All Forum Posts by: Navid A.

I haven't been able to find a clear answer to this question. I'm buying a "primary home" via a Subject To deal with decent equity. The seller will obviously hold the debt/note for the existing mortgage while the title gets transferred to me. My question is, would I be able to open a HELOC on a second position lien if someone else (the seller) has their name on the 1st position lien mortgage? Once again, I'll be holding title and ownership of the home, just not the debt of the original mortgage.

Essentially, can you get a HELOC if the Subject To deal will be your primary home while someone else holds the note for the original mortgage? Has anyone been successful at this?

Hey BP,

I'm currently in the process of restructuring things. What do you all recommend for an entity structure with a partner who's funding the deal? As is, my partner is funding the entire deal while I'm managing the daily operations for a 50/50 split of profits. For this entity, we are using it strictly for flipping with the possibility of holding a few of the completed projects. This would require us to have the ability to transfer or quitclaim the completed project/property into another holding company which will be a LLC.

My partner wants to remain as a "passive partner" to avoid SE taxes to the extent possible on his share of the proceeds. He is not involved in daily operations or decision making. We are looking for both asset protection and tax mitigation. We have it down to 2 option: a LLC treated as a S-Corp for tax purposes or an actual S-Corporation. Which is preferred and why? Please and thank you!

I'll have to disagree, STR are extremely profitable. As a matter of fact, STR produce about 2-3x that of a long term rental in most of the markets I invest in. However, great management is key.

Hey BP,

Thinking of converting one of properties into a short term rental (STR). Been looking around for a great management company that specializes in this space. Plushyhost came up as a viable option, but I'm skeptical from what I've seen and heard thus far. Does anyone have any experience working with them?

@Allan C.

Thanks for the reply. Do your lenders require a personal guarantee and do they lend to entities? Also, do they consider DTI and personal finances or is it solely based on the property's debt service coverage ratio (DSCR)? Just want to make sure we are comparing the same product. The lenders I've used disregard DTI and personal income verification. They base underwriting on credit score, DSCR, and property value. If we are comparing the same product, can you please message me the name of your lenders?? I'd be happy to refer you to a list of my lenders that helped me build my portfolio as well.

@Joe Splitrock

I completely agree, everyone is acting risk adverse right now. I'd argue that we as investors are the ones really taking the risk, the banks are sitting on 30% equity! Housing market is still strong here, leased a property within 24 hours of listing. The rate is pretty low to me but I'm used to rates of 6.5-7% using portfolio lenders. I'm assuming you're using conventional lenders?

@Joe Splitrock

The issue is, or maybe it isn't an issue, these banks also want a personal guarantee on the loan as well which is something I've been able to avoid for the most part. Otherwise, the rate they're offering is 4.75% for a 5 year term with 20 years amortization.

@Joe Splitrock

These 4 properties are completely held with cash. No loans were used for acquisition or rehab. All cash positions. Tried the small banks as well, no love there either. Commercial side is offering 5 year terms over a 20 yr amortization for a 70% cash out. Im not too familiar with the commercial side of things, but I need a solution to keep driving my business. I don't want to wait around in hopes that my portfolio lenders will reopen soon. Truth is, no one knows how long the wait can be.

**to pull your capital out in terms of a cash out refi? This bottleneck is causing a halt in my operations.

Here is the situation:

I have cash tied up in 4 properties, 2 of which are stabilized with paying tenants and 2 are undergoing rehab (will be complete within a month). My lenders have suspended operations and I've called dozens more, both on the conventional and commercial side. On the conventional side, they won't fund me because the properties are under a LLC and would require I quid claim deed it to my personal name and wait 6 months...no thanks. On the commercial side, can't get anything near a long term financing situation. What are you guys doing out there to pull your capital out?