All Forum Posts by: Alonzo Garza

Hello all,

Quick question about renting out my current primary residence...  Appreciate any feedback!

If I were to move to a new house and put my current primary residence under a newly formed LLC, would this trigger a due-on-clause event from my bank?

I've heard that if you transfer ownership (in this case from me to the new LLC), that the mortgage company could exercise the due-on-sale clause?

Here @ BiggerPockets.com, Brandon Turner has also mentioned you could call the bank and explain to them that this is a 'performing note' and maybe that would help call them off but wondering if anyone has dealt with similar situations?

Definition I found online - A due-on-sale clause is a clause in a loan or promissory note that stipulates that the full balance of the loan may be called due (repaid in full) upon sale or transfer of ownership of the property used to secure the note. The lender has the contractual right, but not the obligation, to call the note due in such a circumstance.

Hello BP,

In the spirit of Robert Kiyosaki's definition of an asset being something you own that generates you money, I've been thinking about making a move which would entail selling my 2+ acre lot in a beautiful hill country gated community ( dancingbearliving <dot> com ) and taking the proceeds from that to pay down my primary residence much faster (I own the land outright, fully paid for, have deed, title, etc...)

I define the land as a liability because it's not generating income for me; rather it is costing me in annual taxes.  So by this definition I feel my home can become an income producing asset for my family must faster if I were to pay down the mortgage that much faster and get renters into it.  Rental market is still HOT in San Antonio, TX.

In the long run, I am building my asset portfolio and if you compare my current primary residence to my lot it's easy to conclude that the true asset here is the home due to the following factors: 

• Real Estate (in this case, my primary residence) appreciates in value, increasing my net worth
• I can have renters in my primary residence, which would generate income thus turning my investment into an income producing asset (something I can't do with my land)

So I'm looking for some feedback from all my peers here @ BP.  Is this a good strategy?

Appreciate any feedback, PM me with any questions if you don't feel comfortable posting on this feed.

Thank you,

Alonzo Garza from San Antonio, TX

You GO GIRL!!!!  Congrats on future success!

-Alonzo

Hello BP,

In order to gain greater buying power (sooner) I was wondering if it's legal or if anyone here has ever combined their spouses 401k to use in a self directed 401k trust to purchase real estate property.

• I understand how a trust would work (all monies have to flow through the custodian, etc..)
• I will probably follow up with my tax advisor / financial advisor / trust companies

All the same, just wondering if anyone has experience w/ this "strategy"?

Thanks in Advance,

-Alonzo

@Lawrence Rutkowski

I don't have any real-live experience w/ a subject to deal but I've heard that if the note is performing, the bank really has no reason calling the "due on sale" clause.

Also, wondering if you ever pulled the trigger on a subject to deal because I'm currently assessing doing the same thing.

Hey, PM me anytime since we both live in San Antonio, TX. I'd like to chat more.

-Alonzo

So to wrap things up on this thread... I received an official response from this 'credit union' and here is the stink of it:

"Good Morning Alonzo,

xxxx(Credit Union Name omitted(xxxx offers financing on Rental/Investment properties only up to 15yr’s. That is our Lending Guideline, with 20% down.

Please advise if you intend to move forward.

Best regards,"   blah, blah, blah...

No worries as I don't let small hurdles like this slow me down! Onward to REI victory!!!!!

-Alonzo

Thanks for the input folks!  Much appreciated.  Yep, I sure am shopping around for other lenders, you can BELIEVE THAT!

-Alonzo

Hello BP community,

I'm in the process of verifying this but wanted to post the question here in the forums so as to help any other members who might have a similar question:

So I just had a loan officer approve me for a loan but when I told her that this was for a rental investment property and it will not be my primary residence she stated the following:

" Oh, since this is a rental property Texas law mandates that it can ONLY be a 15 yr. loan and the 20% has to be cash only".

Is this true? 

Thank you in advance BP community members,

-Alonzo from Texas

Thank you for your informative reply Curtis!  I actually already have a $1 Million umbrella policy on my primary residence dwelling which I understand from speaking w/ my insurance company I can actually move another property under after converting that umbrella policy to allow it (for little or no change in current premium).  I'll speak to my insurance agent and tax professional for the following 2 items:

Insurance - Can I shelter rental property under my existing umbrella w/o an LLC?

Taxes - Can I deduct all or 1/2 of the premiums paid for such an umbrella policy

Regards,

-Alonzo

Hello fellow BP community,

1. Is it fine if I obtain a rental property under my own name and then at a later date shelter that under an LLC or INC. structure?
   1. Or is it better to get it under the LLC or INC. from the very beginning?

Thanks in advance for any advice!

-Alonzo