All Forum Posts by: Ron Domina

Hi all, and thank you in advance for your feedback!  

My name is Ron. I began REI 5 years ago, and currently have 6 houses / 8 units. I have purchased a couple of these rentals using a HELOC on my personal residence, which allowed me to buy with a cash deal, complete the remodeling, then I obtained a mortgage on each property to use the money from the bank to repay myself for the renovations, and pay off the HELOC at the same time. I recently went to my personal bank (the one that I have the HELOC from,) looking to refi my existing HELOC with the idea that I could reduce the rate a bit, and increase the monies available at the same time, giving me more capital to work with for future purchases.

For the first time in my life, I was declined. My credit has always been great. The issue apparently is my debt to income ratio. Even though I am cash flowing very good returns on each of my rentals, the total amount of my mortgage balances are the issue. My concern, I feel like if I don't make a shift somehow, I will lose potential deals in the future as a result of not getting the needed approvals. Two of my units were closed into an LLC. The other 4 were closed in my name because I liked the idea of having the interest rates fixed for the life of the loan, instead of having to refi every 5 years like I have to do with my first two properties because they were closed into an LLC. SInce I closed these two into an LLC, they do not show up on my credit report so they are not the issue holding my back, the other 4 that were closed into my name are the issue. In addition, I live in NYS and from my understanding, an individual has a limit of 10 mortgages in his / her name.

SO, MY QUESTION(S):

1. Should I refi these 4 properties that are in my name and close them into another LLC(s)?

2.  I assume that this would clear them off of my future credit reports, resolving the issue of having a high Debt to Income Ratio?

3.  If so, what are the pro's and con's of closing them into one loan, versus 4 different ones?  

Thanks again for you input on this topic!!!

Thanks guys, helpful information!  I appreciate your responses.  I will be talking more with the attorney next week.

I am fairly new to bigger pockets and real estate investing, and excited to be a part of this community. I have owned a single family property for a couple of years now, and it was closed in my name. I know that I need to move it out of my name and into a Trust or and LLC, with my primary objective of protecting my "personal assets" in the event of potential suits connected to my rental. From all that I have read, I believe that LLC's accomplish this, as long as I am not doing anything illegal or am not negligent. My specific question, I know that quite a few people use "Trusts" as well instead of LLC's. Would putting the rental into a Land or Revocable Trust offer the same protection of my personal assets (outside of the rental) as an LLC would? I have an attorney who is recommending that I put the property in a Revocable Trust, and use an LLC to be the trustee of that trust. Any input would be very helpful!

Thanks,
Ron