All Forum Posts by: Tom Shelby

So I just paid off a 3 unit building I own, and now want to make sure I protect my asset(s) as well as hopefully enable myself to draw out some of the equity in the property for reinvestment in another property. I'd really appreciate any advice someone might have as to the proper sequencing....should I try to pull cash out before an LLC formation? Will this be more difficult if I form the LLC first? Do I need to form an LLC or is just an umbrella policy adequate? I always have and intend to continue managing/maintaining the property myself, and have read that doing so negates many of the potential benefits of an LLC. Most importantly though I don't want to do anything that will make it more difficult to pull out some of the equity, as I am anxious to leverage that equity into more properties. Thanks

Thanks guys, I appreciate all the input.  Points well made.  I think ultimately the goal has always been to accumulate as many units as possible, and going big sooner may yield a greater number in the end.  Time to see if that's a possibility.

Thanks guys, I appreciate the replies. I agree talking to a commercial broker is definitely the next step to realize what is actually possible. My current cashflow situation is positive on both properties. $700/mo on A and $1800/mo on B. Property A has more equity but lower CF due to CH.13 Bankruptcy with "cramdown". Remaining balance is approximately 120,000 and is still amortizing on a 30 year schedule. This property would be payed off in 8-9 years as a result. Yes I agree the returns on the smaller multis in general do seem to be higher, depending on the property of course. The bigger 30 unit complexes I've been looking at in the 1.5m range mostly have cap rates in the 10% range, whereas some 6 unit properties in my area go in the 250,000 range and have cap rates in the 15-20% range. Obviously from a pure ROI perspective these make more sense and this had been the direction I was heading, but reading a lot on these forums you seem to see a lot of people saying "Go big early, or as soon as you can" for various reasons. I also like the idea of having as many units under one roof as possible. Which has led me to question if I am looking at this the right way or not. Thanks

So I own two 3 family properties that i currently have about 200k and 150k in equity in and I'm trying to decide what is the best step to take next.  I have a few ideas...

1. Sell both properties to yank out the equity and put down on a 30 unit in the 1.2 to 1.6M range (my credit isn't perfect, have a discharged ch.13 bankruptcy)

2. Sell property A to capture the 200,000 in equity and pay off the remaining balance on property B (current balance on property B is 207,000) Then set up a HELOC on property B to access up to 80% of the approximate 350,000 current valuation. This HELOC could then be used to purchase additional property

3. Another wrinkle in the mix is that I need to purchase a single family for personal use. By using sale proceeds from A to pay off B, I have been told I could then qualify now for an FHA loan as opposed to having to wait 2-4 years past bankruptcy discharge for a conventional mortgage. Given the whole Ch.13 BK situation I don't know if I could get a million dollar commercial apartment loan yet or not either.

Thanks in advance for your thoughts and ideas