All Forum Posts by: Kerry Baird

@Clay Hall, I like a HELOC on my primary residence as an emergency fund, and wish I'd had that extra money when I got started, simply as reserves. We moved into fixer houses to renovate and then moved out and turned the house into a rental. Once the renovation is done and the house is put back together…that's a great time to get a HELOC and just leave it open.

Moving a house into an LLC has several unintended consequences, as you have noticed. Financing requirements change a lot.

Borrowing from my primary so I can buy another rental, which is also borrowed money, is a fools’ errand…creating an “alligator” right at purchase and putting my own house at risk. 

@Clay Hall,

It is much easier to get financing on a house that you will be occupying, because of risk to the lender.  This includes HELOCs or fixed second mortgages, which again are easier to get when titled in your own name.  

Rental houses in your own name will be harder than an owner occupied house, but you may find a HELOC or fixed rate line at a local community bank, a credit union.

Once you title a house in an LLC, you have to change title to yourself and back again. Or you have to look for commercial or DSCR mortgages.

This may mean that people on one side of the wall at your local bank (in the residential lending) might have no clue that they have a product on the other side of the wall (in the commercial lending side).

It can be a challenge when we pay off a house to get money back out of a house. 

@Devin James, thanks for taking the time to answer.  I look forward to seeing the build make its way to completion.  

I have been operating STRs for 5 years now, and there are many with much more experience, so you are sure to get other opinions.  Mine is buy a solid house wherever you choose, get it rented as an LTR and have a property manager manage it. 

Compare and contrast:

My long term portfolio is largely remote from me, whereas my STRs are within minutes.  There are quite a lot of repairs or daily requests from guests, more bookkeeping due to consumables, extra utilities, pool service, lawn service, internet, etc.  When things break, there is a quick response needed.  A local handyman would fit that bill, and perhaps a couple who could shop for and bring in the consumables.  I furnished them from estate sales and local furniture shops, and the furniture/sheets/towels become damaged over time and need some care.

I have a PM manage the remote houses, and they cash flow just fine, the PM handles issues that come up, and they paid off the debt on them once.  We refinanced and pulled cash out, and they will pay off the debt a second time.  Renters handle the electrical and water, and manage the lawn.  I have no pools in the LTR side. 

One portfolio gives me cash flow and debt pay down, while the other produces appreciation in addition to the other benefits.  The LTR portfolio takes much less of my time and attention.  

Looks to me as if you made a good decision on the interest rate.  What about the rest of the deal?  5% down is for an owner occupant, and my guess this is for a single family residence.  What is your plan for this property? 

@Deepak Malhotra, happens to me, too.  Thanks for your response.  

My husband and I started out holding properties in our own name, and later developed an LLC structure (which also moved to a new structure later on). I agree with the previous poster and for the same reasons. My lender won't allow me to occupy any of the properties they lend on, and which are owned by the LLCs.

Take a second look at what @Randall Alan said about the tax benefits of holding in an LLC. Taxes, as in not paying so much, have been a huge part of our success with properties.

Nice progress.  Looks like an infill lot…how long has it taken to get to this point?  I’m curious if truss delivery is still taking a long time.

I imagine the recent storms have set you back on your timeline, and wish you clear skies going forward.  

I use Stessa and I use ZRM, but I don’t use them together.  Curious whether you have solved this yet?

If it *is* the case that closets are needed, your house would very likely not be lendable. I recommend you confirm that with someone else other than your agent.

Food for thought…

Insurance related: I’m currently replacing a roof on a house I own, not because the roof is “bad” but because it isn’t possible for the next buyer to get insurance with such an old roof (barrel tile, which lasts longer than the 30 years that insurance companies require).  I’d rather get the roof done now, than to get a buyer under contract only to find later that they cannot get insurance.  

Lender related: the house I live in was not lendable because it was missing a stove and had open shelving in the entire kitchen.  Conventional lender asked us to add a stove and put doors on the cabinets…we argued that we didn’t own the house. We got very close to the closing day, and lender backed out citing loose wires, no stove and no doors on kitchen cabinets.  We ended up using seller financing and we gutted the kitchen.  Also are currently turning a Jack-and-Jill bathroom into two bathrooms, to add value.