All Forum Posts by: Mike Day

Duplexes with detached third units cause problems due to an obscure rule. Your best bet will probably be to start calling local banks that do their loans in house and do not use Fannie Mae, aka portfolio lenders. It also might be eligible for FHA, though I'm not sure off the top of my head.

Hi all. I'm a serial BRR-er and have recently hit a wall acquiring more properties because each additional one increases DTI above the level banks will accept--even though the properties cashflow. So it appears that the next step will be to find a commercial lender who will lend in the name of an LLC and get these properties off my personal credit.

My question here is the following: if you own a property financed in the name of an LLC, how do banks look at the income from that property? Do they want you to show two years of tax returns with income coming from the LLC or something similar before counting it? The point is to make the income from rentals business income so that the banks stop counting the debt against me.

Ideas?

I'm also interested in hearing about people's experiences getting credit in the name of an LLC.

Quote from @John Warren:

@Mike Day the second any lender hears about a moisture or mold issue, they will bail. I have no idea how this came up, but those are the facts. 

I would be curious to know how hard the repairs are though. A lot of times with older basements, you can run a dehumidifier, clean everything with the stuff they sell at HD, and then kilz primer everything to solve the issue. The problem of course, is that you have to be licensed to do this, but getting your GC license is not very hard. 

That's a great idea John. A dehumidifier and coat of primer is all that it needs really. And the reality is it will be back in 6 months, but oh well.

Quote from @John Clark:

Quote from @Mike Day:

There's a little mold on the walls and a little water in the basement when it rains, but nothing that isn't found in 90% of homes in the area. Has anybody encountered this? Is this even legal? Interested in feedback.

 My sympathies are with the lender on this one, as your attitude about "a little mold" has no basis. "Ninety percent of homes" -- in any area -- do NOT have mold, and there's no such thing as "a little" mold. Mold problems get worse exponentially faster until they are cured. If your "damp" basement has progressed to mold then you have a real problem, and no sane bank will touch it.

Interesting John, your comment tells me you haven't been in a basement on the east side of Indianapolis before. People buy these places and banks finance them all the time. I've done it many times myself and this situation is exceptional.

My lender heard from the appraiser that there was moisture in the basement of a couple places I am trying to refi, and all hell broke loose. They are seemingly not aware that all homes of this age in the area have some dampness, or are possibly just fishing for a way to avoid following through on the loan. I'll go ahead and name the lender: Regions Bank. They delayed closing to complete a special inspection and are now requiring me to complete repairs totaling thousands of dollars to close. There's a little mold on the walls and a little water in the basement when it rains, but nothing that isn't found in 90% of homes in the area. Has anybody encountered this? Is this even legal? Interested in feedback.

It's interesting to think about what's good and what isn't, but no matter what any of us say, short term rentals are probably here to stay. I'm not sure I would consider it a moral issue. Personally I'd probably advocate government regulations against STRs in extremely tight rental markets. But that's just me.

I have a duplex in Indianapolis and am considering renting half of it on Airbnb--reason being, I need a place to stay when I'm in town, but would like to Airbnb it the rest of the time, while having a long-term tenant on the other side. Has anybody done this? It seems like a good idea on paper. My concern is whether the Airbnb guests tick off the long-term tenants by making noise or creating problems. If you have actual experience with this, I'd like to hear it.

Feedback?

Hi all. So, I'm into all the details of acquiring and renovating properties and normally leave all the tenant screening management stuff to a management company. Currently my management company is asking if I want to rent to someone whose credit score is in the low 500s, which doesn't meet their criteria, but they otherwise look fine and have a guarantor with an excellent credit score. Would you do it? Bending rules has turned out to be a bad idea in the past but this one sounds like it might be ok--advice appreciated.

PNC did this for me in the past--good rates and service, too.

Hi all. I'm currently considering refinancing all my investments into HELOCs. In my area I can get the refis done much more cheaply and at better rates than conventional loans. I also like the flexibility that HELOCs provide--if you don't currently need the cash, pay it down and save the interest. However, banks can freeze or close credit lines, whereas a mortgage is a mortgage and there isn't much that can happen to it as long as you are paying it. So I'm hesitating to actually pull the trigger and eliminate all my conventional mortgages. Would you do it? Why or why not? Do you use HELOCs and have you ever had the bank close or freeze one? Thoughts appreciated