4-PLEX Buy in LLC? Or 30 year conventional fixed?

Question

I mean, come on folks, I haven't been in the forums for a while, and maybe someone asked this already, but on a 300K purchase the difference between non-recourse, 5,7 year fixed 25 year am, and a 30 year set it and forget it conventional fixed makes or breaks the P&L.

What do I do? Suck it up and pay $1,700 a month for protection, or $1,200. Property brings in 3K. It's in west philly, and if someone sues me, isn't what insurance is for? I could overload on that for like $150 a month and still be better off. Thoughts? Or, does everybody hate me already... Cheers!

Kevin Moyer · Answer

Buy it in your personal name- then go to the courthouse and change your personal name to Jared LLC. Checkmate.

Jonathan R McLaughlin · Answer

@Jared Kotler commercial rates out there in the 3s and if you could get resets instead of balloons at 5 or 7 years I think the commercial is a decent bet. Increased paydown on the 25 year am offsets the gain by the 30 year fixed

kinda like sex OR candy (see what I did there?--fan moment)

Fed is strongly signaling low interest rates for a while

kinda like sex OR candy (see what I did there?--fan moment)

Fed is strongly signaling low interest rates for a while

Eric Greenberg · Answer

I would talk to my insurance agent/lawyer to figure out if you should put it in your name, LLC, or a LLC with umbrella/etc policy. Alot of that will depend on what you have/own outside of this property that someone's lawyer could to to garnish.

Rich O'Neill · Answer

Check out Philadelphia Federal Credit Union. Their commercial loans are great so you can kind of get the best of both worlds.

Jared Kotler · Answer

@alecia loveless so no LLC? How many mortgages can you have in your name? Cool name by the way.

Alecia Loveless · Answer

@Jared Kotler I’m closing on a 30yr fixed at 3.5% next Thursday. The deal is similar to yours 4plex cash flow close to $3,000. A little lower price.

I was biased on the 30yr because a family member just took a blood bath on 8 ARMs down in Texas that they weren’t able to refinance during the first part of the pandemic.

Of course you can’t fix stupid and I’ve given them BP books and advised them to join the forums for some time now so I think they weren’t familiar with many alternative lending options.

Best of luck!

Jared Kotler · Answer

Thank you all. Fact is, I'm sure I'll forget to bay common area electric or shovel the walkway. So, you're probably all correct. Pay more, cover my arse, and write another hit song. Thanks John. The force runs strong through you it does.

Bob Okenwa · Answer

Call your insurance agent/company and/or attorney and ask them about your liability. If insurance covers what you would need, that's your answer. I'd definitely check with the experts though before making a decision.

4-PLEX Buy in LLC? Or 30 year conventional fixed?

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