All Forum Posts by: Lindsey Matejak

Hi BP- I currently have a multi-unit in Missouri that was purchased under an LLC. I have a two part question for the attorneys in the room.

1) Our lender required that my mother be listed on the LLC Operating Agreement at the time of purchase because she contributed funds for our down payment. She has a 2% share and my husband and I each have a 49% share in the LLC. Now that we've paid her back those funds, we all agree that we would like to remove her from the Operating Agreement. What is the specific process/documentation we need to go through to remove her from the LLC (can I do it myself or do I need to involve an attorney)? Our Operating Agreement states: "The Member(s) agree that Member(s) may voluntarily withdraw from the Company without the approval, vote, or consent of the Member(s). Unless the withdrawing member's ownership interest was sold, it shall be transferred to the remaining Member(s) in the Company at the same ownership interest percentage ratio that exists at the time of withdrawal. After being removed from the Company, the withdrawing Member shall be unequivocally released from any legal or financial liability that is related to the Company unless otherwise agreed upon."

2) We would like the building/LLC to transfer to my Trust in the event of my husband and my passing. Do I simply need an estate attorney to write up a Transfer on Death Assignment, or is there a different process in Missouri to ensure smooth transfer of ownership into my Trust?

TIA for your assistance.

Hey BP- I've looked online and on the forums, but can't find a definitive answer. I know that in the past all held security deposits needed to be stored in their own dedicated TRUST bank account in Missouri. It looks like that may have changed in the recent past so that at TRUST account did not have to be created. Security Deposits still need to be in their own dedicated bank account, but it can be an account opened under my LLC name rather than a trust. Can anyone confirm the current law on this? TIA!

Looking to chat with someone (ideally an attorney) who knows the ins and outs of LLC formation in Missouri for an urgent issue on a property I'm under contract on.

I am working with LendingOne for a DSCR loan and just learned that they will not allow any portion of the downpayment/cash to close to be from a HELOC or gifted. Since we were planning to use a HELOC for a portion of the down payment, this has us scrambling. We just formed an LLC in Missouri (just spouses as members), but haven't yet created our Operating Agreement.

Due to LendingOne's restrictions, we are now wanting to pull in a family member as a third party on the LLC to cover the portion that was supposed to be the HELOC. Based on my research, it seems we just need to include the family member on the Operating Agreement and we are good to go to avoid it being considered "gifted" funds, but I just want to verify that I do everything correctly to avoid issues with the underwriter at the eleventh hour.

Thanks in advance to anyone who is willing and able to provide some assistance!

Thank you, @Dan Schwartz, @Daniel B., @Stephanie Medellin and @Kevin Romines -- very helpful! I hadn't had luck finding a lender that would allow a HELOC on a non-owner occupied property. I don't want to be tied to living in our current property for another year, so I'll definitely be reaching out to PenFed.

We will likely not be using FHA because in Chicago it is nearly impossible to find a multiunit that meets the FHA Self Sufficiency Test...especially in neighborhoods that we are willing to live. I'm aiming to use a portfolio loan from a local credit union that allows for 10% down with no PMI. I'll be discussing with them what the impacts of taking out a HELOC would be on ability to secure their portfolio loan. Thanks again for the education.

I am in the process of looking for my second multi-unit property. I currently own a 3 unit with around $350k in equity. I am living in one of the units, but am ready to move out and again house hack in the next 3-4 unit property I purchase. Before I move out, I want to get a HELOC on the equity I have in my current property to eventually use for renovations of the new property.

If I do so, how will this HELOC (unused) impact my ability to get a conventional loan for the next property? I am already having some trouble getting past the DTI benchmark on the 3-4 units I've considered--will the HELOC make it even more impossible to clear that hurdle? Suggestions welcome!

@John Warren and @Jonathan Klemm, thanks for the input--that's the advice I got when we originally purchased and it made sense to me, but then I've talked to a handful of people lately who have said we were insane to do anything other than an LLC for liability coverage. I know it's a consistently heated debate, but it makes sense to me to stay on the side of owning under our names for now with an umbrella policy and then addressing an LLC at a later date if our portfolio gets large enough. Thanks again!

Hi BP,

I just finished refinancing my 3-unit building in Chicago in which my wife and I live in one unit and rent out the other two. We purchased the property under our own names and our recent refi is a 30 year fixed conventional loan for a primary residence. I would like to move the property over to a Series LLC as we start prepping to buy another multi-unit. Am I allowed to switch the property into an LLC given the details of my recent refi as a primary residence under our names?

Thanks for your input!

Hey BP! I just refinanced my primary residence to a 30yr conventional fixed rate loan. Our building is a 3-unit in Chicago--my wife and I live in one unit and rent out the other two units. We would like to buy a new multi-unit and move into one of the units of the new property while we rent out the other units in the new building. We want to keep or current building as a fully rental property.

1) How long are we required to stay in our current multi-unit after refinancing? 1 year? Any way around this?

2) We want to put down the least possible amount on the next property as long as the numbers work for cash flow. We've already explored the FHA route, but with the restrictions in place, we have found that this is impossible for us to do in Chicago (i.e. per the lender: must be 100+ miles from our current property, FYI loan limits, they won't take into consideration the potential income for the unit we are currently living in to calculate debt to income ratio which is about $3000+ per month, etc). We are being told that 20-25% is are only option if we want to buy another multi-unit in Chicago. Anyone have alternative information or ideas for less down payment?

Thanks in advance for your assistance!

Hello,

I recently had a major plumbing project done on my multi-unit building. I signed a contract at the beginning with a GC that was more general than I wanted considering the large price tag, but he kept saying that he couldn't make it more specific until they busted up the concrete to see what was really going on (lots of unknowns due to age and character of building). No need to highlight that I never should have signed--I am aware and there is a HUGE back story as to why I did that is not significant to the question at hand.

Due to frequent flooding, we were planning to have an overhead sewer line installed, as well as a sump pit for the basement plumbing, an ejector pit for the upstairs/exterior water that was leading to the flooding, and tying in the downspouts to the mainline at the front exterior of the house underground.

The project, which was estimated to last about 15-20 days, took more like 10-11 full days. Along the way the GC and subcontracted plumber mentioned numerous times that they found great news or thought of more efficient solutions (i.e. the mainline plumbing under the basement was intact--that they had assumed was all broken and needed replacing). In the end, due to the "great news" they found, they ended up not installing an overhead sewer line or digging out front to attach the downspouts to the mainline in front of our house, but instead, redirected some of the existing piping and doing an edited version of the proposed plan that more heavily used the intact mainline under the house.

The end result has seemed to be a resolution to the problem (so the ultimate purpose of the work was achieved), but with what I would estimate to be about 50-70% of the total proposed work. We are now in debates with the GC that he should update his pricing based on how much the scope of work changed. If you read the signed contract there are a number of elements that no longer apply and that they did not do (because it was unneeded). We have payed 80%+ of the balance, but he is fighting that we need to pay the full initial rate that we signed on even though the details of the contract are inaccurate and he never sent any written Addendum to the contract for changes in work (he just went ahead and made the executive decision about adjustments without checking with us first). He is now threatening a lien if we do not make the final/full payment.

What are my rights? Are we locked into paying the initial contracted amount since we signed the document? Is he able to put a lien on our property without having to justify his claim? Advice on how to respond?

@Brie Schmidt, @Chris Titcomb, @Thomas S. -- thank you all for your input. This is very helpful in making a decision about selling vs. renting.