All Forum Posts by: AJ Exner

Quote from @David Ray:

Buy and hold at this point. Thanks!

 Of course, good luck!

Quote from @Sam Booth:

Quote from @AJ Exner:

Quote from @Sam Booth:

Quote from @Andrew Postell:

@Sam Booth several things to consider here:

First, there are lenders out there that will lend to a person.  If that's of importance we can talk about this further.

A single member LLC is how most of us usually start.

Creating a LLC doesn't make any difference on the Capital Gains tax...OTHER things affect this, but not JUST if the property is in a LLC or not.

And the liability thing is always "touted" with LLC formations but very few people will do all of the OTHER things it takes to provide proper shielding.  Again, JUST the LLC formation alone does not provide shielding...you have to do tons of other things as well to do it properly.  

Hope all of that makes sense.

I d love to hear about fix and flip financing to an individual! Let me know who these are.

If a property is in a LLC and then transferred to another LLC or trust then it will trigger capital gains is my understanding.

I second what Andrew says, there are definitely lenders that can lend to you as an individual, but finding them could be tricky.

LLCs can help with the liability side of things, but they can also help on the personal financial side of things as well, like Debt to Income and Personal Credit Score. By increasing trade lines and debt flows, even with that, conventional lenders will cap you at a certain point so LLCs can be very beneficial when you really start to scale.

I am not worried about the liability part at all since home owners insurance offers GL for a lower cost then the trouble of LLCs. But if I need an LLC then which type? S Corp? I ve heard on the podcast that you should never put rentals in a LLC for a bunch of reasons. Obviously big time players do to protect but for just a few rentals and especially where plans may change in 5 or 10 years it would be nice to know how to do it right.

Sure, I mean for ease, simplicity, and flexibility we tend to lean single member LLCs. I have clients that operate just fine in an S Corp, which if any lender can do one, they do the other.

Where I see it help is in the front end processing as much as anything. Whenever you have an S Corp, there are a few additional hoops to jump through to get things changed, which is where if plans change in 5-10 years, it could get a little tricky. 

Whereas with single member LLCs, you can tweak, make changes, and modify pretty readily as needed for any new or existing deal. We find it is the best all-around option, but it might not always be the perfect option.

Quote from @David Ray:

Merry Christmas and Happy New Year!

A friend of ours is helping resettle his cousins who are Afghani refugees in the Akron area. When I looked at the cost of housing there, I became very interested to purchase in the area,  seeing as several properties were in the 80k-150k range. Anyone had experience owning and renting properties there? Best established management companies?

Thanks 

Agree with James on this one, I have some clients in that area and it is a great market to get into with some good stabilized rents in combination with solid purchase prices. Are you looking to BRRR or just buy and hold?

Hey Robert,

I think focusing on the LLC as a conduit to manage liability is a great way to go. I have some clients that would actually set up multiple LLCs that manage a couple of properties, or even an LLC per property, to help offset that. Its a little bit of work on the front end, but certainly a way to help.

It does sound like a strategy that could be beneficial as you start to scale up.

Quote from @Sam Booth:

Quote from @Andrew Postell:

@Sam Booth several things to consider here:

First, there are lenders out there that will lend to a person.  If that's of importance we can talk about this further.

A single member LLC is how most of us usually start.

Creating a LLC doesn't make any difference on the Capital Gains tax...OTHER things affect this, but not JUST if the property is in a LLC or not.

And the liability thing is always "touted" with LLC formations but very few people will do all of the OTHER things it takes to provide proper shielding.  Again, JUST the LLC formation alone does not provide shielding...you have to do tons of other things as well to do it properly.  

Hope all of that makes sense.

I d love to hear about fix and flip financing to an individual! Let me know who these are.

If a property is in a LLC and then transferred to another LLC or trust then it will trigger capital gains is my understanding.

I second what Andrew says, there are definitely lenders that can lend to you as an individual, but finding them could be tricky.

LLCs can help with the liability side of things, but they can also help on the personal financial side of things as well, like Debt to Income and Personal Credit Score. By increasing trade lines and debt flows, even with that, conventional lenders will cap you at a certain point so LLCs can be very beneficial when you really start to scale.

I would think that you could just refinance it as long as you are a member of the LLC. You might need to get signatures though if there are other members of the LLC.

Quote from @David Johnston:

Hello! I am excited to learn a lot from you all! I am very new to REI and have a question regarding an LLC. Is it best to open an LLC in Wyoming or in my home state (WI)? Also, how do you buy a property under your LLC or move a property you already own into your LLC? I talked with a lender and they said they would not do a conventional mortgage to an LLC, so I am wondering how it is done with multiple properties. Thank you!

Yeah, most conventional lenders don't like doing an LLC, but LLCs can provide some flexibility. Like, if you wanted to do a 50-50 JV within an LLC where one guarantor has a better FICO and the other has more experience, there are some means where that would be beneficial.

There are some lenders that actually only lend to LLCs (or some kind of business entities), but it does really depend on what you are going after and your general growth strategy how you would want to go about it.

Quote from @Nicholas L.:

two (?) words - DSCR loan

call The One Brokerage - David Greene's company

not affiliated - just a happy customer

good luck

Hey @Clay White

Yeah, DSCR is definitely the way to go. The issue is going to be that even if you find a conventional lender that can do it now, you will run into it DTI issues on the next one, or the one after that. So the best way to scale, is to get set up with a DSCR lender now and just continue to BRRRR.

Quote from @Thomas B.:

Investment Info:

Small multi-family (2-4 units) buy & hold investment.

Purchase price: $99,000
Cash invested: $130,000

1947 SFH 2/1, previous owner converted the single car garage into 1/1 apartment and a portion of detached 2 car garage into an efficiency. Extensive renovations mostly complete, just needing interior finishes. Plan to rent through Sec-8 due to neighborhood demographics, proximity to bus line, etc.

What made you interested in investing in this type of deal?

Cashflow.

How did you find this deal and how did you negotiate it?

Bank-Owned property. Previous owner passed away. In retrospect, I should have stuck to my initial offer of 60K, knowing it needed foundation, roof, and electrical. Got emotional when they said there were other offers higher than mine. I think realtors are out-right lying when they use this line... If not, I'll still stick to my guns next time.

How did you finance this deal?

All cash, using funds from a HELOC on my primary residence. I retrospect, this was a mistake since I am now in a cash crunch at the end of renovations. Next time I'll use Hard money lending for the initial purchase.

How did you add value to the deal?

New roof, foundation repair, and updated the electrical. Extensive renovation.
Bought as SFH, going to rent out as tri-plex. Sec-8 rents beat open market rates and the waiting list for prospective tenants is huge.

Hey Thomas,

Have you considered doing a refinance/rehab? Since you've got it with cash/Heloc, you should be eligible for either a cash out/rehab or even some delayed financing to help relieve the cash crunch and get set up with a rehab escrow, which could be really helpful given the extent of the rehab.

Quote from @Stephanie Cortez:

Hey all! I am still learning and trying to figure out the best way to finance buy and holds and eventually flips. I love bigger pockets and how much I have been able to learn from others. Something that I see a lot is using hard money lenders and OPM to finance projects. However, I have a property that I own free and clear with an appraised value of 160k. I would like to do a cash out refinance and complete the brrrr method and hopefully repeat the process. My question: what are the benefits of using a cash out refinance vs hard money? Can you use hard money or OPM without any of your own money down? Anyone willing to teach me the process and or let me watch them work a project?!  I would be open to property management/ administrative tasks in exchange of learning the ropes. 

Awesome, and sounds like you've got a great start.

So Hard Money lenders can actually help you on both the flip side (the bridge) and the DSCR (the long term). The advantage of doing everything through a hard money lender is keeping everything through a business entity of some kind and keeping it off of your personal credit and debt-to-income.

Experience will be the biggest factor to what kind of terms you can find on those "flip" bridge loans (the 'BR' of the BRRRR). If you have a property that can rent out and cash flow, then it would pass what lenders call the Debt Service Coverage Ratio (DSCR), ie it cash flows monthly. If you can show them that a property cash flows, and you have decent credit, then you will be able to find a lender who is technically HM that will offer a 30 year fixed loan.

Is your property in Philly? I am seeing A LOT of movement up there so it seems like a great market and a great opportunity. Especially as rates are starting to trickle down and put yourself in a good position to snag a property or two in the spring.