All Forum Posts by: Nate Fanara

My spouse and friends think I am crazy and the market will turn down soon and crush any and all real estate investment

@Thomas Hamm That shouldn't be an issue as long as your DTI is at 40% or less. 70% LTV before 6 months is also referred to as delayed financing. Unfortunately most lenders have no clue about it.

Hello BP!

I'm a new investor and currently looking for a property to BRRRR. I plan on using the HELOC on my current home to purchase the home outright, then refinance with a conventional loan after repairs are completed. I've been searching for a lender to get prepared for the future refi. One lender, after I explained my goals and strategy said in an e-mail:

"There is a 6 month seasoning requirement on a cash-out refinance. One exception is a “delayed purchase” refi which you can do when you pay cash for the house initially. The catch is you can only refi the amount your paid for the home plus closing costs/title fee’s for the purchase. You cannot include the rehab costs on this program."

My understanding of the BRRRR Strategy to to recoop the purchase price, closing costs, and rehab costs as much as possible. Essentially getting a new loan for 75% of the new ARV. The line that stuck me from this lender is that I couldn't include rehab costs in the program. I would like to ideally recoup those funds from my HELOC so I can start looking for my second property sooner than 6 months. What am I missing? Do I just need to find a different lender? Thanks in advance! - Nick

If you have to ask a lot of questions, then running a STR from out of state is probably not for you. Or at least it is not going to be worth your time.

Are you buying properties for yourself or is there more than one investor? If just you then I would NOT go the LLC route and just purchase additional insurance (business and personal umbrella). This will allow you to get better financing rather than go the commercial route. I own multiple properties in my own name and also own multiple within an LLC with my brothers.

In regards to the debt to income ratio, once you have the property rented it shouldn't be an issue as it will add to your income.

Agreed that the LLC should be registered where the property is located for maximum asset protection. The reason Delaware LLCs are so popular is that they have business-friendly tax laws. This doesn't really help you with a property in Ohio. Most people also segregate each property they hold into a separate LLC (again, for liability purposes). So bear in mind that you will likely want to create a new one each time you add a property to your portfolio.

LLCs can be as simple or complicated as you make them. Most anyone can fill out the forms and pay the fee to the Secretary of State. If you have complicated assets or ownership structure, or other areas that need specific legal protections, its important to have an attorney set up an LLC that meets these specific needs.

Hope this helps!

I was surprised she won and honestly I wasn't very involved because the HOA insurance company dealt with it, I just got updates from the woman who manages the HOA (it's a complex of 5 buildings and we own one of them). The plaintiff just slipped on some ice in a shaded part of the parking lot and busted her hip. It's icy fairly often in CO in the winter, nothing out of the ordinary and our plow guys are pretty good, so no negligence on our end, but she was still awarded some money. You'd think it would be common sense to step carefully when it's snowing in the winter time in CO, so I'm not sure how she won but she did. That area is still often icy, and we can't do much because it's shaded by a building next door, so we have some signs up and a bucket of salt there and the groundskeeper salts it as much as possible, not much else we can do. Our layers of protection were an LLC and the HOA, everything was handled by the insurance we have for the HOA, which resulted in getting dropped by that insurance company.