All Forum Posts by: Tom S.

@Danny Lyu  If you're getting 10% down on that loan product, I would definitely do that and just close in your personal name.  Will be far easier to purchase more property with 10% downpayments vs 20-25% for each one.

Umbrella insurance isn't too expensive, $2M for $1200 per year.

Just be sure to run the properties as a good business, address any concerns brought up by the insurance company (they usually do annual inspections).  If they say put up higher railings, additional smoke detectors, etc, complete it promptly and document it.

I've been in the landlord business for 20 years, and I've always kept my properties to code and well maintained.  No issues with any lawsuits.

Good luck!

@Natali Cobb  I recently switched over to providing the washer / dryer to start, but say they're responsible for any additional maintenance.  So far so good.

I do feel like you attract more tenants by offering the W/D.  The downside is that when something breaks, it takes forever to schedule appointments, make sure the tenant is home or a property manager can let them in, and sometimes it even takes two appointments.  One to diagnose and one to fix after a part is ordered. 

My 2 cents...

@Kathy Merkh  I would say it's a scam.  Normal mortgage rates are in the high 6's now, for a personal residence, and higher for an investment property.  I don't see why anyone would led at 5%.  There should be no upfront fees for the loan, other than an appraisal.

Their website is also full of typos and grammar errors.

@Sharad Bagri Lots of people say "as long as the payments are being made on time, the lender won't care." But you'll have to change the insurance to the LLC, and the lender will be notified. I disagree, I had a time when my name and the name on the insurance didn't match and the lender was all over it, regardless of the on-time payments.

Your best bet is to refi into a commercial loan that allows the LLC (if you've already purchased the property), or close directly with a commercial loan / DSCR loan.

@Brittane Jenkins  A few other somewhat creative ways: 401k loan (if you're comfortable with that), margin account on your stock investments, seller financing for the downpayment (usually has to be done with a business or commercial loan for the remaining part of the loan).

@Elliot Angus Welcome to BP!

This scenario is entirely possible and I've done stuff like this before with seller finance (SF) properties I've purchased and then refinanced later.

That said, if you have the downpayment now, why not just use conventional financing now? With a 25% DP on a $250k property, the down would be $62.5k now versus the $100k in your scenario.  Freeing up more money immediately, and then you wouldn't have to worry about refinancing in 5 years.  And pay another set of closing costs.

If you do have to refinance in 5 years, the main concerns would be to make sure your credit is good for the refi.  Also make sure you have good documentation of your payment history.  The SF probably won't show on your credit report, but a bank lender will want to see the payment history, especially the last 12 months.

Hope that helps and good luck!

@Jeremy Hartwig  You can always pay for an appraisal to be sure.  Yes, it may go by the income approach but depending on your area, the comp approach may also be factored in.  I have a 5 unit in VT and the appraisal weighed the comp approach slightly more than the income approach, because the area was pretty rural.

@Cliff H.  Hi Cliff - is that website comes up as invalid / expired.  Is there an updated one?

Thanks!

http://vermonttwincabins.com

@Tanner Johnson  Hi Tanner - what was the end result of this?  Were you able to get funded?

@Jesse Dominguez-Castelan You should also explore one of the quickest options to this situation - reach out to the seller financing provider and see if he'll extend the balloon a few more years.

I did this in the past when my 5 year balloon was about up, it was a simple email checking if he was happy with the arrangement and would extend an additional 3 years.  Reply back was that would work, we raised the interest rate slightly and I paid for the attorney fee to update the note, which was only a few hundred dollars.

Just a thought!