All Forum Posts by: Jaysen Medhurst

@Brien OConnor, 

1. What are the places worth? Are you sure you have enough equity to take money out?
2. Those numbers don't look good to me. Are you sure you're accounting for all of your expenses? CapEx, repair, vacancy, etc? Just going by the 50% rule, you are hardly breaking even and probably losing money.
3. The garage apartment: is it legal with a CoO? Just because there's an apartment up there, doesn't mean it can be legally rented. You don't want to run afoul of building codes and may also get sticky with your lender.
4. Many banks do like a year of seasoning before doing a refi. Check with your local/regional banks. They tend to hold on to their mortgages, not sell them off to Fannie/Freddie, so they have a lot more flexibility.

@Troy Luster, you mean added to the deed along with the current owner? I'm not sure I see the upside for that person. 

Why not just buy it? With three open units you can reno as necessary and get the best rents.

@Sai T., flippers didn't cause the crash. The insatiable hunger for mortgage-backed securities created a need for lower and lower qualified borrowers, which ran up prices. Flipper took advantage of the market realities and certainly contributed to price inflation.

@Steve Kirsch, a colleague of mine has bought several turn-key properties through them and has been very satisfied.

@Reaz Ahmed, first off the financing will be different. 5+ unit properties require a commercial loan, which typically has slightly higher rates, shorter terms, and a shorter amortization period. E.g. 5%, 10-year term, 20-year amortization.

Management can be different, too, depending on the size. PM companies tend to charge a lower percentage the more units there are. Call some up and ask around. At some point, you'll want in-house management. Though probably not for an 8-12 unit place.

Lastly, economies of scale really start to kick in. You want to reduce the number of buildings you have. Fewer roofs, few mechanical systems, better terms with vendors.

@Shaun R., sounds like your banker at Wells Fargo is trying to make this more complicated than it needs to be. I understand the strategy, but I'd talk to a RE lawyer and/or CPA. Someone who's working for you. Then talk to some local/regional banks. WF is much less likely to do something "outside the box."

My understanding is that CA is a difficult for establishing and maintaining LLCs. Check out Clint Coons on YouTube. I've learned a ton from his videos.

You should be able to get conventional financing on a property with 1-4 units, even if the title is held by the LLC. You will still have to personally guarantee the loan, though.

@Roshan K.

First, have you thought to pursue off-market deals? Decide what areas you're interested in then use the town records to find 3 or 4-family properties. The tax records will have the owners name. Then start reaching out. A personalized, hand-written letter will probably give you the best response. Be honest that your a young guy trying to make smart financial decisions and put down roots.

Second, building may be an option, but not necessarily an easy or inexpensive one. You really need to understand the price/square foot to build vs. buy. Also, is your town allowing 4-family construction? You may not be able to put one where you want or the economics don't make sense.

There's A LOT here. Especially, on your first deal...and we haven't even mentioned financing.

Hi all. There's a central CT meet up next week. 

Hi, @Amber Hooks, I'm not an attorney (and you should definitely speak with one), but hopefully can help.

What your lender told you is correct, the loan COULD be called due. It is unlikely because you are still personally responsible for the loan, even if you move the title to an LLC. Also, the lender has little incentive to call the loan, as long as you're up to date on the payments. Why anger a paying customer? With rates still so low, they can't really make any more money off of you with the current loan. Better to keep you happy and try to sell other services.

One approach is to have the paperwork on your loan updated with the bank. Or just refinance and do the title transfer at the same time (again, time to talk with a lawyer).

Regarding future purchases, you will probably have to continue to be personally responsible for any loan (even if title is in an LLC's name) for some time. You won't be able to take a loan in the LLC's name until it's showing suitable profits to cover any loan it takes out.

Remember who owns a property (has title) and who's responsible for paying back the loan (the guarantor) are two different things.

Looking good, @Jorge P.! Can you share any of the deal specifics?