All Forum Posts by: Ronald Isgate

You can certainly transfer it into a LLC at any time, however, there will be consequences to doing so. First, you will end of paying transfer tax on the transfer - even if you do it for $1.00, you will have to pay transfer tax based on assessed or FMV values - that can be pretty costly. Odds are your mortgage can technically be called as well - as you allude to in your post. While they can, as long as they get their monthly payments, its pretty unusual that they call the loan. Many times the lender finds out about the transfer b/c of the holder of the insurance policy is changed as well.

The only way to avoid that would be to call the lender and see if they would agree to an assignment of the mortgage to your LLC. They may agree to do so if you are the sole member (since nothing would really change from the guarantor standpoint) - if they agree the would either assign or recast the loan to the LLC, and have you personally guarantee the loan. You could also try to refi the property as well - but again you dont get around the transfer tax issue.

I agree with Nicole above.  If you can provide value / a solution to a problem for the Seller, then your proposal could work.  Keep in mind though that the math has to work out being 100% leveraged - but if the deal works and you can provide value to the Seller, then its a win win.  I agree with what was echoed above, you do not know the situation the Seller is in - all they have to do is say "no" to your proposal, you dont have much to loose in proposing a deal - people do it all the time!  Best of Luck!

I agree with several of the above posts. Many require the LLC/S-Corp as the borrower / property owner, but will also require a personal guarantee from the individual members/shareholders of the corporation. Lenders, like the laws, vary from state to state, but the biggest thing they will look for is LTV and your experience - those two things go a long way in getting a loan from a HML and getting the best rate/terms possible.

I agree with several of the posts above. First and foremost, the deal does have to make sense. One of the first things lenders will look at is the collateral. Most hard money lenders are going to stay below 70% LTV (they may go higher, but you will probably pay more for the loan)- but that could be before or after repair value depending on your project, and your personal strength/experience. You will most likely be in the 12-14% and 3-4 point neighborhood for a 6-12 month loan - possibly more, possibly less, but that is probably a solid range.

Yes, as long as you have a clause in your lease that states that the landlord is entitled to all legal fees and costs incurred in the event of the filing of an eviction.  Those costs can get placed on the tenant's ledger whether you go to court or not.  There is also nothing that prevents you from putting in your lease that an administrative fee is owed as well to cover your time (but i would check with an attorney local in your jurisdiction to ensure that is acceptable/allowable.)

Yes - you are correct.  Essentially the contractor would get 1099'ed for "services rendered" in the construction/rehab of the property.  The amount can be whatever you choose.  It cannot be "profit" as you rightly point out.  That portion would be paid as an IC for services rendered.  The remaining profit would get disbursed as a distribution to each of you in proportion to your ownership interest.  Hope that makes sense.

Great advice all around.  Absolutely recommend you check out @Matt Faircloth book on raising Private Capital.  

I agree with Carl Fischer above - you can absolutely do that.  You can change ownership interests to compensate one party vs the other (depending on the value of $ vs. services to be provided), or you can simply pay the contractor for services rendered.  

Chatting with your attorney and CPA is absolutely recommended so you get the best path forward for profit and protection.

Totally agree with @Joe Scorese - SJREIA is a great group and very active.  www.sjreia.org

I agree with the comments above. First, if you are going to have anyone sign for you, you will need a POA executed in advance and approved by the Title Company (many times they have their own forms they prefer to use, which cuts down on time for them to approve/disapprove of it). You always run the risk of them simply signing without actually reviewing everything, especially if they are not disinterested, i.e. they get a commission if it goes through. As many investors can assuredly agree, often times there are last minute changes to the HUD or on a title bring-down which could impact your transaction.