All Forum Posts by: Johnny Gonzalez

For those general contractors who work with investors rehabbing an investment property (not a primary residence), what is your ideal client? How can we as investors add value to you and your company, make your time working our jobs worth your while and wanting to return for business with our future jobs? From the first point of contact, to coming out for bids, to negotiating and understanding pricing, to choosing materials, to timelines, and everything in between, up until the end. The more specific the explanation, the better. My goal is to help us all be better business partners by understanding your needs.

Kevin, You are absolutely correct on all counts. I made an error. Thanks for your input. 

What's up, everyone?

I just closed on a single family investment property two weeks ago. Closing was in the name of an LLC. The loan is conventional Freddie/Fannie. I would like to do a cash out refi in several years (there is a 3 year-prepayment penalty, so I would wait until after such period).

There is much talk amongst investors about having to transfer title out of an LLC into the individual's name in order to refi, and then transfer title back into the LLC after refi closing. I would prefer to avoid this.

Does anyone know if a portfolio lender would be willing to cash out refi my conventional Freddie/Fannie loan while maintaining the property in my LLC, and if Freddie/Fannie regulations would prevent me from doing so?

My thought is, I understand the need to transfer title for the cash out refi if I am going from a conventional loan to another conventional loan. But do the same rules apply if the refi is from conventional to portfolio/unconventional loan?

Thanks in advance.

 Thanks for the good info, Mike.

Hi all,

Any recommendations for people you have worked with to structure asset protection in Miami-Dade, Broward, or Palm Beach Counties? I would like to review my real estate investing strategy/plan with an attorney experienced in the area of asset protection to structure appropriately.

Thanks.

David,

I would be cautious about using Crystal Clear Properties LLC as the property management company. I read an article by Amanda Han (CPA, real estate investor, and very active member on BiggerPockets) where she gave an example of a lawyer who recommended the same structure of using one of their LLC's as the property management company for their client without realizing the huge tax implications of doing so (if I recall correctly, it had something to do with self-employment tax). My advice would be to run this idea by your CPA and get their feedback as well.

Also, be wary about the series LLC approach. As someone already mentioned on this post, not all states allow this structure. Furthermore, and more concerning to me, is that some states may not recognize series LLC in the courts even if you set up the series LLC in a state that allows it. That would be a bummer to find out after the fact.

If you still have a loan on your duplex and pay a mortgage, most banks will have a "due on sale" clause if you transfer the title of the property from your personal name to the LLC, forcing you to pay the remaining loan amount immediately. Yikes. Check with your lender to see if this is the case. If so, maybe hold that property under your personal name until you own it free and clear prior to transferring title to your LLC.

Disclaimer: I am no CPA or attorney, but I have done a lot of research in this area because I had/have a lot of the same questions as you. I am new to investing, and I am working on closing my first deal on a single family home right now and plan to purchase all cash via an LLC. My current plan is to open a separate LLC for each property I purchase. Maybe once I own about 10 rentals, I will start looking into forming a "holding" LLC with individual LLC's beneath it (this may be a tad different than a series LLC. To be determined). But for now, separate LLC's are very manageable and seem to be the safest route for me.

Best of luck!

-Johnny

 Hi Eric,

Yes, I have strongly considered leveraging. However, at this point in time, cash is the best option for me. Future investments may be via leverage.

Great info here, Bradley. Much appreciated. As for your cash versus leverage question, trust me, I have strongly considered leveraging. The cash route is the better option for me at this point in time. I will not rule out the former in the future.

Thanks again!

Thanks, John.

Hi all,

I'm hoping some of you guys may be able to help a newbie investor out. After much reading, studying, and vetting, I have made the decision to purchase my first rental property via turnkey with all cash. REI Nation, formerly Memphis Invest, is the company I will likely use.

I understand that an appraisal is required when getting a loan for a property, but is it necessary when buying all cash (other than getting a gauge of wether the listing price is accurate or not)?

Estimating depreciation for taxes: Is getting an appraisal the only way to determine the percentage of building versus land that can be depreciated from the cost of the house? If so, is the appraisal better completed at the beginning of the purchase, or can it be done later on?

Thanks in advance!