All Forum Posts by: Account Closed

Does anyone have an opinion to financing a property in my own name for the lower rates, take the chance of the liability for a few years, and once the property is paid off, re-deed it to an LLC for the asset protection over my next 40 years? Has anyone heard of this before and can it be done? I mean, it's my property, why can't I deed it to whoever or whatever I want?

I am beginning to see that the LLC debate is a matter of personal opinion. Some do, some don't. Like John said, it's a matter of your own risk tolerance and assets. Thank you all for your thoughts.

Sean, 

Thanks for your honestly. I will be certain to let BP know how that works out with a loc with under 2 years of job history. I was hoping that they would lend because the property is owned free and clear, but I'm not sure. That and it's in my best interest if they did loan because I'm excited to get started and even more excited to keep making moves forward. In regards to the LLC debate, can you elaborate on your statement that you use insurance to cover liability rather than the LLC route? Is there a certain name for this insurance? Does that mean you acquire buy and hold properties and deed them in your name so you qualify for the lower rates and longer terms? And then use some type of insurance to protect each asset? Sorry for all the question, but this definitely peaked my interest as this is the first time I've heard it mentioned. Thanks for your input.

Mike,  thanks for your input.  Once I get back stateside, I'll be sure to catch up on that podcast.  Unfortunately, they don't allow us to do that over here.

Sam,  I understand.  Thank you for clarifying.  The property is fully rented as we speak which is wonderful.  I intend to keep the tenants as one has been there for a year and the other has been four years.  I believe your "cash out refi" example is very similar to an equity loan or line of credit?  Please correct me if I'm wrong.

As for your example, when I plug my own numbers in, I believe it will work out for me.  Pulling out 80% in equity loan or line of credit, using my cash in addition, I can move on to my second property even before my two years of job history requirement that I asked about initially.  Thank you very much for your help and the great news!

Hello Everyone!

Somewhat new to BP.  But even newer to posting on BP.  I had asked for advice in another forum and someone's answer prompted a new question.

I am about to close on my first duplex next month. I run all of my major financial decisions by my accountant before making any moves. With this duplex, I told my accountant that I was paying cash and right away he advised me to create an LLC. I asked him about the differences in financing when I deed a property to myself versus an LLC. Some of the things I mentioned to him were higher rates, shorter terms and higher premiums for insurance because I was under the impression that deeding a house to an LLC would turn my entire venture into a commercial venture. After I told him that I plan to finance multiple other properties in the future, he retracted his advice to create the LLC and said that if I'm financing other properties in the future, to just deed them to myself and forget about the LLC. I searched numerous forums about which business entity to create. However, I didn't really find any that mentioned any of my concerns specifically (rates, terms, insurance). Does anyone have any thoughts about my concerns? Are my concerns valid? Or does creating an LLC somehow offset the higher rates and insurance premiums? And if so, how exactly? Thank you all for reading.

Hi everyone!  Thank you for your thoughts.

Sam, unfortunately, I am already into the process of purchasing this first home cash as they already have earnest money deposit, inspections, etc.  So I'm afraid that backing out and trying to finance this home is not an option.  Also, because I do not have two years of employment history as self-employed, I'm not so sure I'd be qualified for financing anyways.

Rita, I will definitely keep those options open and if I have questions later, I will reach out. Is a "stated income" commercial loan only available if I deed the property to an LLC?

Michael, equity lines are a great idea. For future purchases, is an equity loan or equity line of credit the better option? And is there such thing as a FIXED RATE equity line of credit? Also, I spoke to my accountant about my plans. At first look, he recommended an LLC while purchasing this property cash. Once I told him that I plan on financing around 75% of each additional property, I asked him if the benefit was still there with an LLC because if a property is deeded to an LLC, am I going to be susceptible to commercial rates, terms, and insurance policies on the properties? After I brought those questions to him, he retracted the idea of getting an LLC and said to keep them in my name so I won't be paying higher premiums on rates and insurance with shorter terms because everything would roll over to commercial standards if deeded to an LLC. Also, I did not even consider SBA loan because I didn't consider the LLC option to begin with.

Hello everyone!

My name is James and this is my first post.  I wanted to run my situation by some of you, which most of you have more experience than myself, to maybe get some of your thoughts and opinions about my circumstances.

A little about my background--I am 30 years old. I am currently deployed to Afghanistan as I work for the government as an independent contractor. I am paid at a daily rate and providing I am here in country most of the year, my annual gross income is about 105k. I also receive about 20k from VA disability from my time in the Marine Corps. Another fact that I believe is important to share is that my credit score is around 815.

I am about to close on my first duplex next month.  I followed the 2% percent rule to find this property and let me tell you, it was extremely difficult to find a 2% property in the local market.  I am paying cash for the property.  All is well up to this point.

My real questions start here:

I am interested in obtaining a new property every 6 months or so. Given my annual salary, I have no problems coming up with 25%-35% for each property, whatever the lender wants really. My plan is to put a down payment on each property so that my DTI stays around 25% on each property. My issue is that by the time I'm ready to scoop up another duplex, I will only be in this job, considered self-employed, for about 18 months. I will not have 2 FULL years of tax returns with this job. From what I've read all over this forum, this can be a problem. In your opinion, do I have a chance at being financed because of my down payment and my credit score? Is fighting to be financed worth the headache or should I just hold off for 6 more months until I have two years of this job history--even though I will not have two years of tax returns with it? I can clearly see there is a difference between two years of job history and two years of tax returns with the same job, unless you were fortunate enough to start a new job January 1st. This scenario is, what I feel, my best option. By using my lump sum of cash as down payments on multiple properties versus paying in full on one property, I can get a better return on investment when all properties are added together.

On the contrary, my other option is to continue to save, and simply pay cash for each property.  The benefit here would be that I have no issues with banks and financing.  The disadvantage would be that I could only pick up one property every 18 months or so.