All Forum Posts by: Deepak Malhotra

Thanks everyone for the ideas. Cadence Bank (recommended by Pat) is able to do it (HELOC on properties in LLCs). I'm giving them a try first.

Quote from @Jason Wray:

All very true and I am here in Florida on the Gulf Beach side and STR and LTR are all on fire in terms of rents. There are some great deals up in Pensacola where you still buy a 2/2 on the water with a boat slip. In some cases the boat slip alone because they offer Gulf access can be rented for $500 to $1000 a month.

If your going to buy in Texas around the DFW area reach out to another great agent I have worked with over the years who seems to always find my clients hot pockets listings - @Lucia Rushton

Yes, Pensecola looks like a pretty interesting part of Florida in terms of cap rates.

Quote from @Jason Wray:

Quote from @Deepak Malhotra:

I'm not looking to buy more until cap rates from rents (on properties that aren't more than 20 years old) are higher than CD rates.  Until then, I can earn 10+% on Notes. I have cash that I'm sitting on so don't need more.  I may be wrong but I don't expect values to go anywhere for a while. I don't care about the interest rates on HELOCs because I will not be using them.  I'm really more interested in the protective lien.  Do you offer HELOCs on properties in LLCs?

I guess everyone has their own game plan but there are states that are offering huge ARV potential and cash flow options. But none the less I would reach out to Quorum FCU they have some fairly reasonable LOC options. I would also offer you to reach out to a good agent on here who is not far from you that has some crazy STR options on the Oregon Coast. He just helped my Doctor customer close on a Vacation home $1.2M home raking in over $125K in annual ROI.

He is a Bigger Pockets member as well @AJ Wong

I'll look up Quorum, thank you.

My theory is that if the numbers don't work as a long term rental, the numbers don't really work.  An increasing number of cities are placing restrictions on short term rentals, including on the Oregon Coast, believing that they cause a housing shortage for locals.  Vacationers are starting to go back to hotels as Airbnb fees have increased and they don't want to deal with cleaning dishes on top of paying cleaning fees.

We stayed in a nice vacation rental on the Oregon Coast and there was evidence that kids or homeless were hanging about when it was vacant.  Empty beer cans and oyster shells scattered about the property.  So many drug addicts in Seattle and Portland.  It is sad because when I first moved to the Northwest, Seattle was one of the cleanest big cities I ever encountered.

I'm personally done with blue states.  The landlord tenant laws are getting more and more anti-landlord.  I'm selling locally and had been buying in Texas and Mississippi until cap rates got too low. Even red states with blue governors can be problematic.  I'd consider Florida because I love that they have tackled the squatter issue except I know insurance prices will creep up in the next few years.

Quote from @Susan Maneck:

Quote from @Deepak Malhotra:

Hello, I have some free and clear properties in Texas, Mississippi, and Nevada.  I would like to put "friendly" liens on them as a barrier to fraudulent transfers, which are apparently on the rise.  Which banks are allowing low fee HELOCs on properties in LLCs?  Alternatively, does anyone know of a loan originator who can help me create my own friendly line of credit from one of my LLCs and record the liens?

When I acquired my own portfolio I did so largely by my own version of BRRR which involved paying cash for a property, fixing it up, renting it out and then a year later getting a Wells Fargo HELOC on them and using that money to buy another house. WF would offer teaser rates for the first year, but once you paid them off you could get another teaser rate. So I was playing musical chairs with them much as you might with credit card balance transfers. Unfortunately WF no longer does those HELOCs and I don't know anyone else who will do them for rental properties.

Thank you for the suggestion.  Wells Fargo was the first bank I contacted.  They have not been offering HELOCs for LLCs since COVID.  I'm guessing I need a mortgage originator to help me place my own lien on it.  Are there any here?

I'm not looking to buy more until cap rates from rents (on properties that aren't more than 20 years old) are higher than CD rates.  Until then, I can earn 10+% on Notes. I have cash that I'm sitting on so don't need more.  I may be wrong but I don't expect values to go anywhere for a while. I don't care about the interest rates on HELOCs because I will not be using them.  I'm really more interested in the protective lien.  Do you offer HELOCs on properties in LLCs?

Investment Info:

Small multi-family (2-4 units) buy & hold investment.

Purchase price: $88,300
Cash invested: $88,300
Sale price: $320,000

My very first duplex. My next door neighbor told me that the owner had three duplexes but would only sell if he could sell all of them at the same time. My neighbor was willing to buy two. He wanted to know if I wanted to buy one.

What made you interested in investing in this type of deal?

My neighbor told me that the numbers worked. He told me that the numbers "penciled." I had no idea how to do the analysis but was happy that someone else had done it so purchased, paying all cash. I later learned that he meant that the price was less than 100x one month's rent. Only later did I decide to use leverage and refinanced with Washington Mutual.

How did you find this deal and how did you negotiate it?

My neighbor did that work.

How did you finance this deal?

Cash.

How did you add value to the deal?

Just routine maintenance.

What was the outcome?

Positive cash flow the entire time I owned it and it gave me the desire to buy more.

Lessons learned? Challenges?

I was worried about the slab foundation and flat roof. In the end, neither turned into a problem.

Investment Info:

Small multi-family (2-4 units) buy & hold investment.

Purchase price: $88,300
Cash invested: $88,300
Sale price: $320,000

My very first duplex. My next door neighbor told me that the owner had three duplexes but would only sell if he could sell all of them at the same time. My neighbor was willing to buy two. He wanted to know if I wanted to buy one. He told me that the numbers "penciled." I had no idea how to do the analysis but was happy that someone else had done it so purchased, paying all cash. I later learned that he meant that the price was less than 100x one month's rent. Only later did I decide to use leverage and refinanced with Washington Mutual.

What made you interested in investing in this type of deal?

My neighbor told me that the numbers worked.

How did you find this deal and how did you negotiate it?

My neighbor did that work.

How did you finance this deal?

Cash.

How did you add value to the deal?

Just routine maintenance.

What was the outcome?

Positive cash flow the entire time I owned it and it gave me the desire to buy more.

Lessons learned? Challenges?

I was worried about the slab foundation and flat roof. In the end, neither turned into a problem.

Hello, I have some free and clear properties in Texas, Mississippi, and Nevada.  I would like to put "friendly" liens on them as a barrier to fraudulent transfers, which are apparently on the rise.  Which banks are allowing low fee HELOCs on properties in LLCs?  Alternatively, does anyone know of a loan originator who can help me create my own friendly line of credit from one of my LLCs and record the liens?

One more question, is it possible (and lawful) to apply for the mortgage conventionally (under my name as an individual) for a more favorable rate, and then assign the asset to the LLC at a later date?

 Both Fannie and Freddie are allowing transfers into LLCs these days.  Just ask your bank for permission first and quote the relevant Fannie Servicing Guide section if they refuse.  https://servicing-guide.fanniemae.com/svc/d1-4.1-02/allowabl...

Quote from @Robin Simon:

Congrats, any reason not leveraging this investment?

It was a HUD repo so better chance of winning by paying with cash, and was cheap.  I have a fair amount of cash with no deals that make sense right now.  Interest rates are now usually higher than cap rates if you factor in any sort of repairs and capital expenses.  The relatively safe 9% with JEPI is looking good to me right now versus real estate that is at record unaffordability