All Forum Posts by: Nino G.

@Andrew Yen have you considered a realtor career? With the kind of time/funds/efforts investment that you described, you likely would have had better returns on your work as a realtor with good brokerage. Also, I think realtors are better positioned to make money on either buyers or sellers market. While wholesaling business is likely to suffer in any sellers market. Any junk house on market has a bidding war, why would anyone sell to a wholesaler right now.

@Ekta D. Sorry I can't. I personally stay away from STR business and don't have any personal experience of those policy providers.

@Ekta D. Why don't you get STR host insurance policy instead. Much simpler solution IMO. You just have to make sure it's STR host policy and not a regular landlord long term rental policy. If you are not sure how to navigate insurance policies, try to get an insurance broker to give you all available STR insurance options.

If you are still determined to proceed with splitting the lot, whether it is possible or does it even make sense, will be determined by local RE laws and ordinances. Wouldn’t monkey with them and get a lawyer as others have said.

@Jay Shah I would suggest you consider this: LLC should be a separate legal entity from its owners. If you put your name on the insurance of LLC owned properties, does it mean that you are personally responsible for any claims against LLC? If yes, doesn't it defy the point of having an LLC ?

I don’t have answers to these questions, but if I were you would investigate this side of your situation before being tempted by lower premium.

Good luck

@Brice Hall.

Bob should understand that one’s creditworthiness is determined not only by the income, assets and job continuation, but also their reliability in paying money back in the past. Bob defaulted on his contract (to pay monthly mortgage payments), and just because he could but chose not to, doesn’t change that fact.

I find banks request very reasonable.

@Kyle Marsh

Hi Kyle. If you are planning to use FHA loans then I guess you are taking about live in investments. I don't have any experience with FHA loans and can't advice how to best utilize them. But let me offer you few points.

You question is very finance/mortgage based. But live in property is not just numbers game IMO. It’s also lifestyle/personal preference based. I would advice you to think of how you see your life in the next few years and be honest with yourself.

Are you handy? Do you want to learn how to renovate property and manage renovations? Is that something you are interested? If yes you could get old property that is still livable and do

slow/live in flip. At the end of 1 year it should get you a decent equity in SFH and you won't have to deal with tenants and be in full control of reno.

Is landlording what you are interested in? If you self manage, you understand you will have to familiarize yourself with local laws, screen and manage your tenants. Is this something you are interested in? Do you understand that a tenant is very different from a next door tenant. What if your tenant defaults and relations between you two don’t go well, are you able to handle that while living next door to them. MA is tenant friendly, you won’t be able to get rid of bad tenants fast. Are you ready for that?

Even if you have good tenants, annoying nuances can come up in multiplexes. I remember one landlord was complaining in this forum, that her upstairs tenant, an elderly gentleman had bladder problems and during the night, he would go to the bathroom often. Floor was squeaky and every time tenant used bathroom the landlord downstairs would wake up. Are you ok to deal with those annoyances?

If you feel ready to take on both challenges, the rehabs and landlording next door, you could also go after value add multiplex.

I think people have better chance of success by doing what they like. What do you like?

If you are not going to live in the properties you buy, then most of these points are less relevant and then pure numbers become more important.

@Cody Smith

I think for a new investor, keeping properties in your name and using umbrella insurance coverage is a good business structure. LLC is a very good tool if you know when and how to use it. Understand that just because you have an LLC doesn't mean you have legal protection from it. It has to be properly structured and run for you to have corporate veil. If you want to learn more about it, search articles on the subject "how to pierce corporate veil of LLC" and you will see that running LLC shouldn't be taken lightly. It is a good tool to separate risks of one set of assets from the other. For example, if you are both flipping as well as buy and hold, it would be useful to keep flipping business in a separate entity and not expose your buy and hold properties to a more high risk endeavor that is flipping.

If you do decide to create and LLC, I would also advice to not do it without a lawyer. Mr Turner is an experienced investor but he is not a lawyer, don't run a legal entity based on advices from forum or webinars.

To address your point about due on sale clause. Taking a personally guaranteed mortgage has lowest interest because you are personally liable for it. LLC however, IF run properly, will not only protect you from law suits, but creditors as well. For example, if a property in LLC defaults, creditors can come after LLC assets and not your personal ones. Yet, bank doesn't trigger due on sale clause even though you are putting a property with personal mortgage in an LLC. Why not? Maybe because Mixing personal and LLC business is one of the ways to pierce corporate veil. So, the bank doesn't care about your corporate veil and you don't really have any protection from them. So they can still come after you personally and therefore they don't trigger due on sale clause.

My personal advice would be, get an umbrella insurance. When you have grown your portfolio enough that you want to separate risks of one set of assets for another get an LLC and put assets with highest associated risks in the LLC. Don't start an LLC without a lawyer.

Best of luck.

This is not a legal advise. I am not a lawyer and I don’t have right to give legal advices.

@Howard Montaque

Are you in the fast appreciating market? If fixer uppers are going for 500-600k and you can get new construction for 670k, by the time the construction is done, shouldn’t you already have some equity there? If your market is hot, you might be able to pull at least some of your money back soon after the construction is over while keeping the 4K income. If the market won’t allow you to refinance in the near future, then it becomes trickier.

@Tim Swierczek got it. Sorry it’s easy to misunderstand written text.

And agree with you. I personally am the new investor, and my current structure is sole proprietorship with insurance. And I will follow my advice that when I have assets worth enough to justify headaches of LLC, I will get best lawyer I can find to structure and run it.

You could say my short term investment goal is to grow big enough to require LLC :)

@Tim Swierczek this is a great example you brought up. As I said, people mistakenly thinking corporate veil is there just because you have an LLC.

Here is an extra point I will offer on that example. You mentioned that people forget to transfer ambrella insurance in the name of LLC, but then you said, that leaves LLC without ambrella coverage but at least you have LLC.

If I was going after that LLC and the owner in court, I would use that ambrella coverage which is in the personal name of LLC owner yet supposed to insure the address of the LLC owned property as an evidence of mixing LLC and personal business and ask the judge to consider corporate veil pierced. Would that work? I don't know, I am not a lawyer. However, that kind of mistake could not only leave your property without umbrella coverage, but without LLC protection as well.

Which is why I oppose any sort of self managed LLCs without lawyer involvement. Keeping corporate veil is a tedious work and devil is in details.

*just like before, this is not a legal advice.