All Forum Posts by: Anthony King

Quote from @Chris Seveney:

Quote from @Anthony King:

Are there any rules/regulations regarding private lending from family members? How are people structuring these deals? I have been doing flips/BRRR's with my own money and would like to bring on family members to earn a return by loaning to me directly (not tied to a specific deal), at a fixed interest rate payable in one lump sum similar to a CD with a bank.

If I do a promissory note through a title company attorney is this enough? How do I provide the investor a 1099?

 You are moving into a very gray area if you are borrowing money from more than 1 family member and it's not for a specific deal as you should need to file an exemption from the SEC. It does not matter if it's your mother, brother or someone you do not know - the moment you start commingling funds is when you star getting into securities. 

I would consult an attorney. If you do one investor one deal that is different story typically. But as always, consult an attorney.

I figured that were the case. However, not to be a wise guy, but serious question...what if I wanted to borrow $25k from 5 different family members to buy an RV, or start a small business, or pay my bills? If the loan is not connected to real estate in any way and I have the means to pay them back, are simple loans from multiple family members not allowed regardless of how I plan to use the funds? 

Are there any rules/regulations regarding private lending from family members? How are people structuring these deals? I have been doing flips/BRRR's with my own money and would like to bring on family members to earn a return by loaning to me directly (not tied to a specific deal), at a fixed interest rate payable in one lump sum similar to a CD with a bank.

If I do a promissory note through a title company attorney is this enough? How do I provide the investor a 1099?

@Marc Rice can you share with me please?

@Samme Chan I can help you analyze this deal if you want to send me the address. I invest in Cleveland/Akron/Canton.

@Zach Edelman dealcheck app. Thank me later.

@Ola Owoyemi I have a local DSCR lender who does cash out refi with no seasoning and 80% LTV.

@Pollo Diaz it would probably just be kinder, and easier, to tell your grandparents to "please kindly send funds to Nigerian Prince and you shall be awarded with worldly riches". I'm sure they'd rather be robbed by a nameless, faceless internet scammer than their own flesh and blood. At the very least they'd still have a home. Do your grandparents know you are planning to rob them?

@Adrian Smude I just bought a SFH for 20k, put 38k into it, got a renter in for $900/month and it appraised for 105k. I'm doing a cash out refi at 8.25% and getting 23k cash out. It breaks even, I have $0 in the deal and I have 23k cash out. Another SFH I am in the middle of refi...purchased for 57k, put 20k into it, appraised for 120k, rented for $1,250, 8.25% rate, breaks even and pulling 13k out. Another one in the middle of rehab right now...

Seems to be working for me.

@Jeremy H. Yeah, this is looks exactly like one of those posts. All of these agents work together and are posting from neighboring cubicles trying to drum up business from left coasters.

Quote from @Amy Raye Rogers:

Quote from @Anthony King:

@Amy Raye Rogers I don't know how to tell you this, but what you did is a BRRRR. All you are doing is using a LOC as cash for the purchase and rehab. Just because you are leaving equity in the deal doesn't make this unique. I've grown from 1 to 30 doors in 2 yrs using this same process on a handful of them. I had to reread what you're doing a few times because you made it a lot more complicated than it really is.

Use LOC to purchase and rehab. Finance the purchase and rehab cost leaving equity in the property. Pay off LOC. Repeat.

Am I missing some detail that makes your strategy unique?

It is similar. What makes it unique is the emphasis is building equity and growing the credit line instead of pulling the equity out for down payments as most BRRRR investors do it. You are essentially right, I guess I would consider this a "higher and better use" of the BRRRR method than what is commonly taught.

Gotcha. There are two extremes to look at it in my opinion and many combinations in the middle. You can pull out the max LTV and put the excess toward more deals, maximizing your leverage, and minimizing cash flow monthly. Or you can only take out only your purchase and rehab costs leaving excess LTV in equity, reducing your leverage (and risk) down to only what you need, and maximizing your monthly cash flow.

What I'm not getting with your strategy is how do you increase your LOC with every new deal? Do you have some type of portfolio LOC that you can increase freely? Or do you have to open up a new, separate LOC each time you complete a BRRRR?