All Forum Posts by: Brandon Plombon

@Matt Saxton Congrats on your success! It sounds like you put a long of sweat equity into the deal. Did you have any major challenges or surprises?

Hi Greg - I would talk to your lender about doing rate resets on a fully amortized note instead of a traditional balloon in 5 years. Basically the rate will be fixed for 5 years then reset back to an index, typically WSJP +- a percentage. This effectively guarantees loan renewability while saving renewal costs (appraisal, title work, loan fees, ect) as long as you are making your payments you never have to worry about the note being called or nonrenewed. However; this does not protect against long term rate increases but as long as the rate environment is still favorable you can always refinance out if the rates get way out of whack.

 Rather than taking 1 large capital gain in a single tax year they can spread that gain out over multiple years by utilizing seller financing and become "the bank" by collecting interest payments on their own property on which they can foreclose if the buyer stops making the payments, hence becoming the bank. Feel free to reach out if you want to discuss further or have a specific situation you would like to talk about.

Hi Sean - Where are the properties that you are looking at located?

Spreading out capital gains taxes

Hi Shayla - Where are the properties located?

You should make it clear in your operating agreement who can do what and what signatures are valid to conduct financial transactions. The banks will require all owners of 25% or more to be disclosed for beneficial ownership. As far as signing goes - I've had a 4 person structure (all 25% owners) and the operating agreements states that any of the four can sign and conduct business of their behalf without requiring others signatures. So on the loan documents only 1 person was needed to sign the note but we required the other parties to Docusign personal gurantees, W9s, ect. Long answer but it depends on how your entity is setup and the bank will be required to follow your legal entity documents.

John - I would ask your local lenders to see if they are interested in lending on bare land. Most bank that do will have the LTV requirement closer to 50-65%.

Mike - Without knowing more financials on your current residence it is hard to tell you what you should do. If you haven't refinanced in the last 5 years or so you can probably save on your interest rate. It sounds like you don't want to spend the money on a cashout refinance without a deal lined up which makes sense as you will be paying interest on the money borrowed, whether or not you are fully utilizing the cash that you pulled out. To answer your HELOC question - the short answer is no you won't lose the $30K of available credit. The longer answer is maybe - when your line of credit renews in 12 months or whatever the term is and they ask to do a new appraisal on the property if it comes in lower than previously you could "lose out" on the availability of $30k of credit. Always read your loan documents to get the most accurate information.

It's crazy to me as well. I'll stick to the real world real estate that won't just vanish if something goes wrong. I do find the blockchain technology extremely useful for some applications and has benefits but "investing" in virtual real estate is more like gambling if you ask me.