All Forum Posts by: Nick Leamon

I had a similar question that I asked on the forums.

https://www.biggerpockets.com/forums/81/topics/219...

The responses were basically that you need to contact your insurance company because you most likely aren't covered, and to get covered you will have to get a commercial property as you would for any business which is considerably more expensive.

I ended up not renting to them, because my insurance company didn't even write commercial policies and I would have had to go out and find another insurance provider, just didn't seem worth the hassle and expense.

But keep us updated and let us know what you end up doing and how it turns out.

Nick Leamon

Hey Mike,

Welcome to BP!

I am an investor in and live in McKinney, I would love to meet up and buy you coffee and talk about real estate investing as well as how your faith influences how you operate your real estate investing business.

Sounds like you have a great attitude and plan, for your family and retirement.

Good luck in your investing,

Nick 

Hey there BP Nation,

I have scoured the forums for an answer to this question, and I have left more confused than when I started.

How does DTI ratio work when you own some homes under your name and some in an LLC?

My situation: I currently own 3 homes, 1 primary residence, and 2 rentals (SFH) I know that I am only allowed 1 more under Fannie may and Freddy mac. I am looking to potentially form an LLC in the future with Friends and/or family or by myself, and my question is how will that:

1. effect my DTI ration?

2. effect my Fannie and Freddy cap of 4 properties?

Best I can tell from previous posts on the site is that if you are having a problem with your DTI ration transfer properties to an "entity"(this is the usual word choice with little insight into what kind of entity the poster is referring to) However, when you dig a little deeper, it seems to be that even if you own property in an LLC if you sign a personal guarantee (which they pretty much always make you do* it all falls to you in individual, and therefore counts against your personal DTI ratio, which at least for this, seems to defeat the purpose.

* it seems if you have an LLC with 2 years of tax returns, you can actually have the business get the mortgage, and not have to sign a personal guarantee. (however this mirrors the college grad scenario of if every job requires 2-3 years experience how do you ever get a first job) And even if you could separate the LLC from you personally, how would the LLC's DTI every qualify? I doubt anyone has a property where 75% of the rental income(the amount banks generally count) would give you a 50% DTI ratio on it mortgaged. are the DTI rations on a LLC or business different than and individual?

and then as far as the # of properties. if the LLC buys the properties does that count as any of the 4 properties you are allowed to mortgage? I mean technically the LLC owns it, but I assume you are signing your name on all the documents?

I look forward to learning from all you brilliant people,

Thanks,

Nick Leamon

Welcome! I think you will find all the info you need here!

@Ryan Terwilliger Thanks for the advice, yes they replaced the carpet and pad, and it is a concrete slab. Tenant said that she got an "enzyme spray for pets mart" and used it liberally and that it didnt help.

@Stuart Birdsong Thanks for the website resource, ill check it out.

Hey BP Nation,

So I had some tenants move out that had cats. I used their deposit to replace all the carpet and have the house professionally cleaned, at first everything was fine, its been about 2 months now, and the new tenet is complaining of  a really strong cat (probably Urine) smell in the master closet, an area we had the carpet replaced. it is a slab foundation, any cheap tricks to get it fixed, I honestly don't know what to do, I would have thought to hire cleaners or replace the carpet, but both have already been done.

Thanks in advance for your help,

Nick

Thanks for the help BP!

So it seems that there are a lot of times where the company leases, or at least pays the rent on a rental, it seems to be more common with apartments than homes. Anyone have any insight into how apartments structure the lease? Do they put it in the tenet's name and just get checks paid from the company? or is it common to have the company, or a company employee other that the tenet on the lease?

Just looking for some clarity and direction, 

Thanks in advance!

Hey BP,

I have a perspective tenet, who is being relocated by his company to my area. The lease would be in the companies name, and the company would pay the rent. it sounds like a great idea to me, since companies tend to be more reliable than people, but i have some concerns.

My question is would you rent to him/it?

My concerns are:

If his name is not on the lease will he have any incentive to keep the house nice?

You cant run a credit check on a company?

If the company defaults, or if there is more damage than the security deposit at the end, will I be able to get anything out of the company since I'm sure they have an army of lawyers? What recourse action do I have?

Looking forward to learning from all the wisdom out there!

Nick Leamon

Thanks everyone for all your input.

@Jason Bott

@Jason Bott thanks for the advice, I called my insurance company and they said they wouldn't even write me a policy for it, that i would have to get commercial coverage.

This is why I love BiggerPockets, you all got my back! And probably saved me a large headache.

Thanks again,

Nick Leamon

Thanks @Travis Lloyd

I know there are other day-cares in my neighborhood, but I will definitely look into those things you mentioned. assuming they are non-issues though, what would you do?