All Forum Posts by: Mike McCarthy

What's the reason for the LLC? Everyone gets them for asset protection, but when you have a few rentals that you're self managing, I'd say an LLC is pretty much worthless. If someone sued, they are going to sue you personally as well, so you're going to have to deal with it.

Deal with it by keeping your properties in good repair, and by keeping good liability insurance in place including a landlord policy + umbrella policy.

If you're investing in larger MF (5+) or are planning on being completely hands-off managing, then an LLC might be worthwhile upfront.

@Donny Hackett is the credit union staying you can't buy the house in the LLC using the HELOC funds? Or are they saying they can't give you a mortgage in the new house if it's in an LLC?

Once the HELOC is created, the bank really doesn't need to know what that money is used for - and I don't think has any say. You just withdraw $x from the HELOC and buy a new house.

Agreed! It all comes down to the cost to purchase + cost to renovate + closing costs : compared to the after repair value (ARV) and how that looks as an investment.

For a first investment property though, I’d recommend staying away from foundation and structural issues, or serious water damage. These are items that can easily balloon time and cost if you’re not absolutely sure of the damage.

Also, if the reno budget is above $50-75K, definitely consider whether it’s a good first project. It’s of course not a hard number, but a full gut isn’t for everyone- especially if you don’t already have a good relationship with a contractor(s).

Yes, you’ll have to wait 6 (sometimes 12 for some lenders) months for a cash out refi.

There are some ‘tricks’ that some suggest like including the reno costs in the closing amounts (and using some kind of escrow to pay the contractors - you’ll need to ask someone who’s done it). Or using a commercial lender who won’t need the seasoning, but will expect other requirements including shorter loan terms and potentially higher rates.

In a typical BRRRR though, I'd assume a 6-month seasoning.

Tip though, it’s 6 months to closing. So start the loan application process at about month 4, and close right at 6 months.

@Jay Cai the recommendation is generally to buy your first couple SFH (or up to 4-unit homes) in your own name and make sure you have landlord insurance + umbrella policy to cover any liability.

The hassle of an LLC plus the challenges of getting a loan on an LLC without any/much experience just isn't worth it. You'll get better rates (3.5%ish) for a longer period (30 years) by keeping it in your name. Plus, the LLC doesn't help with taxes.

Once you have a few properties under your belt, then it's time to start exploring the LLC and commercial/portfolio loans and figure out what makes the most sense.

@Jean-Thierry Aleman I’m in the same boat as you. I LOVED Cozy, and am now indifferent about apartments.com. I’ve recently switched one property to TenantCloud and though I’ve upgraded to their paid plan, I’m a fan so far.

Don’t mean to hijack the thread, but wanted to share.

I’d have a conversation with your PM as well about the incompatible placement. Obviously it’s not fully their fault and it’s not worth souring a good relationship, but they likely have other candidates and may be willing to do a lower-cost 2nd tenant placement. Doesn’t hurt to ask.

@Wesley W. Nothing on that list should have required a discount IMO. Sure, they need to be fixed/cleaned, but as long as you took care of it quickly, that’s it.

Moving forward, just be firm. I don’t think you need to draw a line with them, just handle questions as they arise. If something is broken, fix it. If it’s just not right for them, it’s not something you can have done.

I often tell tenants moving into a newly renovated house to please let me know if anything doesn’t work right. Unfortunately, there always seems to be something missed. But again, there’s a difference between broken and just not to their liking.

Thanks @Will Gaston appreciate the detailed response!  

After my last conventional mortgage, I'm looking for a simpler solution.  I could not believe how many documents, letters, explanations, and time they needed - and that's after having been through it before.  

How long do these loans usually take to close? 

Having been through a handful of conventional mortgages for buy-and-hold properties, I'm exploring a commercial/portfolio loan for my next SFH purchase.

For small investors who have been through this, anything I should specifically prepare for? I have experience and good track record to show, and should have a good property to show.

What rates/costs should I expect?

And lastly, should I be working through a mortgage broker? Or just call a few local banks and talk through it?