STRs?). 

There are a variety of things you can do to learn more about the industry. What's awesome about Real Estate is the vast amount of strategies and niches one can oversee when starting. My suggestion would be to really read up on the fundamentals (ie. BiggerPockets Podcast, their Books, Networking on Forums/Meetup groups, etc.). It really depends on your level of dedication and how open-minded you are to learning. You're already on the right path by coming to the forums. 

If you wanted to learn more about how I got started, reach out to me and I can share some more in-depth insight into how I got started and how we raised $20,000 in just the First Quarter of going into business. 

The biggest suggestion I could make alongside @Sarah Kensinger & @Michael Baum 

would be to TRIPLE CHECK the regulations within that area for STRs. I know that Austin - for example - had recently changed the regulations requiring everyone in the city to obtain a relatively expensive STR license for anyone hosting guests for less than 30 days. If that proves to be an arduous process in the long run, consider what Sarah mentioned regarding Mid to even Long Term Rentals, If possible.