All Forum Posts by: Matt Nico

@Carlos H DeOliveira

Thats the development off Old lake wilson and osceola polk line road right? I actually was checking out an MLS listing in there the other day. I own in the next development over. Small world.

 Carlos, 

That's sweet. Thanks for sharing. Where in Davenport are you? I'm willing to bet we have properties within 5 minutes of each other. Providence? Reunion? Championsgate?

I see you are from Rhode Island. I guess you do out of state investing then?

 Jared,

If you offer any kind of DSCR loan I would love to hear from you. I will be looking for lending in 1-2 months. I am finishing up a rehab now and then have another house lined up to buy in October.

-Matt

 Rob, I would look at the contractor in terms of your big ticket items in your house. Things like a new roof, anything electricity, or an Air conditioner or water heater, you should probably go with someone who is insured. These are the bigger items with risk. I make sure contractors have a license and are insured.

For the smaller stuff, I am perfectly fine calling a mom and pop handyman to fix things. Do you really need insurance for someone to come over and replace a kitchen sink that's leaking? I'd say no.

Happy Housing,

-Matt

Yes I agree, banks can be a bit dumb sometimes. I have had similar experiences. But yeah that's how I have everything set up right now and it seems to be working well. I thought about moving the homes from my personal name to my LLC, but a good insurance policy should accomplish the same thing as the asset protection, and It just seems like a risk to be able to have the bank call such favorable loan terms due. The interest is really low.

-Matt

@Ned Carey

It makes sense to me. LLC's are pass through entities to my knowledge. So my cash flow comes right to me. I still get to depreciate and write off expenses before paying Uncle Sam.

I have been told my multiple lenders in the past that to aquire a business line of credit or a loan i need 2 years of history. Everyday that goes my is another day ticking off of that 2 year waiting period. Once a bank sees how big of a positive gain i make, a loan should be fairly simple.

@Justin Hammond

Cool. Thanks for all the info. I am sure i will utilize a wrap at some point. Im starting to build a good amount of relationships in the area so i think deals fill funnel to me. Hopefully i can link up with a handful of lenders with multiple options.

-Matt

Hey Ned, thanks for the reply.

Your HELOC suggestion is the route I am about to take actually. I am running in to a bit of a problem finding a bank that will do a HELOC on an investment property loan, but I am hoping I will crack through that obstacle soon.

For the lending that you mentioned in my personal name vs. my LLC, wouldn't it be more beneficial to place all of my rentals in my own name, and then run the cash flow through my LLC? What are your thoughts on this?

I know a lot of people worry about liability, which is why the LLC question comes up a lot. I personally dont see it as a big deal as long as I am cautious and protect my assets with proper insurance...I was just thinking about a large umbrella policy. My LLC was created to get a business bank account and credit card to separate my finances more than anything.

For a commercial loan, is this 30 year amortized but with a balloon at 5 years usually? Or does it act more like an ARM with the interest rate setting for the first few years, and then it adjusts.

Thanks for your input,

Matt

 Justin,

This gives me a lot better clarity, thanks. So for that hypothetical 260k that I would owe to the seller, you mentioned that I should make sure he is paying it. That seems incredibly difficult to be able to force someone to pay a mortgage to a house they don't own anymore. Whats to stop them from just pocketing the money? I was assuming I would be given that mortgage information and I would make the payments, and then send him the difference.

When you say the due on sale clause is triggered, wouldnt a bank that has any kind of good equity in a property call the loan due? I was under the impression that a phone call would be made to the bank to sort of ask for permission to do a wrap, and then have something in writing that states as long as the payments are still coming in they wont call the loan due. In the 100 deals that you said you have done, can you give me a quick synopsis of how you executed them?

With respect to your second post where you talk about a lot of loan products, what I am basically trying to accomplish is scaling. I'm only on my 4th property and I am already having trouble with my DTI even though my properties cash flow incredibly well. So I am trying to avoid using a DTI ratio and go for more of a pure investment loan product with a manageable interest rate. The 5%-6% sounds perfectly fine. I actually was running numbers at 7% to be safe. Do you have any lender recommendations or brokers? Or should I just be calling every bank I see and asking what are their terms for investment loans?

Thanks again for your time. This is very helpful already.

-Matt

Hey Justin,

Thanks for the reply. So I understand the basics for what a wrap is, and your post clarified it better for me. The information I am trying to gain out of it is terms and how to execute it.

As an example....I actually bought a house a couple months ago using seller financing where the seller owned the property free and clear. So the mortgage was easy as I just make payments to him and he is carrying the entire balance. So lets say he owed $100k on the house still. I bought it for $260k, so I would need to do a wrap. I would owe him 160k, and then there is the 100k left that he owes to the bank. 

How do I go about setting that up? Do I call his bank and ask for permission to assume his mortgage of 100k? I assume they would have to approve of this. And also, what kind of terms such as interest rate and down payment do you usually get on a wrap?

-Matt