BiggerPockets

hello BP world, My name is Nareth, 25 yeras old, began in real estate at 21 managing family real estate portfolio 16 units while in college when my dad passed, had to step up. But there is so much to learn but I feel that its my time to branch off, take some risk, and work on establishing my own portfolio. I would like to buy, fix, and hold. I am licensed real estate agent and newly licensed loan originator.

I'm interested in incorporating into an LLC, buy properties in my personal name with co-borrower (considering I do not have 2 years of established work history) and transfer to LLC, and build off on it. I would have about $50k to start off with. Are there any suggestion, tips, advice, word of wisdom you experienced professionals have for me?

Hi Nareth! :D

I am new to Bigger Pockets but not real estate! :-)

I have a couple suggestions. The first is that if you are looking to buy and hold, you need to have 5-10% of the Market Value of the Properties you are holding in cash reserves to be used for emergencies...to give you moving room if you need it, especially when you are relatively new to this kind of investment. I hope that isn't discouraging---I think its most wise.

So, if you have $50,000 to invest, I would keep 5-10% of that for reserves for the building you will purchase in case of unexpected repairs, etc.

The rest you can use for a down payment towards an investment property. I would suggest buying properties for cashflow in Texas---we have great spreads for cashflow.

An LLC is really easy and relatively inexpensive to set-up, but I would have an attorney write up your articles of organization. I would suggest having 2 managing members in the LLC rather than just you--if you are married your wife. If not, you can set-up a single member LLC now, and alter it later. It just makes the LLC stronger legally.

Also, I would recommend doing some quick flips while you are building up your long-term wealth for the first 6 months-year. You can do what is called "double closings" (if you are in California you may not be able to do this), and not have to put down any money at all. In other words, its very realistic to make $10,000-$50,000 in 6 weeks doing quick flips...and make that per month every month after that.

This will tremendously help your liquidity and will quickly increase your confidence in real estate investing.

Hope this helps!!!

Blake Templeton
[LINK REMOVED]

thank you all for your warm welcome....

Blake, thanks for all the helpful suggestions and tips, very much appreciated.

Hi Nareth,

I'm new here myself but want to extend a welcome to you.

There are lots of great areas to check out in the forums so you'll want to bounce over there and see what most appeals to you.

IMO, I'd be careful about sharing how much cash you have to invest as well as any specifics of particular deals that you might not want appearing in a public forum.

>Brian

Peter,

Thank you for bringing this up because I actually have several questions and hope you or any other BP members could help clarify this.

The reason why I wanted to use my personal name is because I didn't think an LLC would be able to qualify for a mortgage because its new entity and without established working business history, I wasn't sure they would lend to the new entity.

So my approach would have been to buy with personal loan and quitclaim it to the LLC. However, if I could purchase with a commercial loan under the LLC and put 20-30% down wouldn't be a problem but not sure how the qualification would work?

Would they want a personal guarantee and request my 2 year work experience because (embarrassingly) I don't have 2 years of solid reported income, after I graduated I worked as a leasing agent and after a year as I went to apply for jobs, the job market tanked and economy sucked. But real estate is what I want to do anyways.

Anyways, having funds of 20-30% to qualify for a commercial loan wouldn't be a problem as I would be able to get that as I am now starting to close some deals and be able to raise investments for it as well.

My questions are: Would I need someone to co-sign the loan? If so, could I have them be the credit investor but I be the capital investor and put that under the LLC? How would a new entity qualify for a commercial loan? Is there a limit on the number of commercial loans I can get? Also, if I were to be able to quitclaim several free and clear properties into the LLC as well as a cashflow multi family (6 units) into the LLC would that help the entity at all in getting a commercial loan?

Thank you for viewing and the BP members who offered suggestions, advice, and guidance.

The issue with conventional is you are going to get maxed out at 4 loans (not sure if they've changed that again).

Commercial may be shorter amortizations and higher interest rates than conventional but it normally has lower loan fees. The higher down payment can be an issue but there are commercial lenders (usually local banks) that will do lower downs.

On top of that qualifying for a commercial loan is not nearly as stringent as conventional. Commercial lending is based more on your financials and relationship rather than on the particulars of your credit report and income verification.

Originally posted by Ryan Webber

The issue with conventional is you are going to get maxed out at 4 loans (not sure if they've changed that again).

Commercial may be shorter amortizations and higher interest rates than conventional but it normally has lower loan fees. The higher down payment can be an issue but there are commercial lenders (usually local banks) that will do lower downs.

On top of that qualifying for a commercial loan is not nearly as stringent as conventional. Commercial lending is based more on your financials and relationship rather than on the particulars of your credit report and income verification.

Nareth would be considered a start-up business as he is just now forming an LLC. all lending will be based off of his personal score. many lenders will not even qualify him for a commercial because he has been in business less than 2 years. tough to go off of anything otherthan personal credit when nothing else exists.