All Forum Posts by: David A Lisowski

Why is the listing agent dictating terms of your offer?

They can say they will reject any offer that has an appraisal contingency, but they can't force you to send an offer with or without contingencies.

If there's a financing contingency, the lender will supercede the listing agent's wishes. Whether "appraisal contingency" is checked or not won't matter at that point. It would only be a means to keep someone's earnest money when/if the property doesn't appraise.

I established an LLC for our rental property, but not to hold title or get a loan.

Mainly for bookkeeping, and as a "management" company. Essentially, the LLC collected the rent and paid all the bills (mortgage including escrow for taxes and insurance, water, and HOA). Any repairs or services required, etc. came from the business LLC account.

At some point, we might refinance and transfer title to the LLC. But then again, the current loan terms won't be beat for quite a while.

Anyway, there is some great advice here in the thread. LLCs tend to get overblown, and hyped-up. But there is more than one way to use an LLC.

@Kevin Nieves

Open a HELOC and take a draw when you find a deal that works. There's no need to have cash sitting in an account.

The only reason to have it in an account would be to avoid "sourcing" the deposit during a loan approval.

Otherwise, the numbers should drive the deal.

@Brandon Vanderford

Land has no value in the mortgage world. Lenders won't have much collateral on empty lots.

Most "land" loans are essentially construction loans that turn into mortgages (construction-to-permanent loans) once the dwelling/structure is completed.

A "buy and hold" on land is essential prospecting. It's real estate prospecting. So that will need to be financed differently (i.e. cash, hard money, etc).

It will also depend in if it is raw land, or undeveloped land (assuming it's not already developed).

My wife and I sleep on a king. Anytime we travel, we want a king.

In our 2/2 STR, we decided on two kings rather than a king and queen. If people are traveling with another couple, or friends, who decides on who gets the queen?

We also wanted the beds to be more comfortable than the ones at our home. Vacation should be restful and relaxing, and comfortable, restful sleep is important.

If a king fits, then king.

Do you expect guests to spend a large amount of time in the bedroom aside from when they are sleeping? If not, then the "space around" the bed shouldn't matter much.

@Chris Mason has a great explanation.

Essentially, the property is on your personal Schedule E so it must be used in DTI calculations. Is it negative cash-flow on Schedule E? Do you claim depreciation on Schedule E?

Did you provide a current lease?

And as others have mentioned, you should have the LLC documents and the commercial loan paperwork available as well.

Sounds like there is miscommunication as to the actual issue, however.

@Charles Granja

It wouldn't necessarily be the mistake of previous title companies (1, 2, and 3). It protects you while you own the home from anyone suing you as the current home owner if they are claiming a lien or right to the property from before you purchased it.

In terms of % of claims/owners this protects in a given year, I haven't found data, but would also be interested to know. Chicago Title or American Title, or CoreLogic probably have data. Maybe, Fannie or Freddie....?

But compared to the relatively low cost of owner's title insurance, it probably outweighs any situation where you might be sued. Benefit >> cost

On a refinance, that you have owned for several years, I wouldn't necessarily worry about owner's title insurance, but for purchases, I'd recommend it. You never know what will happen.

Why not do both?

Going to school doesn't prevent you from investing in real estate.

My first purchase was precisely because I went to graduate school in a new state, TN. It was cheaper to invest in my primary residence condo than it would have been to rent. House hacked by having a roommate. He paid all the bills (like $700/mo.) because even that was cheaper than if he rented somewhere.

My degree hasn't disappeared. My real estate investing was aided by the fact that I held a steady job (two or three usually) and could qualify for more loans and lending options as a result.

Student debt is no joke though so I understand the apprehension. You might think investing $60,000 in a home or investment property will have better returns than investing that $60,000 in yourself and your education. That's going to be a personal assessment based in time, costs, returns, etc.

But there is also another thing to consider in all this. Not that I'm regretful, but rather unaccomplished, and my decision wasn't even as extreme as yours; but I switched majors from Physics to History. I've often discussed "earning a Physics degree" at various points since then, and still remains something I want to do. However, once "real life" kicks in, certain things lose all priority.

Before I get roasted: the Physics degree would not be for anything other than personal fulfillment. Does it have to be an actual degree? Probably not.

Would I like to have the time or even the option of pursuing that if I want to? Yes, most definitely. And that's really the point.

Both times so far, has been a HELOC on our primary residence.

$10,000 for the first house. That sold to finance the second. That primary had enough equity to purchase a STR using a HELOC.

We sold the primary with enough to pay both loans and make some money. Moved into the STR. Refinanced as our primary. Opened a HELOC, and purchased a LTR nearby.

We plan to keep both and hopefully keep the HELOC open. New primary is next to get this back on STR market.

Probably rinse and repeat for the next few.

@Carlyle Gianni

Typically, depreciation is added back in on rental income calculations.

The difference in value used based on the Schedule E depends on the loan program, terms, underwriting guidelines, any overlays, and even, your qualifications.

A DSCR loan will be different from a Conventional loan. An ARM would be different from fixed rate (possibly). If the property is a Condo, or the loan is a certain LTV, or at different DSCR ratios, or loan amounts over $1,000,000, etc. are all factors that might also affect it. Whether it's the subject property or another REO, has a current lease or not, etc. can also affect how the property is viewed and rental income calculation.