All Forum Posts by: Peter M.

Why would you do that? You have to pay loan origination fees for the refi and closing costs twice. Just sell it and keep the extra money. Unless you are a turnkey provider or are holding it past 12 months to avoid short term capital gains (even then not sure if it would make sense financially) don't bother refinancing it. 

1) Don't use a quit claim. Use a general warranty if paid off, special warranty if financed. Quit claims are the worst type of deed. Even a deed without warranties is better but since you own the LLC use special or general.

2) Same process. 1st LLC will go into "Campbell LLC-Series A", property 2 will go into "Campbell LLC-Series B" etc (I just called it Campbell LLC, you would obviously call it whatever you named your LLC)

3) Yes but every series will use the same EIN. Just fill out the forms on the IRS website to get the EIN

4) Yes create a business checking account. Yes you will also need your certificate of formation, operating agreement, franchise tax info(if applicable in IL)-basically just bring the company book with you. You should probably open 2, one for expenses and one for security deposits. Keep it separate from personal expenses to maintain the veil and the liability protections. 

I will also vote for vinyl. Nowadays it looks like wood, is more durable than most other flooring types and least expensive unless you want to get the really cheap 70s looking vinyl squares. 

The title to your post says "Traditional loan down payment". A traditional loan will not give you rehab money and is as @Josiah Kay said, 48k for a 75% LTV loan.

If you want a HML or commercial construction loan you can get rehab money included in which case you would have to bring 82k for the down payment. That would give you 52k to do the rehab. You could take a smaller loan if you don't need that much for the rehab. Small local banks (portfolio lenders) will do construction loans for a couple points more than a traditional mortgage and will usually have a 5 year call with a 15 or 20 year amortization.

Not sure what the rental history has to do with it if you are planning on flipping it. If you are turning it into a rental you would probably need at least 2000/month in rent to make it even close to break even. 

If a lender doesn't care about DTI they will care about DSCR. Debt service coverage ratio. It generally needs to be at least 1.2. It is calculated as NOI/yearly debt service cost so it depends on the property characteristics. However they usually just take the numbers you give them as long as they are reasonable so if that is all that is keeping you from getting the loan, you can tweek the numbers.

Indemnification: The Tenant will defend, indemnify and hold Landlord harmless from all liability arising from your conduct or that of your invitees, occupants, and guests. 

People can sue for anything so it doesn't matter how you word it because if someone gets hurt and wants to sue you, no verbiage will stop them. 

I generally agree with the comments above. If you can charge back the tenants, great but that is extra time you have to take each month and bill. Then you have to figure out pro rata and pro rated amounts when tenants move out at weird times. If utilities are killing your deal, it may not be that great of a deal.

@Larry Caper I am also not advocating using all the equity. It depends on your risk tolerance but I don't like to go more than 60-70% as long as I stay cash flow positive. Just like @Hadar Orkibi said. 

Second lien deed of trust on another rental property they have financed. 1% origination, 5.5% interest only for about 60% of the equity I have in the other property. But I have had a relationship with them for a while. 

Depends on the state, judicial vs non judicial foreclosure. Non-judicial is much faster-about 60 days. Get a title company to run an abstract of title to get all the other info.