All Forum Posts by: Erik Browning

Quote from @Angelo Cortez:

I have two W2 jobs. W2 income is total ~300k/year. I already co-owning a duplex, but the VA loan is under my friend's name, so I don't think I can quite deduct that yet; I have helped with furnishing / renovating one side of it for an MTR, which has taken ~15 hours/week. We are planning on converting it into an investment property next year since that's the earliest we could do it.

That said, I'm debating on what to do as my "first"  real estate investment to maximize my yearly W2 tax deductions. Have around 90k cash and 90k in stock. Possible strategies:

1. Quit 1 job, get 1-2  investment properties in Sacramento, cost-seg them, and attempt to claim REPS (may be too late for this year as I just started halfway)? .

2. Keep working 2 jobs, get STR in San Diego, cost-seg it, and use STR loophole.

3. Quit 1 job, get STR in San Diego, cost-seg it, and use STR loophole.

 What are your jobs? Lol, I'm interested

Quote from @Eric Herrera:

Quote from @Erik Browning:

Quote from @Eric Herrera:

Hey All.

Got an interesting scenario. My brother and father in law are moving to Greenville, SC and looking to rent a property together, as I do not believe they are in a position to purchase a property. I live in California where prices are extremely high. I wanted to explore that idea of finding a 3 bedroom or Multi-Family property and rent out to them. I also have thought about using my brother in law as a way to secure a a better rate/loan since it would be his primary. I assume we would need to have him on the loan or do a partnership?

I am also looking to connect with investor friendly agents in the area to see on and off market opportunities that meet the criteria above. Not opposed to finding something that needs a little work to force equity. I have about $50k to leverage so thought this opportunity could be a good one given the situation.

 Hi Eric, Erik here. 

Are you familiar with the different types of financing available to you?

 Hey Erik,

In terms of my scenario and trying to leverage my brother in law on the loan to secure better rates and terms, I am not. I am familiar with the various options if I bought the property just myself under my own name or LLC. I guess I want to see how I can leverage my brother in law on the loan or if that is even possible, If I am providing all the capital and want the property still in part of my name.

TLDR: The oldest discussion in real estate. What are income-based loans? What are DSCR loans? Weighing both options. Stop worrying and save your money.

 Ah ok. 

Buying under your LLC conventional, FHA, USDA, or VA is not necessarily an easy task. Most lenders do not close into an LLC at the start, but you can transfer it over eventually. The biggest thing to consider is probably the oldest discussion in real estate: "will the bank call the note due once I transfer to an LLC?"

Best way to understand is to do an example: 

You and your family buy a house using your combined income to qualify.

You close the house in all of your names.

6 months later, you transfer the deed over to the LLC for legal protection

The servicer (lender that collects the note) notices and says, "hey, we were under the impression that Eric and his family have the ability to repay the loan. Now this new owner, Eric's Homes LLC., we have no idea if they can repay the loan and we didn't agree to it."

As a result, they can say that all of the principal of the note is immediately due because the Eric's Homes LLC. hasn't been vetted and they don't know if the loan is good anymore.

-------------

Ok, chances of that happening are 50/50. Some servicers will wait and see, some might not notice that it changed, and some might have an eye on all of their mortgages and immediately ring the bell.

Now - what you can do is not use one of those regular conventional, FHA, USDA, or VA type loans. You can use instead something called a DSCR loan where the loan is given based on the "Debt Service Coverage Ratio" (DSCR). And a DSCR will allow for you to close in an LLC.

Simplest way to understand how the DSCR ratio works for a DSCR loan is another example, though this is very simplified for illustration purposes: 

Monthly Revenue/Rental Income: $1000/mo

Monthly Debt Service/Mortgage Payment : $1000/mo

$1000 / $1000 = 1.00

Most lenders like to see a 1.20 and above DSCR ratios, but some will go to 0.75 or even lower - knowing that the investor will improve the property's rental income performance over time.

Now, nothing is free Eric. 

With the Conventional/FHA/USDA/VA loans, they are all income-based and you are getting preapproved based on your income vs debts. You are limited to primary residences, 2nd homes, and investment properties that are all BASED ON YOUR INCOME and the income the property produces. Rates are lower, but you have to follow a lot of rules. You also have the opportunity to put 0% down, though.

With DSCR loans, rates are higher, but you have more freedom on property types and can close in an LLC. You also have to put typically 20% - 25% down. This is for real investors that don't mind the higher rate because they are saving so much in taxes anyway.

My recommendation: Skip the LLC and worry about getting a good deal. You already have your family moving in there and it's a good idea to not use your entire $50k on one property. Use the least amount of cash for the purchase and save your money. If you want to be safe from liabilities and getting sued - get an extra insurance policy (umbrella) that is more comprehensive.

Quote from @Eric Herrera:

Hey All.

Got an interesting scenario. My brother and father in law are moving to Greenville, SC and looking to rent a property together, as I do not believe they are in a position to purchase a property. I live in California where prices are extremely high. I wanted to explore that idea of finding a 3 bedroom or Multi-Family property and rent out to them. I also have thought about using my brother in law as a way to secure a a better rate/loan since it would be his primary. I assume we would need to have him on the loan or do a partnership?

I am also looking to connect with investor friendly agents in the area to see on and off market opportunities that meet the criteria above. Not opposed to finding something that needs a little work to force equity. I have about $50k to leverage so thought this opportunity could be a good one given the situation.

 Hi Eric, Erik here. 

Are you familiar with the different types of financing available to you?

Quote from @Kawika Smith:

Quote from @Erik Browning:

Quote from @Kawika Smith:

Quote from @Erik Browning:

Hi @Jeff Marzo, you can certainly build a multifamily with a VA Construction loan - I'll attach the screenshot of the product matrix at the bottom. I'm a broker and can facilitate these in the states that I'm licensed in. I've done a renovation loan myself on a residence that I owned and these are similar in nature. Also, I'm helping a fellow veteran in Washington state right now with his construction loan - although he's doing a single family.

@Kawika Smith Here's the thing with building - most veteran buyers are not aware of how hands on they need to be with the process. It's like a part time job that you must tend to on a daily basis.

Everyone's favorite thing to complain about (contractors) are the biggest hurdle because there is required paperwork that needs to be filled out and (most importantly) the contractors need to answer the phone and communicate.

So know these 2 things before you start: 

1. Are you actually serious? Or did you just watch a TikTok for building a home and you think it's a fun little project? Serious people only with these things - most people are not serious.

2. Understand that you will need to get contractors that are equally serious, answer the phone, and are partners in the process. Additionally, quality contractors come at a premium.

Here is the product matrix I promised: I am absolutely serious and very passionate about this! I appreciate your straightforwardness. I am also a realtor who specializes in military/VA— I am new into real estate investing, and two years into the business as a realtor.

Hey Eric, I am absolutely committed to this and willing to do the work. I am also a full time realtor— for two years, so still fairly young at it. Thank you for your straightforwardness! I understand this is a huge task and project but I am committed.

I have a small understanding of the process but I do have an investor who owns his own design and construction company who want to support. I have beginner knowledge on this subject but am dedicated to learning and making this happen!

I would love to connect with you to find out more! Thank you! 

 I think I have a webinar that I could send you. It's specifically designed for realtors.

 YES please! That would be great! Thank you!

 DM me your email and I'll look for it

Quote from @Kawika Smith:

Quote from @Erik Browning:

Hi @Jeff Marzo, you can certainly build a multifamily with a VA Construction loan - I'll attach the screenshot of the product matrix at the bottom. I'm a broker and can facilitate these in the states that I'm licensed in. I've done a renovation loan myself on a residence that I owned and these are similar in nature. Also, I'm helping a fellow veteran in Washington state right now with his construction loan - although he's doing a single family.

@Kawika Smith Here's the thing with building - most veteran buyers are not aware of how hands on they need to be with the process. It's like a part time job that you must tend to on a daily basis.

Everyone's favorite thing to complain about (contractors) are the biggest hurdle because there is required paperwork that needs to be filled out and (most importantly) the contractors need to answer the phone and communicate.

So know these 2 things before you start: 

1. Are you actually serious? Or did you just watch a TikTok for building a home and you think it's a fun little project? Serious people only with these things - most people are not serious.

2. Understand that you will need to get contractors that are equally serious, answer the phone, and are partners in the process. Additionally, quality contractors come at a premium.

Here is the product matrix I promised: I am absolutely serious and very passionate about this! I appreciate your straightforwardness. I am also a realtor who specializes in military/VA— I am new into real estate investing, and two years into the business as a realtor.

Hey Eric, I am absolutely committed to this and willing to do the work. I am also a full time realtor— for two years, so still fairly young at it. Thank you for your straightforwardness! I understand this is a huge task and project but I am committed.

I have a small understanding of the process but I do have an investor who owns his own design and construction company who want to support. I have beginner knowledge on this subject but am dedicated to learning and making this happen!

I would love to connect with you to find out more! Thank you! 

 I think I have a webinar that I could send you. It's specifically designed for realtors.

Quote from @Khaled Seirafi:

Hi all. My family's looking to sell a triplex in San Mateo, CA. Most realtors I see might have some experience selling to investors, but the ones I see who are specialized in this are in the bigger commercial firms (JLL, CBRE, Marcus & Millichap). Problem there is that I don't know anything about those multifamily specialized realtors and there are obviously no reviews about them online. What do some of you multifamily investors out there suggest? 

 Selling a triplex is not entirely too complex and any agent that is competent can handle this for you and your family. 

Here's what I'd do if I were you: 

- Gather up who'sever taxes reported the rental income over the last 2 years (2021/2022/current 2023)

- Collect all of the leases

- Collect any other documents of relevance (big repair invoices, etc.)

- Document a transaction history of the last 2 years (2021/2022/current 2023)

Provide all of those documents in a nice and easy to understand file or packet and give to the realtor that you choose.

Make sure they updated the MLS with how much rent is being collected for each month.

Make sure folks that want to view the property are actually preapproved and can actually afford the property - ask for proof of funds in addition to the preapproval letter.

Should be pretty straight forward. 

I'm in the Bay and know a couple agents that I'd trust with your sale. I don't receive a referral fee because I'm a lender and that's illegal. But I'm happy to give you their name(s).

Quote from @Cameron Ezzell:

I’m new to the real estate world and I’m not quite sure where to start. I have a vision of what I want to do and I want to start with wholesaling. I’m looking for a mentor to guide me through the first couple of steps. I’m currently located in San Diego California but I’m looking to relocate to North Carolina in a few years. Thank you in advance.

 I know @Doug Spence personally and he's in San Diego - great guy to connect with and a valuable resource.

@Jeff Rollon

Just sent you a Michigan lender that I trust

Hi @Jeff Marzo, you can certainly build a multifamily with a VA Construction loan - I'll attach the screenshot of the product matrix at the bottom. I'm a broker and can facilitate these in the states that I'm licensed in. I've done a renovation loan myself on a residence that I owned and these are similar in nature. Also, I'm helping a fellow veteran in Washington state right now with his construction loan - although he's doing a single family.

@Kawika Smith Here's the thing with building - most veteran buyers are not aware of how hands on they need to be with the process. It's like a part time job that you must tend to on a daily basis.

Everyone's favorite thing to complain about (contractors) are the biggest hurdle because there is required paperwork that needs to be filled out and (most importantly) the contractors need to answer the phone and communicate.

So know these 2 things before you start: 

1. Are you actually serious? Or did you just watch a TikTok for building a home and you think it's a fun little project? Serious people only with these things - most people are not serious.

2. Understand that you will need to get contractors that are equally serious, answer the phone, and are partners in the process. Additionally, quality contractors come at a premium.

Here is the product matrix I promised: 

Quote from @Erik Browning:

@Erik Estrada @Bonnie Griffin Kaake @Cody J Leivas @Ran Iarovich

@Ran Iarovich

@Ran Iarovich

Hi folks and thank you for the thoughtful responses. I didn't see any notifications from this post until recently, or else I would have replied earlier.

I did find out about the DSCR option. In fact I found multiple lenders offering them - one of them up to 10 units.

I did find out all of the extra items needed to facilitate this deal outside of just the debt service - thanks for that tip, Ran.

Cody, you mentioned your buddy that gets direct rates from Fannie/Freddie. Yes, please send me a DM with his information.

Bonnie, I wasn't aware about the opportunity to factor in a good estimate/pre-analysis for a cost segregation study on the property. So CSS's can be conducted prior to the purchase? I assume this is a soft study so the buyer can estimate how much can be depreciated? This is interesting and I'd like to know more about how this works, if you don't mind sending me a message.

Thank you all :)