All Forum Posts by: Kevin S.
Kevin S. has started 24 posts and replied 395 times.
Post: Please Help! - What am I missing with Cash-out Refinance?
- Posts 399
- Votes 240
I have no experience in flipping/rehabbing and will attempt to analyze strictly on numbers.
If you were to buy the 270K home as an investment you would have had to come up with a 25% DP = $67,500. Assuming you are coming to the table with 240K (210K+30K) this would leave you with $172,500 for your next investment.
Doing it the rehab way, you have $189,000 instead of $172,500. That's an extra $16,500 for next investment i.e buy a property with extra $66K price tag. Repeat this four times with exact same numbers and you now buy the fifth property with an extra 264K price tag!
Don't forget with each property you have extra $13,500 in equity. How so? With usual 25% DP you have $67,500 equity. Doing the rehab way you leave $81,000 (30% of 270K) in equity. That's 54K on four properties. Now multiply by whatever number of properties you have as your goal!
This is strictly by numbers. Experienced BP members can correct me If I am wrong. I am here to learn myself.
Post: First time Landlord Insurance questions for Central FL
- Posts 399
- Votes 240
Try Tower Hill and State Farm.
Post: What is an “investor friendly” lender?
- Posts 399
- Votes 240
Your post highlights an important distinction between two different lending experiences. My guess is when members are seeking “investor friendly” lenders they meant your second lender in your post, not the first one. They meant the one doing the 20x project. Now that may be an entire separate post as to how to get to that point.
What will be more helpful is to mention those lenders that you are having good experiences with history of projects associated with the lending. For example, you can say that you did 15 projects of quad plexus using "xyz" lender or you did 9 SFR rehabs with "ABC" lender or you acquired 25 commercial strip plazas with so & so lender". This way members can identify who they can use based on what project they have at hand and what they are looking for. Seasoned investors with over four or five digit posts and votes mentioning those lenders will have validity over some with two digit votes. Even more, if these lenders are to be mentioned, then having a post with subject title that will be easily found will be great. Otherwise the names will be just buried.
If more seasoned investors did that it would be a great help to other investors and to the lenders who deserve more business and more votes to the post. A win win win situation. Just my thoughts. I am new and not sure if it’s possible or there’s any rules on BP against it. Thanks.
Post: Landlord insurance deductible concern
- Posts 399
- Votes 240
What kind of insurance do you carry if you have SFR in Florida? I am getting conflicting offer of home owner insurance by one broker and State Farm agent telling me home owner insurance is for primary residence, not for rental property. According to State Farm agent it should be "Rental dwelling" policy, not home owner policy. Can you chime in on this topic(home owner/rental dwelling/landlord insurance)? Thanks.
Post: LLC or Trust to hold investment property?
- Posts 399
- Votes 240
Quote from @William Chu:
I don’t know your location and your landlord insurance policy. You can get an umbrella insurance cover up 1 million dollars in just under $200 per year. It will cover whatever happens for your rental and your auto even your primary residence. So depending on where is your rental at. If you are inexpensive area it should be more than enough! Usually your landlord insurance will cover most up. If not enough then umbrella insurance kicks in. Umbrella insurance more likely cover 1 mil per occurrence. So in this case if you have a few more rentals you’ll be fine. Is this make sense to you?
I am in Florida. I keep hearing that umbrella insurance is cheap but I don't find that being the case. I have had umbrella insurance (without being a RE investor) for many years now and 1M umbrella is costing me about $1400/yr. I was recommended by the same insurance agent that I should get more because of my net worth.
Do I need landlord insurance on top of home owner's insurance? Home owners ins cost about $2000/yr on the SFH I am buying for LTR. Landlord insurance supposedly cost 25% more than home owner insurance! If that is the case that's about $5000/yr which is insane. Plus umbrella policy! Thoughts?
Post: LLC or Trust to hold investment property?
- Posts 399
- Votes 240
Quote from @William Chu:
@Kevin S. If you have the first property just make it simple to get umbrella insurance would cover enough. Until you have a hand full of properties the you can have LLC or trust.
Thanks for your response, William. How do you determine the amount of Umbrella coverage?
Post: LLC or Trust to hold investment property?
- Posts 399
- Votes 240
Quote from @Nick Belsky:
Personally, I would put everything in the right kind of revocable trust, but there are complications.
As a broker, I deal with a whole lot of lenders who claim they will close in a trust but don't really understand them. The idea that Trustee has ownership in the properties is what gets most of them. The trust will own the property, not the Trustees. I can't count how many times lenders try to assign a percentage of ownership to a Trustee when numerous attorneys have explained to them that it doesn't work that way, etc... Many lenders struggle with umbrella policies as well. They like to see a single policy with a single property so the costs associated with it are crystal clear. I'd say about 60% of my capital resources will work with umbrella's but not without obstacles.
I use a holding company, an LLC, to purchase properties, then once completed with renovations, I either sell or hold them as rentals. Once I refinance to a perm loan, I will then QCD the property to the Trust. That way I avoid all the lender hurdles while they try to understand what they are and how they work. So long as you are a Trustee/Beneficiary of that Trust, you are still on title, so if they try to give you crap about it, it is very easy to prove that.
A better way would be to get a non-recourse loan, then QCD to the trust, but the pricing for non-recourse has yet to recover from what I've seen in the lending market so far.
I don't have any experience or insight into a JRT... or what the advantage would be over an entity when doing JV...
Cheers!
Appreciate your response, Nick. What did you meant by "right kind of revocable trust"?
I am using conventional loan. Do you think the type of loan make any difference as far as how I hold the property? Thanks.
Post: Approved for a loan. Let's see if any lenders here can beat this rate!
- Posts 399
- Votes 240
No problem Martin. It speaks of inexperience rather than intention. Members here are mostly helpful and understanding.
Post: Approved for a loan. Let's see if any lenders here can beat this rate!
- Posts 399
- Votes 240
Quote from @Stuart Udis:
@Martin Yip Toll So You are making a mistake treating your debt relationships as strictly transactions. You are going to turn off a lot of lenders with your post because you are clearly going to shop every term sheet that's turned over to you with a focus exclusively terms with no regard for the servicing, loan administration and most importantly what that loan officer can offer you in the future. This is one of the biggest mistakes I observe.
While terms are important, take the time to get to know what each banker has to offer, their capacity and how they can help you grow. Bankers move around, rates increase and decrease, market conditions change, but these personal relationships can remain a constant throughout your career and will be critical to your success.
I continue to work with a number of loan officers who issued me my initial loans 12 years ago. The two primary banks I worked with no longer exist and all of my original banking relationships have moved onto different banks/lending institutions. In fact, I just originated a loan with a loan officer at the 4th bank in which we've originated loans together & now originate $8M loans with bankers who originated $80K loans for me when I started. These relationships, if cultivated properly, will allow your borrowing to outpace your balance sheet. The earlier you recognize this, the better off you will be in the long run
"I was wondering if any lenders out here on BP are willing to play game...." is not the best choice of words.
"there are 2 conditions I require..." is right behind it.
Stuart hit it on the head. Hope you change course and the rest a smooth sailing for you. Good luck.
Post: How to handle the tax forms from the property manager and the bank?
- Posts 399
- Votes 240
Never mind about RMD question. My bad. You answered that. I'll check out your website later. The only question remaining is: How will the property pass down to heirs and the tax implications/inheritance tax etc. Thanks a lot.