All Forum Posts by: Michael Doherty

@Greg Dickerson appreciate your response. From your experience, have you ever done or know someone who has- purchased in your personal name and quick claimed it to LLC? This way you get the best of both worlds- better financing and protection? It can obviously invoke a due on sale clause but I've never heard of one happening.

Hi all, stay with me on this one.....

I am half way done with renovations on my first duplex BRRRR. I purchased it with hard money in an LLC. I currently own two other duplex's, one in my personal name which I house hacked and another in an LLC which I got a 20yr commercial mortgage on. I have a well paying W2 job but do not plan to be here much longer (going to go full time into REI).

I keep going back and forth with lenders, accountants, lawyers about what the best way to structure this deal is. I got lunch with a successful investor yesterday who is also a commercial lender and said to just put it in my name and get a great insurance policy while I still have my good W2 job. My lawyer said to form an LLC and have it separate from all other assets. My account said to group it in the same LLC as the 2nd property (which is the same LLC I used for the hard money loan)

Rates and Terms: Most traditional banks want to see 6 months seasoning. The holding costs are roughly 1200 a month- interest only for the hard money loan. 12 month loan no prepayment penalty. 

Option 1: Refi into separate LLC with a commercial broker- No seasoning, 5/5ARM 20 year Amortization, 1pt, 5.75%

Option 2: Refi into personal name: 30 yr fixed 4.5% no points

Cashflow isn't that much more on the traditional 30 yr note and it's only 100bp difference in rates. My goal is long term buy and hold. From a liability and debt to income standpoint however, what makes more sense? Get as many loans in my personal name while I still have the income. Or go commercial route and protect the asset in an LLC.

Thank you!

@Kevin Cespedes as others have stated- I would look to purchase in an LLC and go the commercial route. I just did this for a 2 family and the lender didn't look at any of my bank statements- just looked at the debt service for the property itself. It will be a bit more costly and your rate will probably be 100bp higher but you will close the deal.

@Steven Slivinski Most banks will want to see liquid assets in your account for at least 3 months. Your best bet is private money/family money then season the cash while searching for properties that fit the BRRRR model. If you choose to use hard money, they may not care about the seasoning too much but you will still need to have some sort of down payment.

@Steven Slivinski I think you should get the first 'B' in the BRRRR method figured out first. I could be wrong but I think you will have a very hard time finding a bank that will lend to you with no liquid cash to bring to the table.... no skin the the game some might say.

@Justin Scott Co star is probably what you are looking for. While used mainly for commercial use, it gives you an in depth detail about property info and phone numbers ect. Caveat there is it's not free. 

@Coty C. there is a local meet up the 3rd Wednesday every month at the Chilies in Glastonbury, Ct. I've been going for awhile- good information with great people. 

@Account Closed haha I hear you, definitely confusing at first but once you understand the process it can become a powerful wealth building tool. 

@Nicole Gambino I am currently using a hard money lender for my first BRRRR. I am closing next week but everything has been very transparent so far and an overall good experience. I can keep you updated if you'd like as I go through the rehab process and have to request draws from the lender.

Lima One Capital is the lender on this specific project. I believe they are out of South Carolina - my local hard money broker from Capital Three Sixty is the one who sourced them. 

Just for your knowledge @Account Closed you don't have to live in the property for a BRRRR.

@Paul C. with only two properties (for now) I would just use excel. Quickbooks will be an overkill right now but may be something you want to consider after say 5-6 properties. You could either keep all rental receipts in a folder (hard copy) or scan them onto your computer. I have recently found dropbox to be my go to for keeping everything organized. I have sub folders for each property I own. The app allows you to scan a receipt immediately onto your phone and 'categorize it'. Hope this helps.