All Forum Posts by: Mike De Lota

Each lender is different in how many names you can put on a mortgage and you'd have to contact your lender to ask that question. Most lenders only allow 4 borrowers on a residential loan, but differs per lender and state. In doing this you achieve your above-stated goal of lower down payment. You do however, sacrifice the legal protections and structured partnership of an LLC. Also if one of you were to want out of the deal, the only way that I know to get that person's name off the title is to refi- another thing to consider. As always, consult your RE attorney.

Going the LLC route makes ownership stakes more clearly defined and offers liability protections but jeopardizes your above-stated goal of lower down payment. As above, you can't refi if the LLC holds the title.

Dezmin,

Generally speaking for REI properties, if you are purchasing it as a 2nd home you can qualify for a residential mortgage with as low as 10% down. As far as having all of your names on the mortgage, I would speak with your lender about that but be wary! You should structure your partnership with your friends through a RE attorney who can protect your interests and have it written down as a legal document. I've heard way too many stories about my investor friends getting burned in partnerships with family and friends where the business or personal relationship turned sour. You all need to be on the same page with respect to your short and long term investment goals, property management and marketing strategies, maintenance, and ultimately disbursement of profits.

With respect to placing the property in an LLC you can find several arguments for/against this in multiple BP forums. The skinny: LLC's offer liability protection which comes in handy when you have an extensive portfolio, have a large equity stake in the property, or are trying to shield large amounts of personal wealth. However, they can be expensive to establish and maintain and might not be worth your time if you have limited equity in the property and/or if this is the only property in your portfolio. Also, keep in mind you can't refi a property that is deeded in the LLC name (at least not in my state of TX, but consult with your attorney). The deed has to be transferred to you and/or your partners in order to do this.

Ultimately, I would seek legal counsel to best structure your partnerships and whether or not an LLC is in your best interest. Lots of ways to skin a cat, but this is just my 2 cents.

Agree with Jordan. I usually walk potential properties with my PM and GC, come up with a plan to add value and force appreciation, and work on a scope of work that will get my COCROI where I would like it to be. 

Multi-family in Austin is a tight market and has been for several years now. There’s a number of factors at play including the popularity of the product, scarcity of inventory, rapid appreciation, and flooding of the Austin MSA with both small and large investors alike. So you’re not that far off in your assessment.

I’m interested in learning more as well, Michael.

For your purposes and at that price point, Jordan and Neil are right- RR, CP/Leander, and East of I-35 (Del Valle), Manor, and Hutto.

Agreed. What's your strategy? Buy and hold? Fix and flip? STR? Price point? Different pockets of the city will offer you different advantages/disadvantages...

Good question! You’d have to check the deed restrictions and Individual condo association rules. I don’t believe the city has any citywide ordinance against  using condos for STRs.

Great question and looking forward to hearing everyone’s feedback. Some things I look for are their fee structure for monthly fees and leasing fees, hidden fees, how responsive they are to my inquiries, will they attend inspections for new properties I might be purchasing, and tenant treatment. 

Not an exact science, but hope this helps!

@John Underwood Thanks for the insight John! Sounds like most folks feel (and from my research about PM rates in my area) that 20-25% PM fee is fair. Thoughts?