All Forum Posts by: Dean I.

@Lorraine Pennington Thank you for the informative post. It sounds like you have been where I am now and you are making it work!

@Jason D. Thank you so much for responding back to me. I will definitely be giving them a call tomorrow. I am assuming that you have worked with these two lenders?

@Adrian Zamora

Hey Adrian, I apologize for not responding sooner. Been busy. Anyways, the bank that I used for this flip is no longer taking on new investors for flips. You will probably have to start flipping houses with hard money or private money for a while and then approach some of the other banks. From what I have experience, other banks that do fund flips, wont do so without a 1 or 2 years of flipping houses under your belt.

As for lunch, PM me what your schedule is typically like and let see if we can make it work.

@Brandon Sturgill No offense, but if you have no clue how amortization fits into the equation or how to run the income through the LLC, then maybe you shouldn't speak like you are an authority on the subject.

But, to answer your question, the longer the amortization period is, the lower the mortgage payments will be, thus a better cash flow.

After the title has been transferred to the LLC, rental agreements are then made with the LLC and all income from those rentals are deposited into the LLC's bank account and of course all associated expenses will also come out of those accounts as well.

Again, no offense, but I am not sure why that was so hard to understand . . . You just kinda made yourself sound like a dick for no reason . . .

@Steve Vaughan Thank you for pointing out the possible insurance issues, I had not thought of that. 

As for refinancing and 1031x, title change wont happen till after refinancing (after renovations) and 1031x will not be affected by the title change as far as I am aware. I am seeking additional advice from my tax advisor on this to confirm though. 

@Ray Harrell I already confirmed that I can transfer the title without triggering the DOS clause. Just a matter of finding the right lender

@Ryan Thomas This lines up with my research, but I am confirming this information with my tax advisor.

@Costin I. Gunna read that tonight. Thanks.

@Jason D. Unfortunately, none of the lenders around here will do it, but if you know of a lender that will do 30 year commercial loans in my state, please let me know.

Thank you everyone for your input. I will update this thread with any information my tax advisor gives me.

I have already read a lot of threads on this, I just want to confirm what I know and make sure I am on the right track and not missing anything important.

1. When transferring a rental property from your personal name to the LLC, you are really just transferring title, as most banks will not also transfer the loan.

2. This seems to me that it wouldn't really add any asset protection though, since the loan is still in my name and I am sure that the veil can be pierced as a result.

3. Where it would be beneficial is on the business side. Since the title would now be the name of the LLC, I can essentially run all the finances from that rental through the LLC, showing that the LLC is making a profit and thus giving me the ability to acquire other properties in the name of that LLC without any issues.

4. Biggest cons are the due on sale clause (which I already confirmed with my bank will not be an issue when transferring title) and the fact that eventually I will run out of properties I can do with 30 year mortgage (10 properties), unless I do a 1031 exchange.

With all that being said, my plan is to purchase properties that cash flow well with a 20 year amortization in the name of the LLC and those that only cash flow well with a 30 year amortization, I will purchase in my personal name and then transfer title to the LLC. That way, regardless of who's name is on the loan, all the income runs through my LLC.

Please let me know if I am missing anything or if I am on track.

I agree with everything Jay said, I especially agree with the fact that if you can put the same level of marketing efforts that is required to make wholesaling work into being a real estate broker, you have a much higher chance of being successful.

Competition aside, the problem with wholesalers is that they don't know how to think like the investors they are selling to. Why? Because they never were one. This is why their ARV and renovation estimates are so far off and why they pick up properties in bad areas, making most deals a disaster for anyone who falls for them.

Personally, If i were you, I would get my own real estate license, become a broker and learn as much about real estate and my target market. This will give you a better perspective and allow you to run your own CMA so that you can get accurate ARV. I would then do everything possible to learn how to flip houses and buy rental properties that cash flow. Even if you don't yet have the ability to flip houses or buy rentals, you still need to go through as many of the same steps as possible, so you can learn.

You can do all this without quiting your main job too. Just got to find the right office that will give you the freedom you need.

Anyways, good luck and please don't be like most all the other wholesalers who have no clue what they are doing and tries to dump all their trash properties on us.

In my personal opinion, when it comes to starting a new business, do whatever it takes (morally) to your business off the ground. Sometimes that means getting personal loans or lines of credit in your personal name, until you are able to do it in the name of an LLC or other entity. Ultimately, you are going to want get everything out of your personal name and move everything to the name of the business and keep it that way.

When I first started flipping houses, I was able to find a bank that would lend to my LLC (which was not easy), but I didn't have the capital to fund the down payment or the remaining 20% of the rehab costs. This forced me to get a personal credit line, which to this day, I still use ONLY for the business. From there, I got a couple other personal lines to keep things moving and allow me to do multiple flips at once. Now, that my LLC has been established for almost 2 years (6 weeks shy), I have been able to get 2 large credit lines in the name of the business. The bank required me to close out one of my personal credit lines, in order to get a larger business line of credit. Eventually, I will zero out all of my personal lines of credit and only use the business lines of credit.

One thing to keep in mind is that these personal lines of credit will affect your credit. When I max out my personal lines of credit, my credit score tanks. When I max out my business lines of credit, my credit score is unaffected. What this means for you is that as soon as you sell the house, you need to pay off the credit line immediately and maybe even wait till your score comes back up, before you try and get another house. I know for me, my score has dropped 100+ points before, but within a few weeks (depending on the time of month) my score will go back up after paying off my personal credit line.

Finally, even if you have to start by using personal loans (which I have also done) or personal lines of credit, you need to establish your LLC now and do as much in the name of the LLC as you can. The sooner you can start establishing a history of the LLC making money, the sooner you can get your LLC approved for loans and lines of credit.

His attitude and the fact that he is unwill to do a real credit check and is adamant about getting a refund are all red flags that only point to future issues. Also considering the fact that he claims he was a landlord for 30 years (regardless or whether or not it is true) and is already questioning your policies only tells me that he is always going to question your policies and will only be a problem. Not only will he likely be a thorn in your side, but there is a good chance he will try and come against you legally in the future.

I learned a long time ago with emoloyees that the moment you feel  (with justification of course) you should fire someone, is the moment you should make plans to fire them. Even more true if they pose a potential threat legally. I believe the same truth can be applied here.

Like others have said though, I would reject him on the basis of not following the policies in a timely manner. You really don't even need to give him a reason, but you may want to document that as the reason he was rejected.

@Aaron K.

The numbers work for the current purchase price and rehab costs. There is decent cashflow if I refinance for just that amount, but I just don't know if it will appraise for that amount. I would think it would considering the size of the property what the average sqft value of the surrounding homes, but I just want to be sure.

@Jack P.

Yeah this one looks promising. The one thing I like about there being an HOA is that even if the units are complete crap on the inside of the buildings, at least the owners have to keep up the exterior and the common area is taken care of by the HOA. Another nice thing is that the management fees are also covered.

Thank you for all your valuable info!

I know, I know, use the search bar . . .  and I will, but I was hoping to get some fast advice while I do, since I will be putting in an offer tomorrow.

This is a Quadplex building in subdivision of other 8 or 10 other Quadplex buildings. Basically, it is an apartment complex, but I am only looking at buying one of the buildings (it is the only one available right now). So far, it satisfies the 1% and the 50% rule, which I know only means that it is worth crunching the numbers more. My plan is to purchase the building, rehab it and do some upgrades, then refinance it and get all of my money back out of it. The problem is, I don't know what it would appraise for. From my understanding, since it is only 4 units, it is looked at like a residential property. The problem is, there is barely anything to compare it to. So how do I figure out a value for the building? I need to know what I can expect to refinance it for after the rehab.

I should also note that I am putting this one under my personal name in order to take advantage of the 30 year mortgage. I also don't plan on living in one of the units. Not sure what all the rules are on all that. This would be my first rental property purchase.

Thanks in advance.