All Forum Posts by: Rodney Kuhl

@Andy Gross Yes, exactly. This is their business. Why do some people flip whereas others buy and hold properties as rentals? That's the preference for their real estate business. A good turnkey company can be a great source of buy and hold properties, if that's what you are looking to invest in. They are a form of a flipper, only they don't rehab to retail grade and sell them on the market. Instead, they rehab them to rental grade and sell to other investors. They make a profit off the sale, the buyer gets a cash flowing property, and everyone is happy (at least in theory).

As far as 2%, that can be tough to find, especially with turnkey providers. With turnkey providers you will often pay a premium, which is justified because they are minimizing your risk by fixing up the properties and hopefully placing a good tenant in placing and managing the property as well. 2% deals are more likely to be found off market on your own or through a wholesaler. There are several turnkey providers that sell properties in Indianapolis. You won't find the 2% rule with most of them. 

@Pavel Sakurets Gotcha. So when a bank tells you that you need 2 years of financials for an LLC it's like when a bank tells you that you can only have 4 mortgages to your name - it's a bank specific rule not the rule as a whole? Didn't realize that. Thanks for sharing that with me!

@Account Closed I've done ACV to this point. Actually with me about to add my 3rd property my policy is changing to Replacement Cost for about the same price. I'm not sure if that's typical or if that is just how this lender does it, but something to keep in mind as well. Those numbers for the quotes look about like what I've found as well.

@Raj S. Thanks for your input! What kind of umbrella policy would you deem necessary/desired for someone with only a couple of properties?

@Pavel Sakurets I understand what you are saying. At this point, I can't go back in time and re-buy the property under the LLC. Also, with most lenders who would lend to an LLC likely not lending to an LLC that is less than 2 years old, wouldn't you say I'd be better off purchasing properties under my own name rather than sitting and waiting around until my LLC would qualify for lending? I think in that time frame I can acquire several properties and be over $1000/mo in cash flow. Aren't I better off with that than waiting?

@Shawn Holsapple Yikes, don't like that it would be considered a taxable event.

Yeah, I think I've talked with you before about getting loans to an LLC. I've been told by a few people that lenders will require an LLC to be at least 2 years old before lending to it. I haven't found someone who does otherwise, though I haven't called around that much as I'm happy with my lender, though he only lends to individuals. The loans to an LLC would definitely cut into the cash flow a lot, but in 5-10 years, the equity built up would be significant for sure.

@Jynell Berkshire Thank you for providing your expertise! So essentially I won't be able to change the title over to my LLC safely (as in, without the lender calling the loan due) until after it would be paid off? So basically having an LLC is mainly for cash buyers who don't have to worry about lenders?

@Jay Hinrichs Thanks for the response! I understand what you are saying. Maybe I haven't been around long enough, but I don't see a lot of turnkey companies here in Indy marketing the instant equity part, mostly just cash flow or cash flow and appreciation projections. I could see it as a good marketing play, sure, but I also think it could be a good business strategy for a TK company to sell them for less than they could. Sure, they'll make less money in that one sale, but hopefully the investor that bought the property got a good deal and will want to come back. So it sacrifices a little profit up front for a long-term relationship with several purchases.

@Jay Hinrichs I understand what you are saying about whatever you sell the property for is market value, but to play devil's advocate:

If comps show a 3 bed property in a certain area of Indy could sell for $50k on the open market, but is sold for $40k off market, it would be sold under market value, no? Maybe a better way of putting it isn't so much that it's sold under market value, but rather that it is sold with equity built in? I'd like to read more of your thoughts on this if you don't mind.

@Dan Perrott Yeah, I'm not sure of that. You bring up a good point though. Hopefully someone can help us with an answer to that.