All Forum Posts by: Lucas Bonasio

Originally posted by @Brie Schmidt:

@Lucas Bonasio - we were able to "skip" the 2 year rule. We bought the property in Aug - put it on that year's taxes and were fine the next October for a loan with 25% down and 1 year reserves vs the normal 6 months.

Thank you very much for the insight! Just to see if I understand: you were able to secure a cash out refi where you got 75% of the value of your rental property as cash to reinvest, correct?

I have 3 of my properties ranted since June 2013, and they do show up on my taxes for 2013. So hopefully I should be able to do the same thing as you did as long as I have enough cash in my account to cover 1 year of mortgage payments, right?

Also, I know you are based in IL, and my properties are in TX, but do you mind sharing who you got the Cash out Refi with?

Thank you!

@David J. Thank you!

Could you please tell me in what ways the commercial loan is more attractive than the cash out refi? Is it:

*Easier to get?

*Has better interest rates?

All my 5 real estate properties are under my name, not my LLC, so in order to apply for the commercial loan, it would involve the cost of transferring all these 5 titles.

Thank you!

Lucas

Thank you David Jackson , *********** and Mehran Kamari I do own an LLC in the state of Texas. But all my properties are under my name. This is because I created the LLC after I had purchased the properties and, since it's a sole proprietorship, I decides not to spend the money in transferring the titles to the LLC, since that would bring to tax benefits to me. In this case, since the properties are under my name, it should be able to get a Fannie right? Nevertheless, do you think that a commercial loan would be a much better option as to justify the investment in transferring the titles to my LLC and then apply for the loan? If so, why? Thank you very much!

Thank you for the sugestions @Sharon Tzib .

I think the main reason why I chose all cash was that I was to scared of debt in general (not really decerning between good and bad debt - something that I do now...and BP definitely helped)

My goal is now to increase my cashflow by increasing my portfolio, as I feel more confident a knowledgeble about leverage (though still a rookie here...)

Waiting to save the amount necessary from my profit to make a down payment on my next property, definitely feels like a solid move. Unfortunately, time is of the essense for me - since I don;t want to miss the May to July "move-in period", and get stuck with a mortgage and a vacant home. So the cash out refi or the HELOC would be my only options here.

Thank you!

Lucas

That's fantastic @Brianna S. Thank you very much for the insight! Just to see if I understand: you were able to secure a cash out refi where you got 75% of the value of your rental property as cash to reinvest, correct?

I have 3 of my properties ranted since June 2013, and they do show up on my taxes for 2013. So hopefully I should be able to do the same thing as you did as long as I have enough cash in my account to cover 1 year of mortgage payments, right?

Also, I know you are based in IL, and my properties are in TX, but do you mind sharing who you got the Cash out Refi with?

Thank you!

Thanks for the tips Mehran Kamari . Unfortunately I think I fall on that category you described as "not eligible" to use the rental income to pay for the mortgage, since I've only owned the properties for less then a year. In that case I would have to wait until I have been renting them for 2+ years, right? Is there any way out of that problem? I now you suggested going to smaller lenders, but I was really interested in the 30 year fixed rate... Any other suggestions? Have you ever considered a LOC as suggest above? Thank you!

Thank you for the info *********** . I'll definitely try to go for the cash out in on of those properties (to get the ball rolling). Correct me if I'm wrong: I could get up to 70% of the value that the property is appraised for. Let's say that equals to $75K. That means I could use that money to acquired 3 other properties of similar value with a 20% (or $25k) down payment, right? And in that case I would be paying 4 mortgages at the same time: the original house I refinanced + the 3 new ones. And if I do it right, this should have a positive impact on my cash flow (even if it's a modest one), correct? That is one impressive story you got... $20K to 700+ units... Wow! Congratulations! I wish I could get there one day... :)

thank you @David Jackson . I could have probably increased that ROI by using that $550K equity in 20+ down payments of $20K each on similar properties.

Nevertheless, I do intend to increase that ROI by using that equity as down payment for new properties. In this case do you agree that a cash out refinance would be the best option? What other option would I have to use leverage? How about a home equity loan?

Thank you!

I have purchased cash 5 sigle-family rental properties in Texas (I live/work in New York).

The investment for all 5 properties together was of roughly $550,000. All properties are now rented, generating PROFIT of $3500 a month.

My goal is now to expand my portfolio of properties in the area, using the equity of these 5 propeties + OPM to purchase 10 (or maybe 15 other properties).

Any suggestion on how I should go get the money to buy all these other properties? I was thinking about giving a 20% down on each of them, but I don't know how to get the money (or the best place to get it from)

What type of mortgage and how to get it approved?

Thank you!

Lucas

Thank you all for the insight!

Sounds like better insurance would have a "similar" protection effect as opening multiple LLCs, while still saving a considerable amount of money.

On a side note, I was researching about the "series LLC" entities and came across the same information as you mentioned, Bill: NY is not one of the 10 states that allow the formation of a series LLC.

Surprisingly enough, I found a post from a business law attorney that says the following:

"Yes, NY and every other state recognizes the series LLC. Actually, DE put a name on this type of entity, but it really is similar to setting up multiple LLC's run by one LLC and this is how the states that do not have a series LLC would treat each individual cell/business as a separate LLC owned by another LLC. Cab companies use this type of LLC many times, where one LLC has numerous cabs and each cab is its own entity LLC for protection of the main LLC and the other cabs."

But now we are again talking about opening one LLC per property, what might prove to be extremely expensive, not to mention the extra bookkeeping...

Thanks again for the input!

Best,

Lucas