All Forum Posts by: Michael D.

I bought a couple of properties in the name of my LLC, but then I got to thinking:

What ties me personally to my LLC? If I look on the original LLC application it has the name of my attorney. What's to stop my attorney (theoretically) from claiming the LLC as his own?

Craig, I'm just now getting back to this thread. Thanks, that's great advice. I'll surely do that in a year or two when I'm at a better LTV.

I'm sure that whatever you decide to do, your family relationship will be an important part of it. It's not all about money.

But everybody is losing out here just by being too passive. What I would suggest you do it really try to work on the other investors to show them how much money is being left on the table. Really put it on paper.

As previously mentioned, you can measure the effectiveness of management by looking at the cap rate compared to other cap rates in the area. 8% is probably okay for a 250 unit complex.

ROE is the most important metric for deciding whether to remain in the property. You can improve that by just borrowing more - as long as your cap rate exceeds the interest rate - which might mean that you can't take that approach now.

Final thought - is part of the issue that the manager is part of the family or has a friendly relationship with a family member?

Sounds like you only borrowed the money for 10 years, but had a 15 year amortization (or something like that). So now you're looking to refinance (get a new loan with a new term).

The bank wants their money back for their own reasons - it probably doesn't have anything to do with you - so you'll have to find another bank.

Your current bank probably isn't too worried about foreclosure since I'm sure you have plenty of equity by now (i.e. they win if they foreclose and then sell it).

Good idea, but the downside is that the person that you're putting faith in has an interest in the potential deal and repairs. I prefer to get a referral to a good inspector with lots of years of experince. The best one I've worked with gave me feedback about how the tenants were keeping house! I'm paying him to give me good advice about the property - not to do repairs.

Weren't long term fixed rate loans what caused the last banking crisis 30 years ago?

Banks prefer conventional loans because they make a lot of money with zero risk. They just turn the loan around to Fannie or Freddie and pocket several thousand dollars. Thats hugely more appealing than making a few hundred bucks a month, tying up all their capital and carrying all the risk that you're talking about with a portfolio loan.

I just got an 80% commercial loan on a 9-unit from PNC, so I know it can be done. But I had to personally guarantee it and have a 1.8 debt service ratio.

I had a reply all typed up, then figured out she was asking about something else, I think.

Diane, are you looking for someone else to pony up the money for a good deal you found?

Also - A buyer who BOTH has $400,000 in hard cash to put down on the property AND wants a $30,000/yr front-desk job will be a very rare bird. After all - you don't, right?

Not trying to be a cooler here, I just want you to get what you want out of this. It sounds to me like your best bet might be to hire some folks and enjoy the income that's left.

The thing you need to keep in mind is that for any income property, management is ALWAYS included as an expense. Properties do not manage themselves, so that expense MUST be paid in order to maintain the income of the property.

Whether you pay that expense with your own labor or your own hard cash is up to you - but it's an expense all the same, and a prospective buyer will have the same choice - his labor or his cash.