All Forum Posts by: Greg Miller

@Brad L.

Yes, I have discussed with my attorney in detail. You are correct that personally paying the mortgage on an LLC owned property technically could be viewed as personal transaction. He viewed that risk as very minimal as long as the property is fully owned, operated and managed by the LLC company. Good question though!

Very interesting. Myself or no one on my extended team: attorney, agents, etc. have heard of lenders actually calling the note due as long as it is performing. I typically even discuss this with my loan officers to be transparent, and they pretend not to listen but don't take exception. I am "Fannied out" now, but maybe this strategy does have some risk if lenders actually are doing this. I still think it might be more or a threat than something they would follow through on. I have loans with 8 different institutes including national banks like Wells Fargo and even they get the insurance in the name of the LLC with individuals listed as additionally insured - making it very clear what we are doing, and they have never taken major exception. Your strategy certainly eliminates that risk entirely though. Hope it works out well for you!

The big elephant in the room is the title transfer. Many investors (maybe myself included) get a 30 or 15 year fixed rate residential loan in our individual name and immediately transfer title at the closing table with a quitclaim deed. You may pay $400-500 for the title transfer but get to capitalize on the most favorable Fannie/Freddie backed residential loan terms. I’m in the low 3% range on a 15 year fixed with 3 points on a duplex I’m closing on in the next few weeks. Definitely consult with your own attorney for advice on your individual circumstances.

On the commercial side, yes they are variable rates but some local lenders (I have this exact loan with Empower) might lock for 10 years on a 15 year loan, 20 year amortization on very competitive rates. That way you are saving the costs of the title transfer. It is also flexible if you’re buying a package of properties or 5+ unit property that has to be bought commercially.

There are also some national lenders who offer asset based lending to LLC companies directly. One company specifically lends nationwide on 30 fixed rate loans in the 5% range. I believe only to 740+ credit scores, but there are a lot of great options out there.

@Spencer Cornelia - you nailed it. After year 10 the rate may adjust to the market (years 11-15 would be fixed at that one time rate adjustment) with a balloon payment after year 15. There is also no prepayment penalty at any time over the course of the loan.

@Robin Casper - the lender is Empower FCU

Investment Info:

Single-family residence buy & hold investment in Syracuse.

Purchase price: $238,000
Cash invested: $60,000

Just closed a few weeks ago on a package of 4 SFRs in Syracuse, NY. Properties off-market portfolio from an out of state investor. $238,000, all occupied with rents $1050, 1050, 1095, and 1185. Commercial loan 20 year amortization, 10 year fixed rate at 5.36% with a local credit union. Should cash flow immediately, and expecting around $300 per door positive cash flow after some initial repairs and projects. Very excited about this deal! Feel from to PM me for more details about this deal.

What made you interested in investing in this type of deal?

Great off market opportunity consistent with my investing approach.

How did you find this deal and how did you negotiate it?

Off market from agent connection - negotiated through mutual buyer/seller agent brokerage.

How did you finance this deal?

Commercial loan - 20 year amortization, 15 year loan, 10 year fixed 5.36%

How did you add value to the deal?

Immediate repairs, improved local management, review and renew 12 month leases

What was the outcome?

Closed 6/11/19 - still working on the transition plan

Lessons learned? Challenges?

Stay patient - lots of unforeseen roadblocks will present themselves.

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

Robert Zaccaria, Acropolis Realty - Agent

Investment Info:

Single-family residence buy & hold investment in Syracuse.

Purchase price: $238,000
Cash invested: $60,000

Just closed a few weeks ago on a package of 4 SFRs in Syracuse, NY. Properties were part of a larger off-market portfolio from an out of state investor. 1 Eastwood, 1 Tipp Hill, 2 Strathmore - purchase price $238,000, all properties occupied with rents $1050, 1050, 1095, and 1185. Commercial loan 20 year amortization, 15 year term, 10 year fixed rate at 5.36% with a local credit union. Some upgrades are required and will be immediate, but should cash flow immediately, and expecting around $300 per door positive cash flow after some initial repairs and projects. Very excited about this deal! As you can see by the photos - this deal this deal took from February (under contract) to June to close. Feel from to PM me for more details about this deal.

What made you interested in investing in this type of deal?

Great off market opportunity consistent with my investing approach.

How did you find this deal and how did you negotiate it?

Off market from agent connection - negotiated through mutual buyer/seller agent brokerage.

How did you finance this deal?

Commercial loan - 20 year amortization, 15 year loan, 10 year fixed 5.36%

How did you add value to the deal?

Immediate repairs, improved local management, review and renew 12 month leases

What was the outcome?

Closed 6/11/19 - still working on the transition plan

Lessons learned? Challenges?

Stay patient - lots of unforeseen roadblocks will present themselves.

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

Robert Zaccaria, Acropolis Realty - Agent

Mike - this is quite a feat! Doing a successful BRRRR deal in this market can be a challenge even if you are local. Buying, managing the renovation, and renting the property from 3000 miles away is very impressive - congratulations!!

I'm looking at trying my first BRRRR deal in the Syracuse in the next few months so I'll definitely reach out and try to carry forward your lessons learned (yes old houses are old!). Nicely done.

Investment Info:

Single-family residence buy & hold investment in Syracuse.

Purchase price: $74,000
Cash invested: $23,000

Trying out my first single family rental in Syracuse, NY (Eastwood). Purchased off MLS in December for $74,000, 15 year fixed conventional mortgage with 25% down. Rented out in mid-January for $1125. Hoping for longer tenant duration, less intensive maintenance, and more potential appreciation.

What made you interested in investing in this type of deal?

Low maintenance, trying out a single family investment

How did you find this deal and how did you negotiate it?

MLS

How did you finance this deal?

Conventional financing, 25% down

How did you add value to the deal?

Cleanup, cosmetic upgrades, light paint

What was the outcome?

Leased for $1125/month on 15 month lease

Investment Info:

Small multi-family (2-4 units) buy & hold investment in Syracuse.

Purchase price: $90,000
Cash invested: $36,000

Just purchased a duplex in Syracuse (Tipp Hill area) for $90,000. 25% down on a 15 year fixed mortgage at 4.875% Have completed upgrades to downstairs apartment, and actively leasing both apartments - for $1,700 total.

What made you interested in investing in this type of deal?

Good solid buy and hold opportunity in a nice area.

How did you find this deal and how did you negotiate it?

MLS - viewed after 5 other offers were already received. Offered over asking price.

How did you finance this deal?

Conventional financing, 25% down.

How did you add value to the deal?

Renovate downstairs apartment to obtain market rent and high quality tenants.

What was the outcome?

Still awaiting leasing.....

One thing to consider might be putting 25% down on a conventional mortgage, allowing you more working capital to expand (it seems like that might be your thought).  Or "seasoning" the property and doing a cash-out-refinance in 6 or 12 months, if you really wanted to buy something cheap for cash and renovate.

I think Syracuse (and I'm sure Rochester and Buffalo) certainly have some good areas.  I would lean more toward closer to home, especially if you are going to self manage the rental.  In the Syracuse area I personally look in Eastwood, Tipp Hill, the east side of the City, and near suburbs.  I also have a great investor friendly (and investor herself) agent which I would be happy to pass along if interested.