All Forum Posts by: Troy Smith

You are not buying an investment property for the sake of buying land, you are buying to make money. So first things first: What alternative investments can you make? Since you make more than your bills, paying down debt is the equivalent of earning a return equal to your interest rates on your debts. Do you have other investments guaranteed to pay you a return equal to your debt interest rates? I doubt it. 

So pay down/off your debt and while you are doing so, look for investment properties and shop rates for purchase loans, etc. Make your personal balance sheet attractive to lenders, as you will probably be signing a personal guarantee in any event, even if you do purchase through a corporate entity. 

So spend the time getting to know your market and the types of properties out there and what it takes to manage them. You may find that you don’t want to be a landlord after all. If that’s the case, you’ll find it’s a lot easier to get out when you’re not up to your gills in debt.

It’s important to start. It’s not important to get X doors in Y period of time.

Hi Troy, 

If you become a member of Tuscarawas Cty REIA (tuscreia.org) You can come up to any meeting in Canton (SCREIA.org) or Akron (ACREIA.org).  Plenty of folks to network with and we also do a lot of events not requiring membership.  We have a lot of transactions going on, education opportunities, and you can get to know the vendors and contractors we use as well.  

Well worth the time and membership fee!  

@Troy Smith With my investment portfolio when we’re upgrading we look at the things that were mentioned like floors, paint, landscaping, kitchen appliances, ceilings can be a quick improvement but we also look at the most outdated things and try to figure out the best way to modernize them if at all possible for the least amount of money.

Sometimes you can work miracles on kitchen cabinets by painting or sanding them down and restaining them and simply changing the hardware to something stylish.

Other times a new $120 vanity with drop in bowl sink and a new $50 mirror instead of a sink from the 50s and a medicine cabinet can elevate a bathroom. Then you add in $200 worth of waterproof LVP and a $40 gallon of paint and it’s looks like it came out of a magazine.

Hey Troy. Jose Medina is the investor friendly realtor for stark Co. Tell him I sent ya- he’s done a ton of deals for me. Great guy.

@Troy Smith this is a common question and a good one :) The answer is it depends and it may not be your choice.

• Generally, buying through your personal name can reduce the interest rate - commercial rates on LLC mortgages are usually higher but you can research this
• Most LLCs on incorporation don’t have any credit so it may be difficult to find.a lender
• If you own the property in your personal name you are exposing yourself to more risk and will want to transfer the property into LLC as soon as you can
• If you own property in your personal name and transfer to LLC the lender may not allow or can call the entire loan
• LLC or personal you need insurance

One solution to the above is to buy the property in your personal name and immediately transfer it to the LLC after closing, but you will need to get pre-approval from the lender before you buy a property and plan to do this since not all of them allow this. The lender can call the loan on transfer - this is a risk and you need to be careful. Finally, if you wait too long to transfer the property from personal to LLC there may be taxes on transfer.

The transfer is called a "Quit Claim". If you search the forums for this topic using the magnifying glass feature in top right corner of your screen on BiggerPockets you will find a lot of discussion on "Quit Claim" "Buying through LLC" etc.

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This post does not create a CPA-client relationship. The information contained in this post is not to be relied upon. Readers are advised to seek professional advice.

Call your local banks and credit unions and try to get pre-approved for a purchase. This will tell you whether you are in the ballpark. We always start buying season with a pre-approval letter in hand before we start looking at houses.

Yes, a DSCR loan would only require minimal documentation from you. Drivers license, entity documents (for the LLC you want to close in), two months of bank statements, and your purchase agreement.
Closing in an entity will keep the loan from reporting on your credit, therefore it will not hurt your DTI when you do need to use conventional lending. I utilize a number of loan programs that accept a soft credit pull that our team pulls, so no hard inquiry there.
Good luck out there this year! Let me know when you need to see some terms on a prospective purchase.