All Forum Posts by: Nuhan Demirkan

try the tax records. any purchaser for a non-owner occupied property should be an investor. 

I am a licensed investor for the past 12 years. Never happened to me either. Get your license.

Hi Raeshelle, since you're going to live in this property I would suggest you consider your personal living requirements first. Outside of that buy in an area where people would want to live. Maybe buy with renting a room to a friend in mind to help with the monthly costs. That would also give you an idea about being a landlord to see if that is what you want to do.

Aldo Russo

Aldo Russo

Aldo, it is going to be difficult to get an unsecured LOC especially if you are new to the game. Instead offer to secure it with the property you are buying. The bank is going to want your money in the deal. But the bigger question is what is your plan to convert the LOC to a mortgage? You don't use LOC for for long term investments. You can have the portfolio lender convert it for you paying back the LOC or get a pre-approval from a mortgage banker. You can borrow in the name of an LLC from a portfolio bank but they are going to insist that you two also sign personally.

Aldo Russo

David, something doesn't sound right. If the property is rehabbed and is worth $300K, why didn't it sell for $184K?

I currently use portfolio lenders who will lend from my line of credit up to 80% of ARV for purchase and rehab. Convert it to a commercial loan once a tenant is in the property. In most cases with no cash of my own. It depends on your relationship with the bank.

Dave, my suggestion is to go to a local portfolio bank like it was suggested. You are a businessman and you need a bank that will work with you. Trust me, they have to put their money out on the street. They need you as much as you need them. The mortgage banks will follow strict UW guidelines and will not bend the rules. However, portfolio banks prefer relationships along with numbers. After 10 years and number of commercial loans I am able to borrow 75% of after repair value for purchase and rehab from my line of credit. Then convert it to a commercial loan once the tenant is in the property paying back the line to do it all over again. It is slightly more expensive but you have to roll that into your purchase numbers.

PS: Do not order an appraisal until you get an approval contingent on appraisal.

I agree with most of what's written and would like to add the following. 

It also depends on where you are on your investing horizon. I believe you must first get to the critical number of rentals before thinking about paying them off. Figure out what is a good monthly income and how many rentals it will take. My number is 35 SFH's. I will not pay off or send extra principal on any mortgage until I first get to 35. Use the extra cash flow to buy until you are there. Then focus on paying them off. Paying off mortgages earlier will slow your progress.

You can put the LLC on the mortgage along with a personal guarantee. The banks aren't going to lend to an LLC let alone a young one. You may be able to get some headway if you collateralize the loan by using your other properties. Besides the protection of an LLC is mostly from your tenants and other outside people. Having the loan in both names (LLC and personal) and the property deeded to an LLC should give you the protection you need.

I am currently transferring my personal portfolio to an LLC. I figure if the loan is current and performing as agreed the banks should not call it. If they do, I will take out commercial loans thru a portfolio lender and pay of the existing mortgages.

Good luck!

Alea, I'm not familiar with the Philly market, but the numbers don't look right to me as a flip deal. Is the after repair value of the property $57,800 or is it the as-is value? If the ARV is $57,800 and it needs $15K in repairs my buy price for this property would be around $25K - $28K including the wholesale fee. If we work the numbers backwards $57,800 ARV - 10% Sales Cost = $52,020; less $15,000 repairs = $37,020 for acquisition plus profit - very thin deal..! If $57,800 is the as-is value find out what the ARV is then the deal may pencil out.

If this is a buy and hold play what are the rental rates for these houses in this area. It may work out better.