All Forum Posts by: Nat Rojas

Have you tried getting an opinion from a local lender? They are generally more familiar with, and comfortable with, ground rents in Baltimore. Good luck!

@Joe Norman

Thank you kindly for your recommendation and referral. I'll continue to make it a business practice to connect with local lenders and potential team members. Great point on local knowledge!

1 Vote

Baltimore, Maryland

Originally posted by @Tom Gimer:

@Nat Rojas Ground rents don't expire. They are 99 year leases renewable in perpetuity. In 2041 a new 99 year term will commence unless the unregistered ground rent is redeemed through the SDAT process (which takes several months, as you indicated).

The lender should have requested an attorney opinion letter from title and that opinion (if drafted correctly) would have indicated that the lease will extend more than 5 years past the maturity date of the mortgage, satisfying underwriting guidelines.

@Tom Gimer

Beyond speechless with the golden nuggets of wisdom you've dropped. Thank you so very much!
I've literally copied and pasted your response to both the lender and attorney.

This seems to have gotten the wheels churning as an alternative solution then followed:
"We would set aside and hold in escrow the funds necessary for redeeming the ground rent after settlement. Ballpark figure, we would set aside roughly $3,500 at closing to be held back by my office in escrow."

Hopefully the above solution will be approved by underwriting!

0 Votes

Baltimore, Maryland

Hey BP Community!

Looking for your tips and recommendations

Goal was to refinance a rental property in Baltimore City, MD this Friday. 2 Year lease in place.

30 year fixed at 80% LTV was ready to go.

Monday, I receive a call saying that the Ground Rent is unregistered through the city (takes 6-9 months if I were to start the process today) and because of that the Lender (per Fannie Mae and Freddie Mac guidelines) cannot approve a 30 Year fixed.

More specifically, the ground rent expires 2041. Per the guidelines, the leasehold must not expire any sooner than 5 years after your mortgage is set to pay off.

This means the lender will shorten the term on the subject property down to a 14-year loan instead of 30-year loan – this greatly reduces cash flow.

Today, New problem: with the new guidelines effective 1 April, 2021, the loan’s 4+ points no longer meets the Qualified Mortgage Guidelines. Meaning the 14 year loan may not work anymore.

Hard Money expires in one month.

Best case scenario: Redeem ground rent in a couple of weeks and I can move forward with 30 year fixed.

Considering a commercial loan. Thoughts?

Would greatly appreciate any opinions and thoughts to brainstorm past this speed bump.

Thanks in advance!

Looking for a lender to refinance into a 30 year fixed

80% LTV with 6 month seasoning.

Current mortgage is a hard money loan expiring 4/27/21

Appraisal completed 3/3/21 for $125,000

Address: 4114 Eierman Ave Baltimore MD

Issue: One option we received forced it into a 15 year mortgage due to Ground Rent Leasehold expires 2041.

Is this something you can assist with?

Thanks in advance!

0 Votes

Baltimore, Maryland

Originally posted by @David M.:

@Nat Rojas

Can't help you with a referral.. But,

It really shouldn't be that hard to add/drop properties to an umbrella policy. As far as transferring your properties into a LLC, its discussed just about daily here on BP (and I've posted on it a lot), but be very careful about doing it. There are a bunch of legal pitfalls that people seem to get into in my layman's opinion. Especially when it comes to protecting/maintaining your corporate veil.

If anything, you need to refinance in the llc with a commercial loan since you want everything underneath the purvue of the LLC. Otherwise, your limited liability isn't fully realized. Also, you may (consult with at least one qualified professinoal) make the LLC look like an alter-ego in my opinion. Also, refinacing and having a commercial umbrella policy are non sequitor's. You determine if you need the policy according to your investment strategy, assets in teh LLC, and risk tolerance. Are these residential or commercial properties? You know that the umbrella only is effective when there is a "base" liability policy, right? Also, the llc isn't a "magic bullet" that prevents you from being sued. It only limits the extent that your assets are liable if you lose the lawsuit. So, anything owned by the LLC can be gone after by the suitors (which is why you shouldn't have the mortgage in your name and Title in the LLC's name). The point being, you still need the insurance to protect the assets that are in the LLC. More importantly, you need the insurance so that the insurance company's lawyers will handle the lawsuit. Otherwise, you have to defend the lawsuit, in which case you might win the case but effectively lose all your assets because of legal fees.

So, you see whatever youare doing as a BRRR investor doesn't make sense? If you are going to use the LLC, Title should be in the LLC's name. Yes, that means you need to pay for commercial loans. If you want the asset protection/separation of the LLC, that's part of the price.

You really should consult with a few qualified professionals. Good luck.

Hi David!

Thank you so very much for the detail. I'm rereading the message to ensure I capture the full understanding!

It's interesting you mentioned "transfer". I was under the impression the only way to accomplish this is to refinance into the LLC. If I understand your response, you are saying the best way to ensure the LLC is fully realized and prevent a discrepancy (Mortgage in my name and title in LLC's name, is to refinance. Then, yes! I'm tracking. The LLC was created (in all honesty) with the main focus to refinance into.

Could you elaborate on "make the LLC look like an alter-ego in my opinion"?

Yes - the "base" policy is my Home Owners/Rental Insurance policy, right?

All residential properties - Row homes (townhomes) in Baltimore City. My strategy is to continue in the residential space for the time being

To summarize - Even after the refinance in the LLC, I still need insurance. To your point, my investment strategy, assets in the LLC, and risk tolerance determine if I need an umbrella and amount of that policy, right?

1 Vote

Baltimore, Maryland

Requesting Referrals for an Investor friendly insurance agent in the Baltimore City, Maryland area for a Commercial Liability Umbrella Policy (CLUP).

Current portfolio: 8 Rentals

BRRRR investor - another question is how the properties (or level of difficulty) will be added/removed to the Umbrella as the properties go in my personal name and then refinanced into the LLC.

Bonus question - If refinanced to an LLC, do I still need an umbrella? Understand this may require additional personal info as it may be case by case.

Still attempting to learn and understand! Any and all info is greatly appreciated. Thanks in advance!

3 Votes

Baltimore, Maryland

@Rafael Ignacio Merchan Hi Raphael! Happy to refer you our PM. Great to interview several different options for you to get a feel of what each one had to offer.

In those conversations you'll pick up on the strengths/weaknesses and sent of ethics and value.

1 Vote

Baltimore, Maryland

I’m doing research online, through BP, and within my network to find elite CPAs/EAs/etc. that a majority of their client base are Real Estate investors.

In my search to find and schedule initial consultations/interviews to ensure it is a right fit for both parties, I’ve noticed an intriguing difference. Some have a fee and some do not.

There is no trend or pattern I’ve noticed as to why or how much.

Without asking in any means to be negative, cheap, frugal, (insert any emotion), etc., and out of pure curiosity, what makes some charge for an initial consultation vs others?

2 Votes

Originally posted by @Andrew Hernandez:

Hi Nat, I'm new to real estate but in my investment class today my teacher showed us how to get price per sq ft. as follows,

Lets say you have a 2,000 Sq ft. home for sale with an asking price of 400,000. We get the price per sq ft. (PSF) by dividing the price by the size:

400,000/2,000 = $200 (PSF)

This may or may not be what you needed, just giving it a shot.

best of luck!

Great stuff, Andrew! Thanks for the post and sharing. Welcome to BP! What investment class are you taking?

0 Votes

Baltimore, Maryland

Originally posted by @Sam Lewis:

This is a really great question!

I agree with @Will Fraser on putting yourself in the appraiser's shoes. I actually start at 90 days and 0.1m miles strictly on bedroom count (i.e. 3) and property type (i.e. townhome), and then move the location out to 0.25m, and then 180 days if needed.

The #1 game changer to pulling good comps is looking at the map. Even if something is 0.1m away, it could be across the street in a separate development. Every time I look at the radius on the map, I question "which property would an appraiser most likely pick as a comparable?"

It works like magic and you will boost your confidence by asking that question.

I also remind myself that humans are innately biased towards how things appear. So if a potential comparable has the same street name as the subject property, there could definitely be some bias by the appraiser in selecting that house as a comp.

Unfortunately so many investors don't understand that at the end of the day, one appraiser will affect how "great" your deal is, especially with the BRRRR method.

Appreciate you, Sam!

Would love to hear more on your approach to first start closer and more recent and then branch out.

I’ll need to do a better job at looking the map! Might be across a major highway and I’ll say, “looks good! Count it!” Thanks for that suggestion!

What a question to ask! Other than what’s already mentioned, do you have any recommendations on how I can increase my chance in selecting a comp the appraiser would pick?

That’s Gold! Same Street name, love it!!

0 Votes

Baltimore, Maryland

Originally posted by @Marcus Auerbach:

@Nat Rojas this is something young agents struggle with. A lot of people will tell you that you need MLS, but the sold data on zillow is actually quite good and they have a tool to build comps.

Determining ARV is an art and a science and it requires experience. The more you do it, the better you get. You have the basic process. What you are talking about are adjustments in value for an extra bedroom or more sf.

Here is what I tell young agents: run a market for a brand new listing and try to determine for how much it will sell. Safe the result in your calendar and see if you were right 4 to 6 weeks later (or whenever it sells).

Marcus! Thanks so much for your response!

Very interesting! I have not used Zillow and was unaware they have a tool to build comps. Out of curiosity, I'll be sure to check it out! I, fortunately, have access to the MLS. My background is in data and business analytics, I must admit, I love pulling reports and spreadsheet manipulation J

Other than adjustments, could you please elaborate on “price per square foot of recent sales”? Doing additional research, I stumbled upon this.

That’s an incredible activity. Can’t thank you enough for sharing that! I see that as an opportunity to create a game out of it. Get more and more reps in, and like you said, one can, essentially, master their market! I’ll have to think of a way to maneuver the dates to do so now instead of 4 to 6 weeks later! Nevertheless, I accept your challenge. Thank you for sharing!!

0 Votes

Baltimore, Maryland

All Forum Posts by: Nat Rojas

Nat Rojas has started 16 posts and replied 108 times.

Post: What do I do? Ground Rent Prevents 30 Year fixed.

Post: What do I do? Ground Rent Prevents 30 Year fixed.

Post: What do I do? Ground Rent Prevents 30 Year fixed.

Post: Insurance Agent in Baltimore City MD? Umbrella vs LLC

Post: Insurance Agent in Baltimore City MD? Umbrella vs LLC

Post: Property Management Companies in Baltimore

Post: Searching for CPA: Initial Fee?

Post: Steps for Determining ARV

Post: Steps for Determining ARV

Post: Steps for Determining ARV