All Forum Posts by: Matt Holmer

@Nick Denning

What type of rates and terms are you getting for LLC?

I recently purchased my second property using the BRRR method and am currently looking at doing a cash out refinance. In a perfect world, investors would be able to find portfolio lenders that offer long term, low fixed rate mortgages in the name of our LLC.

However, as I shop around for a loan to an LLC, it is clear this world is not perfect. I am finding a combination of high rates (at least a point higher), short amortization periods ( and short balloons. When looking for financing in my personal name, even without proper seasoning, I've received decent rates (4.5%) 30 year amortization and 15 year balloon based off of 75% of the newly appraised value. With 6 months of seasoning, there is the option for 30 year fixed at even lower interest rate.

With that being said, it got me thinking. Which is more likely to occur. 1) The bank calling a loan due on sale for transferring to an LLC, or 2) A landlord being sued and judgment entered in excess of my liability limits (500,000 per property, 1 million umbrella)?

Just thinking out loud trying to wrap my head around financing options as my portfolio grows.

Are these rates for loans in the investor's personal name or an LLC?

@Aaron Mikottis

That is why I put notes on the outlier properties.  If a property is on the market 100 days, but has no pictures and a terrible description, I want to know that.

Also, I've used rent-o-meter, but that seems to be more focused on apartments.  I will use it when I first start to analyze a property.  If I'm serious about purchasing, I'll spend the $12 on a Rent Range report.  I think it is more detailed and focuses more on SFRs. 

@Aaron Mikottis

If I was better with numbers and spreadsheets, I might be able to come up with a better system, but here is what I do.  Keep in mind, I am currently only tracking in one area that has about 40 active SFRs in the range I want to follow (<$1200/month rent).

Basically, I just bring a search in my specific area for SFRs that meet my rental criteria.  I created a spreadsheet to track the property details of all these active listings.  This includes when they went on the market, beds, baths, sq./ft., advertised rents and then notes on the properties.  This might include notes about the property condition, management company or rental specials.

Once that is done, every Sunday I will get on Zillow and limit it to properties listed within the last 7 days.  I will add these properties to the spreadsheet.  

I will also search the previously listed addresses to see if they have been removed. I typically do a Google search for the property as well to confirm (on hotpads) that it is no longer listed for rent.  Sometimes I will look on the property management company as well to make sure it was removed there too.  While I won't know exactly when it came off the market, by searching every week I should be at least within 7 days.

I have a second spreadsheet that shows the same information, but also includes the date the property was removed and the total days on market. 

I'm sure there is a better way to track this information, but I have not figured out what it is.  My hopes, is that after some time, I can get a true indication of the rental values and vacancy rates of a certain area.

Like anywhere, there are good neighborhoods and bad neighborhoods in the quad cities.  Most everything that will be an affordable rental property is going to be at least 50 years old.  Deferred maintenance is a real concern.

There are a lot of good properties on both sides of the river, but the IL taxes really eat into any cash flow.

To get a better understanding of the true vacancy rates in my area, I have been tracking SFRs on Zillow for the last couple months.  I keep track of the posting date, property details (i.e. beds, bath, sq/ft, rent) and when the property was removed.  

I am starting see some trends and am getting a better idea of rent ranges, desired areas and other metrics that I hope will be helpful down the road.  It is a lot of work at first, but after the initial search, it is easy to update the list for only properties listed in the last week.  This might be more effective then posting a fake ad on Craigslist and measuring the response.  Might be something you want to look into.

@Charlie Fitzgerald

Thank you for the response

Does anyone else have any experience with these forgivable mortgages?

I pulled the documents (yay my county and its online property records) and the forgivable mortgage appears to be in 2nd position.  The terms of the agreement state it is transferable if the new buyer signs an acknowledgement of the terms (or something to that effect).

There are two properties in my area that I am interested in.  One is a duplex and the other is a 4 plex.  Both are from the same seller and both have the same potential issue. 

Each property was recently renovated city funds from a neighborhood stabilization program.  The loans are forgivable after 10 years (5 remaining) if certain tenant guidelines related to income are maintained.  The seller has significant equity in each property and is offering to carry a second (presumably a portion of the down payment).

My question, forgetting about the potential seller carry back for a second, is how will a traditional lender (likely portfolio) look at the forgivable NSP mortgage?  Do these programs typically subordinate their forgivable mortgage to the new purchase money mortgage?

Pardon my ignorance on this whole subject.  Until a couple days ago I did not even know these programs existed.  Once I have a better understanding (hopefully from this thread), I then should at least know what questions to ask when contacting the various lenders.

Thank you for any insight anyone can offer.