All Forum Posts by: Ronald Isgate

Agreed with @Mike S. - you need to call around to other banks.  Odds are you may be able to do a cash out refi as well depending on your ratios ---- you can probably get a better rate/terms today than what you have, so you would have the added bonus of the better rate on your property  locked in for 5-7 years plus the cash out. Call around to all your local banks and CU's - you will be surprised on which banks prefer to lend on certain projects/properties --- you will find that each one has their own appetite/preferences. 

I would say that a HML could have a place/use - but its absolutely not a long term solution. I represent quite a few lenders, and all of them try to make sure that the borrower has exhausted all conventional avenues first. There are two very common reasons for using a HML - a) Hard Money can help you buy a property very quickly - so you either dont loose it or you can strike a better deal moving so quickly; and b) some banks these days, regardless of property condition, want to see a stabilized property (under your ownership) for 6+ months. But of course the math has to work out for you. If you go the HML route, do some due diligence on the lender (there are alot of scams going on right now) and find out all their terms so you can negotiate the best deal (pay attention to all fees and pre payment penalties). Best of luck!

I would first ask local investors who they use - personal recommendations are great if you can get them. Whomever you use, make sure you do you research. I represent several lenders, and I am seeing more and more people paying fees (lock or application fees) to "lenders" only to see them run away with their money. There are alot of scams going on - so you absolutely want to do your due diligence. Ask them their rate, term, points, and all fees associated with the loan. Also ask if they have a prepayment penalty, and what their default provisions are. The key to using HML is to get out as quick as possible, and you dont want to get hammered with a nasty prepayment penalty that could kill your refinance.

Banks are getting tight with everything going on as I am sure you know - but keep calling around. You wont get the same programs in a Corp entity vs. owning in your personal name, but that is a decision you have to make regarding asset protection and tax benefits. Depending on the type of property, especially if it needs reno/stabilization - you may find that you have to go the HML route for 6+ mos, get the property stabilized then refi ---- I represent several HML, and I always tell every borrower that the HML route should be the last resort route. Exhaust calling all local banks and CU's in your area - you may be surprised as to what you find out from each bank as far as what they will and will not lend on. If you do go the HML route, do your research on the lender. There are alot of scams going on where people are paying "lock" or "application" fees and the lender simply walks with their money.

Agree with @Jamie Bateman - you need to sit down with a CPA that has experience with Real Estate investors/investments.  The decision will be made based upon your business model as well as your own personal (and possible partners) financial situations.  I represent alot of investors, and I never recommend making a decision on which business entity to choose without first getting the opinion of my client's CPA.

You are correct - you either form a new LLC in that state, or register your current one as a foreign LLC in that jurisdiction. The first thing you should do is call your accountant - its mainly a tax driven question. From a legal standpoint, I would recommend speaking with an attny to see if there are any benefits to one jurisdiction or another just to be safe as well.

Just to be safe, ask if there are other soft costs - appraisals, origination fees, etc. etc.  You would be surprised what banks can leave off of the sheets sometimes.  Another good idea would be to reach out to your title company - if you are that far along of course - they can give you recording fees, tax amounts, etc. as well.

I would recommend that you call around to your local lenders (smaller local banks, CUs etc.) - they will be your best bet from a conventional standpoint. As I am sure you know, lending has really tightened up with everything going on - so your background/experience in RE will come into play as much as your credit and the performance of the property. The other option you may need to explore (again all comes down to numbers) is to get a short term HML to do the reno and stabilize the property - once you have the property completed and stabilized it will be much easier for you to get a longer term conventional loan. Best of luck with your project.

I agree that a corporate structure is best - both from an asset/liability protection standpoint and possibly from a tax standpoint.  That being said, you should absolutely sit down both with a local attorney and your accountant(s) to determine what entity best suits your needs.  There are often numerous considerations - both from a legal and tax perspective - that should be considered prior to creating your entity.  It will save you time and money in the long term.  Best of luck with your purchase.

Jeffrey - feel free to shoot me a PM - i represent alot of investors so i should be able to help you out.  I am located in Doylestown (Bucks Co.) and do alot of work in the area.