All Forum Posts by: Casey S.

 Hi Matthew! I appreciate and applaud your loyalty and affinity for real estate investing in the South Bend / Michiana area. I apologize if there's something about my profile or my forum posts that suggest that I am not local to this market. In fact, I've lived in South Bend, Granger, or Osceola for 98+% of my life, including the last 14 years consecutively. 

I want to add value to the area by; 

--renovating and beautifying old/dated/depreciated properties to give renters and home buyers more modern and attractive housing options, 

--by providing rental housing that is clean, updated, and well-maintained, 

--by providing short-term renters with affordable yet highly amenities options while they visit family and friends, 

--and to provide those here on business for 1+ months (but less than a year) with attractive, furnished lodging options so they have a place to stay and while they are here, they can stimulate our local economy, 

--lastly, I want to add value by creating a continuous demand for contractors and tradesmen as I renovate and maintain my properties.

Thanks @Tyler Reed! I've come to the conclusion you shared, during these past couple of days. I will either have to go the hard money or private money route, but not a mixture of both. I hadn't thought about the funds being escrowed and there being a "lien check" of sorts before draws are approved. That's super helpful to understand. 

@Ryan Rominger, thank you as well! I've begun speaking with a mortgage broker who can hook me up with hard money and DSCR options. I may get in contact with you for recommendations as I get closer to selecting a lender for phase2/DSCR. The thing that sticks out in my mind about that portion of the process is that many DSCR lenders would finance an amount up to 70% of the ARV of the property. Say, I bought a property for $150 and put $50K in rehab into it. Recently sold properties that are comparable to the "After repair" version of the property suggest (say for example) $280K. 0.7 X $280K = $196K, which clearly is short of covering the $200K investment (not even counting holding costs and closing costs). It's that risk of the ARV not being high enough is a main thing that gives me trepidation. I'm told that as long as I involve my lender or broker in my plans early on, they can validate throughout that I am pursuing an ARV that is actually attainable, I should be okay. I downloaded a BP guide to estimating ARV that I am going to dig into. Just wanted to mention it in case you all have insights in calculating ARV and creating reno plans that are going to pack the best bang for the buck (like adding a bedroom and a half bath to a 2/1).

When examining properties listed on the MLS, It's seeming few and far between that there's a clear ROI to renovate, force appreciation, and achieve a high enough ARV to cover the hard/private lender's principal, their interest payments, reno costs, closing costs, etc. I am not expecting to walk away with a lot of cash after all of this -- just lookin to avoid cutting a big check in closing on the refi/DSCR. I'd have a cash-flowing property that will appreciate, plus tax benefits, principal pay down – and that's the point.

This would be my second rental property. I am looking to leverage PML funds in place of my own cash covering a down payment, but to your point, I could cover closing costs. 

Hello! I'm looking to invest in a long-term rental here in South Bend, Indiana – but I'd like some recommendations for a hard money lender because for the initial purchase, I plan on borrowing for the purchase price, renovation costs, and closing costs.  In addition to a hard money lender providing the bulk of the purchase price (ideally 80%+), I have access to a private money lender who could cover the down payment, and as for the renovation and closing costs – those would be covered by one lender or the other.  The hard money lender has to be okay with my private money lender being secured in 2nd position.  

The idea is that I'd select a property based on the opportunity to force appreciation and create a sizable difference between purchase price and ARV ~ choosing a property that's in solid shape (not a complete dump), and has some extra space to add a bedroom and a bathroom, potentially by having an egress window installed in the basement, new flooring, plumbing, tile, paint, etc. I'd even consider converting a garage into an ADU.

After the renovation, I'd refi and pay off my hard money lender as well as my private money lenders, covering holding costs, closing costs, and ideally netting a bit of cash that I'd use for the down payment on the long-term debt. I suppose I'd refi into a DSCR loan, but I have some requirements:

*Nested/layered LLC -- In my case, the entity that purchases and owns this property will be a subsidiary LLC that is owned by a holdings LLC that is owned by a trust. So, I need the lender for this longer-term debt to be okay with this nesting/layering of my LLC.

*I don't want my personal credit or DTI impacted. I understand that in many cases, a personal guarantee will be required.

Thanks in advance for your recommendations / referrals. I will also fill-out the BP Lender Finder. I just wanted to hit from multiple angles. 

Hello! After buying a property via DSCR loan with an un-nested LLC, can I legally move that LLC into my corporate structure so it would be owned by a nested LLC? I've been told that the lender wouldn't appreciate this, however, if it's legal to change the LLC's ownership after closing, I'd consider it. The whole point of setting up my layered corporate structure was for asset protection, so I'd like to use it, if at all possible.

For background info:

*I have a trust that owns a holdings LLC, and that holdings LLC owns my operating LLC. This is the nested LLC I initially planned on using for this property purchase.

*However, when I made it clear to mortgage brokers that I did not want the DSCR lender nor the servicer to report to the credit burueas or impact my DTI, they said that they could accommodate that as long as the loan docs and the title are in the name of the LLC (borrower = LLC, not me personally).

*However, then we hit a snag with the fact that the purchasing LLC is nested within my corporate structure (owned by another LLC or trust).

*So, I had to spin up a new, un-nested LLC just to get the deal done.

*Now, I am left wondering how I will ever be able to pull that un-nested LLC and the property It owns into my corporate structure so it's ultimately owned by my trust. If anything would happen to me and I'd die. I'd want the business to be inherited by my family.

What do you all think? Can I legally change the un-nested LLC's ownership after I close on this property?

@Account Closed, given your SubTo experience, how do you calm the nerves of a seller who is concerned that their DTI would be negatively impacted by the buyer not paying off their existing mortgage? I've heard that by having a servicing company move money from the buyer's account to make on-time payments each month, documentation can be provided to a loan officer who'd then be able to remove that debt from the seller's DTI as they work to gain pre-approval to acquire a new home. What's your stance on that? Thx!