All Forum Posts by: Kevin Romines

If your going to get into the buy and hold game, being a contractor, you have a huge leg up on most of your competition. I would recommend that you put down on paper what pieces of the puzzle you have covered by your knowledge and experience and then do you best to identify what pieces of the puzzle are missing, or you don't have an area of expertise in, or huge amounts of knowledge in? Then set out to find people that you can add to your team for those areas?

One question that hits some buy and holders is what to do when you have 10 financed properties and need to clear the slate so to speak so you continue to buy more properties? You might need decent hard money from time to time. Who has the best rates / terms and ability to close and give the least amount of headaches? When you refinance from hard money to conventional, who has programs that will get all your cash out of the deal to use on your next one, at solid rates and terms and the least amount of headaches?

When you finance to commercial, what is the correct deal structure that allows you to clear the slate per Fannie Mae and buy hundreds of properties, not just the typical limits of 10 financed properties? Who is the correct attorney with the proper real estate investment experience? Who is the correct accountant that will minimize one of your biggest expenses, taxes, while keeping you set up correctly to keep from having headaches with the IRS and state? Who is the person or multiple people that your going to get your deals from. Your time is best spent rehabbing the home (your area of expertise)? 

The more knowledge you have the better you can directly resolve questions and problems as they come up. You don't have to have the answers yourself, you just have to have a solid team to help you. You will get all the answers over time by going through the challenges as they come up.

Happy investing!!! 

If his lender has a due on sale clause in the contract and becomes aware of the transfer of title, he can accelerate the mortgage (start the foreclosure process) unless the lender agrees to allow it? 

You will now show on title as the owner and it will show in the chain of title the previous transfers. It will show all liens as well. So the seller could record his lien as a second mtg. or he could do a wrap mortgage which is most likely what he would do?

@Al Anderson your best bet is an FHA loan for 3.5% down as owner occupied. I would plan to live there the minimum required time of 1 year, however they do allow for shorter time frames in extenuating circumstances?  

This will give you the lowest down payment of any loan out there for 1-4 units and then you can always refinance it to a Fannie / Freddie without MI down the road, once you have enough equity. You can also use an FHA 203K or 203K streamlined if some repairs or rehab is needed? It is still 3.5% down payment of the purchase price plus repair costs, so the best deal available. If you do end up doing repairs, you might be able to refinance earlier because you may have built up equity through the repairs or rehab. This just lowers your payment and helps you cash flow even better. I hope this helps. 

Keep in mind that 1-4 family is residential lending and 5 units and above is commercial lending. 

Thanks for calling me yesterday @David Domine. The fact that your sellers investor wants a minimum of 1 year worth of interest is just saying, that even if he pays it off prior to 1 year, per the contract he owes the private investor the remaining amount of 1 years worth of interest plus the payoff. He wants to do an RTO with you most likely because that's what he knows and he doesn't want to pay the sellers closing costs (excise tax 1.78%, title, escrow & recording) out of your down payment. So he chose an RTO so he will pay that later when you pay him off?

The problem for you is that your putting down a lot of money, and your planning to BRRRR the property. Technically at that point your putting a down payment into the deal, and your time and money to rehab the property all without being on title as the owner per a contract. I wouldn't suggest that you plan to do that, it just leaves you open to the seller messing with you and your deal after you have put all this money into it. If you do decide to go forward, I would insist on a contract where your recorded onto title. You must also get a copy of the title report before you complete the contract so that you know the liens against the property.

When your done with the rehab, I can take the contract out with a cash out refinance to get your money back out of the deal. Your then left with a nicely cash flowing property, your money back in your pocket to go find another deal, rinse & repeat your way to wealth. 

I have a lease option that the buyers can not qualify for conventional financing for 24 more months due to a job change to an industry that is based in part on commission. 

The home is worth between $300,000 and $320,000 and is beautiful and was built in 2004. The payoff per the lease option is $221,000 and must be exercised by the end of April and the payoff must be completed or paid off by May 31st. The buyers are both professionals with good income. They would like to find private financing for 24 months, or possibly, someone to buy out their position. Their preference is private financing. 

There is a great lack of inventory in the market and homes are flying off the market as fast as they come on in this area. 

I will do the loan for them when they are capable of getting conventional financing. somewhere between 12-24 months. 

Please PM me with any questions and interest. Thanks

My recommendation used to be to set up LLC's but I have since changed that depending on what a person's goals and business plan is? I feel you do want the additional protection that an entity of some type can bring you. This is just another layer of protection beyond insurance which is really your 1st line of defense in most cases.

The reason I changed from LLC's to a corp, or Sub S corp is to resolve the Fannie Mae 10 limit / Freddie Mac 6 Limit, rule of financed properties. Currently, if you own and finance 6 or 10 properties either personally or in an LLC that you own 26% or more of, even if you move the properties to a commercial or portfolio loan, we still have to count them in the 6 or 10 financed property rule. So therefore at 10 your tapped out unless you use a different tactic. Some suggest the husband does 10 and the wife does 10, thereby financing 20 and that may work, but debt ratio's can get tricky at times and your still tapped out at 20 properties?

The best thing I have found outside those tactics, is to set up your company as a corp or Sub S corp. Don't plan to move the homes into the corp until you need commercial or portfolio financing on them. Prior to that point, hold them personally and finance them personally, once your tapped out via conventional, then clear the slate by moving them to a commercial  / portfolio loan in the corps name. 

For whatever reason, Fannie / Freddie's underwriting guidelines makes a distinction between an LLC and those other entities. If you have your properties in those entities and then move them to a commercial or portfolio loan in the companies name, even if your a personal guarantor on the loan, we do not need to count those in the 6 or 10 financed property rule. Therefore, you can buy virtually as many properties as you want, so long as you clear the slate on the conventional loans to then continue using conventional financing after that point.

Its some work, but if your truly going to have a portfolio beyond 10 units, you really have to plan and understand and use the guidelines to your benefit!!!

Happy investing!!!

Welcome to BP @Nathan Weber. 

You will find tons of great info. here, so do your research and night and make it rain during the day. I have always been a fan of the "Ready, Shoot, Aim" methodology. Break the analysis paralysis syndrome and you will figure out the "what you don't know" part as you go. Definitely  go to meetings where like minds can help you get a clear picture. Ask lots of questions and as @Jeremy E Van Dam mentioned, pick someone doing what you want to do and offer to assist in return for learning the ropes.

It wont be long at all before you will be much more skilled and seeing opportunities that you may have missed early on in your career. I would also treat it as a career. Be serious and intentional about your actions. Its in the actions that the results come. Don't listen to the nay sayers, just plot your course and execute your plan.

Good luck and if you ever need anything, let me know how I can help?

@Jon Crosby mentioned Foremost. I was an agent previously with Farmers who owns Foremost. I cant say that I did any coverage for anyone with a vacation rental so I cant speak to that. What I do want to point out to all out there is, that Farmers and Foremost are one of the best, investor friendly insurance companies out of all the big names in the industry. I say that because they will do the policies in the names of the LLC even though the policies are personal lines policies. Farmers limits you to 20 properties, but Foremost has no limits what so ever, so if you need to insure 100 properties on personal lines, they can do it. Most other big name insurance companies will do a max. of 4 properties and will only do them if they held personally, not if they are held in an LLC, or they will put you in a commercial policy. Just a couple of things to think about when shopping for insurance.

Oh one last thing, vacation rentals can be bought with as little as 10% down on a  traditional 2nd home loan program & interest rates. Your required to stay there 15 days out of the year. That's it!!! Pretty amazing!!!

Happy investing!!!

I am a wholesaler in the SW Washington area. I also work with wholesalers as well. I help them get their buyers financed when that is what is needed?

I'm not really sure this is something a wholesaler can do? I could be wrong, but I don't think a bank would be willing to go through the negotiations of a short sale without a qualified realtor? I'm interested to see where this conversation goes, I just might learn a thing or two?