All Forum Posts by: Shane Duncan

I am looking at a 7 bed 3 bath townhouse that is currently being used for student housing near a prominent university. It is listed as a single rent value but I believe they also rent by the room. 
Do lenders consider this a multi family and require commercial financing or is it considered a single family? It has a large shared kitchen, common areas, and shared bathrooms. 

I agree with the above comments. Your numbers are all that matter. Good deals and bad deals are predicated on meeting your financial goals. The first step would be to decide what your goals are. Are you most concerned with cashflow, appreciation, or tax benefits? If it's cashflow, try to use AirDNA to determine your BnB numbers and give a best prediction as to whether it works. If it's appreciation, look to similar properties that have sold recently in that area and consider building a structure other than a tiny home since they don't appreciate like permanent structures. If it is for tax reasons, calculate your depreciation and consider a cost segregation analysis to maximize the deductions. Deals are in the eyes of the beholder. Get all the information you can, then it's a matter of whether you're ready to take a leap of faith.

Quote from @Jay Hinrichs:

there is a better than 50 50 chance he has HML on those you know rehab loans that are short term in nature thats why they have to be paid off via sale or refi.. Before U get to far into this deal you could pull public records look at the existing mortgage and or Deed of Trust and see who the beneficiary is this will tell you a lot very quickly if you simply cant ask the seller what his terms of his existing mortgage are.

Thank you. I will definitely look for those records. 

I found an owner that bought three multifamily properties last year with the intention of renovating them, and then keeping them long-term. He got really busy and only was able to renovate one of them now his construction loan term is up and he has to pay full mortgage on all three. He wants to sell the two unrenovated properties and it is all currently off market. I’m not sure what his current loan rate is but a year ago probably puts it in a high-fives or low sixes at the most. Regardless, it could be a substantial savings for me. Does anyone have any advice on how to propose seller financing, assumption, or subject to when I go view the properties tomorrow ? I’m not sure how much equity he has in the properties either. I have a great credit score and solid W-2 earnings so I’m pretty sure I could assume the loan. I just don’t wanna scare him off with any of these offers. He is a motivated seller, but not that motivated. From what I’ve been able to discern, he is fairly wealthy. But no one likes losing money every month on property. Has anyone been in a similar situation?

Quote from @Mary Parsek:

Does anyone know of any banks or lenders that will finance the purchase of commercial real estate notes? I have opportunity to buy a small portfolio of performing commercial notes with LTV's less than 50%. Just curious if anyone has financed any notes before.

What a great opportunity. Congratulations! I’m not sure a bank would be your best option but it can’t hurt to try. If you have a good rapport with your local bank, drop by and ask. Otherwise, a partnership, private lenders, or even hard money lenders might be an option. It’s about proving you can return their investment. This is actually something I’ve wondered about and wanted to find. Kudos to you. 

I'm a new investor trying to get started in multi-family long term rentals. I've been absorbing everything I can from posts, podcasts, and books to prepare me for the plunge. I've tracked down some great deals but lost them either to getting there just a bit late or not being able to get the funding. 

I listed my location as Lake Ozark, Missouri because my city doesn't show as a selection but I'm actually based out of Jefferson City, Missouri and scour all of Central Missouri for deals. I am software engineer by trade, but have always loved and followed real estate. It's hard to beat the utility of property. It's always needed and always appreciated in the right eyes. 

I look forward to meeting like-minded investors and hopefully gaining more valuable knowledge and connections. 

Quote from @Stuart Udis:

@Shane Duncan great post! Most merely create an LLC and believe that in itself offers protection. It's the way you operate your business that's of greater importance. Your acknowledgement puts you way ahead of the curve. While it is difficult to pierce the corporate veil and the standards differ depending on the jurisdiction, commingling of funds is the leading reason why plaintiff attorney's succeed.

Thank you so much for the help. My plan is to keep staunch records for money transfers, and for this large contribution, record it as a loan from me to the LLC. It will pay me monthly payments at a set interest(same as my HELOC) and I will then pay the HELOC off from my personal funds. I want to play it as safe as possible and not have the LLC directly paying my personal bills.

Quote from @Lateefah Mathews:

Hey @Shane Duncan I know maintaining corporate compliance with LLC finances can be a bit of a puzzle for sure. To keep your limited liability intact, make sure personal and business finances have a clear divide – paper trails are your best friend here.

As for the HELOC: I would consider setting up a formal agreement for a personal loan to the LLC. That agreement would be between you and the company (despite whether you're a member or not) This way, you're covering business needs while maintaining transparency. Keep this in your corporate ledger JIC.

But, and it's a big but, don't forget to loop in a legal pro. They can help tailor this approach to your specific situation and ensure it's all above board. 

Hope this helps a little, as I am not a legal professional. Stay sharp and You got this!

That’s great idea! Loaning the down payment to the LLC is an easy paper trail. 

I am closing on a multi-family soon and the mortgage will be in the LLC's name. All income and expenses will be handled by the LLC. The problem is that I am using a HELOC to assist with the downpayment for the loan. If I use the LLC's income to pay the HELOC payment directly, will that pierce the corporate veil? I want to be very careful to maintain the limited liability an LLC affords. Should I transfer the downpayment to the LLC account as an owner contribution and then log the income as repayments back to me? Then I can use the repayments to pay off the HELOC? I just want to make sure I maintain the liability protections but I still need to repay my HELOC without coming out of pocket.

Wanted to post an update. I secured financing thanks to contacts I made because of this post. I love BiggerPockets. As I was preparing to structure my offer, I got a call from the property manager informing me that the owner had traded this property to a friend for an RV and an ATV! I’ve never heard of such. I reached out to the new owner and he has no interest in selling. Wow, pretty disappointed to have missed this but I learned a ton and met some great people. Thank you for all your help!