All Forum Posts by: Alick Patrick

If I have 20 properties and I set up one LLC for every 5 properties, can I set my D.B.A. for all four LLCs to the same name?

Furthermore, do I have to have one bank account for every single LLC that I create or can I open one bank account to use by all four LLCs since the D.B.A. name is the same? Will that screw up my accounting and tax filing? Should it be multiple LLCs with one parent company?

I'm asking because I am setting up my first LLC. My long term goal is to collect residential rental properties without the intention of reselling them (not yet, at least). I'd like to set up my structure with my long term goal in check so I don't complicate things in the long run.

How are you guys doing it? Better question: what is the ideal way to do it?

Finally closed on the property! Took @Bill Gulley advice and got married. Good thing I didn't listen to @Dion DePaoli

Thank you @Scot Howat! I'll give that a shot. Highly appreciate it!

@Manolo D.

So even if I am also on the loan as a co-borrower I am not allowed to pay for the mortgage? Does that mean the letter I wrote and signed stating that I will be assisting the primary borrower in making the payments is not legal?

@Scot Howat

Thanks for the advice but is it not too hard to be investing outside my backyard? I like the idea of putting my money outside of L.A. but I am not knowledgeable on other areas. Is there a safe way to tackle those hurdles?

@Manolo D.

...Correct on the 1099. After I pay my quarterly tax and do all expenses $26,000 is what rolls over from my S-Corp each month.

My GF's 18 year old and 21 year old children live in the house. I pay a $2,500 mortgage for the property and collect $3,200 in rent total. The plan is to have the son live in the beside property. When both of them graduate from college they will move out of the properties.

Her son won't be able to afford the new place. He works part time at Subway and has never filed tax returns before. Underwriting is ok with that, they just had me type a letter of explanation stating that the son is a full time college student and the property is a mile a way from the university so he will be living in it and I am assisting him on the payments until he graduates. 

I am paying for the SFH and it is under my name. The MFH is under my GF's name but that's three units and the rent collected from the tenants are enough to pay the mortgage.

I am still not getting it, the way this sounds is that if I shouldn't be buying properties that are under 20% downpayment. Now is that accurate or not? I don't need government assistance, all I want is to stay true to my goal which is to put as much less money down as possible.

@Lennie Holland I am willing to listen and learn, which is why I am here. 

Here's the situation:

1. I am an I.T. consultant and I make about $19,000/month GROSS on W2 and another $14,000 NET on 1099. I have about $26,000 in take home pay each month. That is of course not the real number because I have mortgages, food, utilities, etc to pay for.

2. I started to invest in real estate early this year so I can make good use of the extra money I have. I spoke to different agents and told them my goals. I read books and listened to audiobooks, and even plan to get a real estate license soon for tax purposes. 

3. Ultimately my goal is to build a portfolio of single family or multi-family homes that I can rent out. The approach I want to take, based on what I learned listening to audiobooks, is to put as little money out as possible and get that ROI as soon as possible.

4. So I did that and managed to get a 3-unit multi-family and one SFH this year. My agent and broker advised me to get the properties at 3.5% FHA owner-occupied, live in it for a couple of months, and then rent it out. Since my I.T. consulting work allows me to live at different locations around Los Angeles for months at a time depending on the duration of the contract, I can live on the property and then move out and rent it out after I get another contract at a different location. After 6 months they said that we can re-finance the property into a conventional so I can qualify on another FHA.

5. My problem, which was also due to my own fault, is that I couldn't wait. My first property has not hit 6 months yet and I wanted to make another purchase. The property for sale is right next to me and because I know that the house I bought was a good investment I didn't want to let it pass.

6. To still qualify for another 3.5% down both my agent and broker advised me to find someone I know that could be the primary borrower with me being the non-occupying co-borrower. And so that's what I did and I got pre-approved.

7. We went into escrow and everything was fine except that the underwriter came back and said that I must be related to the primary borrower per FHA guidelines. The primary borrower is my GF's son so legally we are not related.

8. I asked for help here but then @Dion DePaoli immediately assumed I was committing fraud. 

Now here's what ticked me:

1. What Dion is telling me is that I should act like a "real" investor and put 20% down. He went further with the "real businessmen" and "integrity" claims. That's too egoistic for me. I am asking for help and am willing to listed but egoistic responses like that is not something I can tolerate.

2. How can it be considered fraud if I am still following the guidelines and trying to qualify legally? @Bill Gulley, who as you said is an experienced, told me to marry my GF. So if I did that and got approved does that mean I am committing fraud? If I pull my sister to purchase the house with me and she gets approved is that fraud? That's what I believe is being "creative" and if everyone here still thinks that is fraud then I would humbly accept I am wrong and change my approach.

It is not wrong to avoid taxes, just don't evade it. It is also not wrong to avoid putting 20% down when you can legally get a property for 15, 10, 5, or 3.5% down. 

So what am I doing wrong?

@Frank Jiang @Dion DePaoli It is not that I didn't get the answer that I didn't like. It is simply because they were unsolicited advice from the topic and concern that I have.

The process is not by all means illegal and by no means is it fraud if you can prove so--and I can. Both of you assume that there is fraud involved when there are tons of valid and legal reasons that will allow you to go around the guidelines. And yes, having a new job and bigger family are just two of the valid reasons I am very well qualified for and can prove.

If you want to call yourselves investors, businessmen, or whatever title satisfies you to fall to have a good sleep at night then go do so. I don't need any of that. The law permits me to do what I do as long as I am able to justify it and so I will abide by it. I don't need legal advice from you, I can get that from a lawyer.

@Dion DePaoli You have a big ego. If you are willing to put a downpayment of $60,000 plus on a property just to be called a "businessman" then by all means go ahead. I rather be called a typical person if it would mean I can save $45,000 and use it on another property by putting 3.5% down. Robert Kiyosaki teaches it, Trump recommends the approach, and may other people does it. You just have a big ego, that's it.

I lived on my first SFH for a month while renovating it, rented it out after, and in 6 months will be refinancing it to a conventional. Maybe I'm no businessman but I am surely doing something right.

Who says something about being creative on underwriting guidelines? Everyone follow the same guidelines. How you approach it is where you be creative. I can approach it as a primary borrower, with a co-borrower, as an investor, or whatever. That's where the creativity comes in. Your ego is too big that you jump on conslusions and assumptions thinking your way is the only way and there's no other creative way to approach things.

But again, I'm no "businessman"--like you, of course.

@Dion DePaoli I am not aiming to be deceptive but creative. No loan officer or underwriter would want that either. There is always a creative way of doing real estate and being creative doesn't account for being deceptive specially if you are still following guidelines and are abiding with the laws. It is not being deceptive or committing loan fraud to purchase a single family home with the intent of living in it but changing your mind after closing for whatever valid reason. 

I am in the business of investing but it doesn't mean I am only looking for investment loans. I want to be creative, ethically and legally, and there is nothing wrong with that. It is no different than being creative with your real estate tax write-offs at the end of the year.