All Forum Posts by: John Morgan

Thank you @Irina Belkoferand @Chris Mason!

I assume my loans are with Fannie and not Freddie. How do I find out? They are traditional 15 year loans taken in 2017. 

@Nicholas Lohr

https:www.biggerpockets.com/forums/49/topics/610831

This is only for Fannie loans taken after 6/2016. Does not include Freddie Mac, VA or jumbo loans. Says you can change your personal name on the loan to an LLC and a DOS clause won't apply anymore.

@Josue Vargas

I’m going to go against the grain of opinions on this one. Especially since you’re young enough and about to have your other loans paid off. If you don’t ever take a risk, you’ll be miserable working hard until you’re 65 like most people. And miss out on time and freedom real estate investors have. Then try and retire off your 401k that probably had average returns over all the years. Then get taxed 25% on it when you retire anyway. 

You live in San Antonio? Great rental market and demand there. I’m in the DFW area and there’s huge demand up here for rentals too  

I would cash it out. Put 35% aside for taxes, and invest 65k into a SFH. That's plenty for your first investment to get started. Then it'll snow ball from here and you won't regret this move later.

Let me give you an example of what I just did last year with about that much cash. I paid 48k for a SFH (3-2) with a tenant in place. The tenant is sec 8 housing which I like because they don't ever want to leave and the govt will pay me on time every month. I put 30k into it right away and raised the rent to $1,200/month. So I'm about 80k into it total and will clear about $850/month after all my expenses. Now I have a couple options. I could just sit on it and do nothing and pocket $850/month forever, or take out a cash loan on it for about 90k and repeat. There are plenty of deals out there when you have cash. You can make low ball offers and some people bite because it's cash and quick.

Real estate gives you many options 401ks don’t. The tax benefits are so much better than the stock market too. You’re looking at only a 10k withdrawal penalty now. Big deal. You can make that back in a hurry in real estate. And 65k cash you’ll have right away to start out with is perfect. Just make sure you tuck 35k away to pay Uncle Sam come tax time and you’ll be alright. Good luck!

@Irina Belkofer

I can't find anything about the rules changing on Oct of 2017 regarding the lenders not being able to use the DOS clause if they find out you did a QCD to an LLC on a loan. Can you document this change for me? I can't find anything about this change.

@Nathan Frost

They changed the law on Lenders doing a DOS if you quit claim your name to an LLC as of October of 2017. So you don't have to worry about your lender calling your note on you if they find out and feel like it. I would get the loan in your personal name then qcd it to an LLC later and you're good to go.

@Matt Holt

I just set up an LLC for my six properties. I now wish I would have done an umbrella policy and kept them all in my name. It's a hassle so far, and I just started. I figured everyone has their rental properties in an LLC. Didn't know an umbrella policy was just as good pretty much and my risk tolerance is fine with just an umbrella policy. I've never heard of anyone getting sued over the typical one million policy most people have on each rental home.

@Jeremy K.

No I haven't done this before. I had an attorney set up all 6 of my properties (five in TX where I live and one in MO) into one LLC last summer. Now I wish I would have kept them all in my name with an umbrella policy like others are doing here on BP. I might keep it set up this way for a year to see how it goes. Plus my attorney charged me $1,300 to set it all up so I might as well do at least a year with it like it is. What a waste of $ I'm thinking now.

Why don't you qcd the other three that are in your name to your LLC? Do we need to file a foreign entity for the out of state property? I assume we do and just found out I might have to.

@Julie Ferrier, was it pretty easy to qcd the properties back in your name? I had an attorney set up my LLC and do it all. If it's not a problem, I may just do it myself since having this LLC is kind of a hassle.

Hi @Jeremy Kross, I just formed an LLC and learned that the due on sale clause for quit claim deeds from loans to LLCs went away as of Oct of 2017 for properties purchased after 2016. I did four QCDs from my name to my LLC about 6 months ago and wasn't aware of DOS that some lenders had done on others. But apparently a DOS won't apply now. I own one property out of state so I assume I need to get a foreign equity permit each year for it which is $200/year in Missouri I think.

Not sure an LLC is worth all the hassle and extra costs vs just putting an umbrella policy on home owners insurance and keeping them in my name. I can't think of much of a benefit for putting all my properties into an LLC. If something happens, I assume my personal finances and assets are protected a little more? Also, I haven't heard of any LLCs getting sued and losing. I'm sure there's some holes in my LLC that attorneys could find, but I bet most people won't go after an LLC.

I’m definitely down with meeting anyone to share our experiences. Preferably for free to chat about ideas, loca real estate strategies, successes, failures etc. anywhere..nothing fancy. 

I’ll look into that meet up group on Thursday too Paul. Thanks.