All Forum Posts by: Samuel S.

Hey BP folks, So I recently refinanced a property out of a land contract, into a 30 yr bank note. I originally purchased the property in an LLC, and the insurance was also in the name of the LLC. Due to the bank requirements, I had to quit claim the property into my personal name in order to refinance. But, as soon as it gets recorded, I am planning to quit claim back into the LLC. I just received a letter from the bank stating that I need to update the insurance policy to show my personal name, instead of the LLC as it’s currently shown as. My question is, if I do this and chance the insurance into my personal name, when I go and quit claim it back into the LLC, would I just need to have the insurance updated to show the LLC as additionally insured? Any advice would be greatly appreciated!!

Thanks for the advice Chris! That makes a lot of sense. 

At this point I am really just trying to get access to any type of line of credit.  Whether it be noo heloc, personal non secured line of credit, or a commercial line of some sort.  Where I can purchase properties all cash and utilize delayed financing to re-pay them immediately and rinse and repeat. 

I wonder if there are many private lenders out there who would be willing to loan on HELOC terms backed by 2nd positions and/or monthly cash flow.

@Brian Ellis Thanks Brian! 

Hey BP Folks,

Wanted to see if anyone has any experience with banks out there (national/regional/ credit unions etc) that are currently offering investment lines of credit?  

Not sure if this is a thing or not in today's mortgage space... I have to imagine other investors are in the same boat, who would prefer to go the HELOC route instead of cash out refinances. Just to have the option to use funds if and when a deals comes by, instead of refinancing cash out and immediately paying on that new higher financed amount.

Thanks in advance!!

@Dan Gauthier Thanks for the advice Dan! Makes complete sense. I figured getting a PPM was the correct thing, especially to mitigate the risk on my end, but due to the potential costs I was hoping than an LLC with a very detailed operating agreement would work as well.

At this point I am leaning towards allowing the investors to have a say in which property is purchased, whereas I will be the "deal finder" as well as property management.  

Hey BP folks, I know there is a TON of info on here regarding syndications, and it has all been invaluable advice. That said, and as the title suggests, I am still trying to figure out if a PPM is needed if the funds being raised meets the Reg D exemptions? My situation is fairly simple: I am looking to raise funds from friends and family. I would not be raising over $1M, no public marketing, and under 35 non accredited investors. The funds would be coming from SDIRA’s and cash. As I understand it, traditional IRA’s cannot invest in this type of deal. The investors would all receive their proportionate equity into the deal, and I would receive compensation for managing the package. In this scenario, would an LLC with a detailed operating agreement suffice? Or does it depend on whether I would have sole investment decisions? As I’m sure is the case with many others in this space, I am trying to figure out the right way to do this properly, yet efficiently and cost effective as possible. Years ago when I just had a duplex, my pitch fell upon deaf ears. Now that I have built a little portfolio, I have friends and family that are very interested in getting involved. Any advice is massively appreciated!

Hey BP Folks,

This might be a shot in the dark, but wanted to see if there are any experienced investors out there with funds available, who would be interested in a longer term equity partnership on an off market real estate deal I have. 

This is for a 6 property package an hour outside of Detroit, being sold from an older gentlemen looking to get out of the landlording business.  His wife recently passed away and she was managing the rentals, so now he is looking to liquidate. He was referred to me by my insurance agent, who currently insures this package.  The sellers lawyer has just sent me the PA with the terms, so as soon as I sign and send back, this package will be under contract and the inspection period will start.

I currently invest in this market, and have a good understanding of the area, market rents, tenant base, etc. I also have a solid network of contractors I work with in this area. These properties are located in working class neighborhoods, and all units are currently rented.

Below are the high level details:

- 6 properties (5 single family, 1 side by side duplex)

- Purchase price = $225k (avg sale price of $37.5k)

- Current Monthly Income = $5,240

- Total Monthly Tax (Estimated uncapped) = $625

- Total Monthly Insurance = $222

- Monthly Cashflow before budgeting and with no debt service = $4,393

If you are interested and would like to discuss further, please PM me. I have an excel analysis showing the specifics with estimated annual ROR's based on an all cash or commercially financed. 

Sam

@Taylor L. Thanks for your input! 
 That’s what I had assumed. And yes he would be putting up all the funds to purchase outright. For the most part it would be passive for him and I would manage the package. The details would of course be spelled out in an operating agreement. 

@John Corey That's a great point. I do not know him extremely well, but I've made offers in the past with using his HML term sheet for the proof of funds. But so far have not done business with him. The funds would be coming from a line of credit, but I do not know for certain if he would be using others funds as well. If he is, could that be looked at as a syndication?

Hey BP Folks,

Was hoping to get some insight on the current situation I am in.

So I am looking to get an off market 20 property package under contract from an older landlord looking to get out of the business. 

I have found a hard money lender who is willing to partner with me on the deal, and come to the table with all the cash to purchase.  

We are still ironing out details, but as of now its looking like he will be loaning me half of the purchase price, we will split the profits 50/50 (after expense budgeting), and I will pay back the loan each month with a portion of my 50% profits.  He will own all the equity initially, but each month as I pay down the loan, I will "buy into" the equity.  So once my loan is paid off, we will be at a 50/50 split across the board on everything.

My question is, are there things I need to be doing to legally to protect myself in this scenario, if God forbid something goes south after the deal has closed? 

Of course I would do everything in my power to make this go as smoothly as possible, but I just want to make sure that I am covered as best as possible.  Would this be looked at as a syndication in a sense, since I am not coming to the table with any funds, although he would be loaning me funds? Or if we lost money, would I be liable because I set up the deal/partnership?  Since my partner would own all the equity initially, in theory would he be able to "kick me out of the company" if he wanted do?  In analyzing the best and worse case scenarios, I am  really just trying to understand my exposure in a deal like this.

Any general or specific advise would be greatly appreciated!!!

@Michael Garofalo @Brian Garrett Thanks alot for your input! Makes perfect sense.  Seems like the more and more you grow as an investor, I suppose the less and less you'll fit into the Fannie Freddie guidelines.