All Forum Posts by: Marc Beaulieu

I will transition it eventually I'm just dreading having to call all the mortgage companies to set up all the automatic payments.  You would think it's easy but it usually takes multiple tries before they set it up correctly and hours on the phone. 

I understand it's not likely to get sued, having propper insurance is a must, and managing your properties well will all cut down the overall risk. I guess what I'm asking is if it matters what type of bank account I use for my LLC to hold up. I was basically told it's useless unless you use a business account in the LLC's name.

I recently spoke to an insurance salesman who told me that a judge can choose to not recognize your LLC if you do not have a business account in the LLC name that all your business activity flows through( for example depositing rent, paying mortgages, paying taxes, etc). I have two properties in an LLC and use a joint checking account with my business partner where we deposit rent and pay mortgages out of (no personal spending or other activity goes through this account it has strictly been used for business since we opened it three years ago). Does anyone know if what the insurance salesman said is true? If so, are there other things that need to be done in order for the LLC to be recognized in court (what i mean by recognized in court is the judge will let a tenant sue you personally instead of the LLC)?

I know that you can only have one FHA loan at a time. If I bought a house with an FHA loan would it be possible for me to refinance my house out of the original loan and then use an FHA loan for my next purchase?

I use the typical Net Operating Income, Cash Flow, Return on Investment, and Cap rate. Most of the books I have read site all of the same metrics. Does anyone have any different numbers that they find useful when analyzing a deal? If so could you also share how to calculate it?

Every book I have read about buy and hold investing talks about forming an LLC as an essential part of your business. The line that is repeated over and over is that it protects you from a tenant suing you for everything you own. None of the books mentioned the downside. If you buy a house with the LLC your loan term is shorter, interest rate and down payment both much higher. In addition insurance is more expensive. If you want to do a cash out refi for your property your terms are also way worse if your property is in an LLC. If you buy a house in your name to get better loan terms and then place it in the LLC the bank has the right to call the loan. I know this is anecdotal but no one I know has ever been sued (isn't that what insurance is for anway). I am thinking it would have to be an absolute nightmare scenario in which you were sued, your insurance did not cover the damages, and you would have to start selling personal assets to pay the judgement. If this was a major fear of yours you would have to get a seperate LLC for each property (which would be quite expensive). Am I missing something here?

Kevin,

If I were to use the same type of loan that you did, how long are you required to live in the house?

My name is Marc and I am a Finance and Treasury auditor for a large regional bank in the North East.  I have always been interested in buy and hold real estate investing.  I graduated from college in 2009 and invested in my first property in 2010.  In total I have done three buy and hold deals in Rhode Island.  The biggest hurdle that I have encountered is financing and I would like to learn ways to overcome large down payments.