All Forum Posts by: Shera Gregory

If you don't have rental income on your tax returns the banks may only count a portion of the new rental income toward the debt coverage ration (Net income $ / Mortgage $). Local banks are usually "portfolio" lenders meaning that they keep their loans in-house so they can make their own rules about their requirements. This doesn't mean their requirements are any easier than the large national banks that resell their loans and therefore have to meet Fannie/Freddie guidelines but it means they can be different and are often different from each other. So it's good advice to check with different banks, especially local banks.

I realize this post is from a few months ago but I wanted to clarify to the best of my understanding ... the change in law in Virginia did not "make wholesaling illegal". It was already illegal in Virginia to undertake the activities of a real estate agent or broker without a real estate license. In fact, the wording of the change just says that things that were illegal under another part of Virignia code are now also illegal under the Virginia Consumer Protection Law. Therefore, entities such as local government attorneys or individual citizens can bring civil action against people participating in unlicensed activity.  

Here is the text of the change in the Virginia Consumer Protection Law regarding what is "now" illegal ... 

Violating any provision § 54.1-111 relating to the unlicensed practice of a profession licensed under Chapter 11 (§ 54.1-1100 et seq.) or Chapter 21 (§ 54.1-2100 et seq.) of Title 54.1.

So those other parts of the Virginia statutes already made it illegal to practice real estate without a license. The real question then for wholesaling is "what are you selling?" .. most wholesalers are being very careful now to state that they are selling the contract rights. They are NOT selling a house.

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Be sure to consider the impact of owning in an LLC vs your own name on your financing options as you move forward with more properties. Generally you can get better terms for your loan if you own in your own name. You can call some of the local banks in your area and talk with the commercial lender (not the mortgage lender) to get an idea of what their requirements would be for a loan to your LLC for a rental property.

If you do decide to continue to purchase in your own name then you are relying on the umbrella policy for additional liability coverage. It also depends on the other assets you own. The higher your net worth the more important it would be to create the separation of your rental assets from your personal assets. If you don't have much equity in your personal home and just a moderate amount of liquid assets then the amount of money someone could go after if they sued you is lower.

I agree with the other comments that it is not necessary to have an LLC to "run like a business". We started out just by having a separate rental checking account and a rental savings account to hold the security deposits. Then you need to track all of the transactions so you can do year-end (or more frequent) reporting for both tax purposes and to just see how your business is doing. I'd also recommend using MileIQ or some other mileage tracking app to keep tabs on the distances you are driving for business.

There is still time to attend Day 2 of the Plan to Profit in Real Estate Seminar. 

For some reason the BP event just changed to saying that this is free of charge. That's not correct. The cost is $75 for the full day seminar including lunch. Tickets can be purchased at: EB Tickets

Hope to see some of our Bigger Pockets community in person on Saturday!

HI @Annie Witkamp - I am also a local Richmond investor doing flips, rentals and private money lending. @Justin Pierce is right that the Dodd-Frank regulations will make it harder to find a lender. However, if you are willing to do some creative financing with a possible buyer/flipper that could be a way to go. Feel free to send me a message so we can continue that discussion if you like.

For more details go to www.PlantoProfitRE.com.

This is Day Two of a two day program but it is possible to purchase tickets for just the Day Two sessions.

 For more details go to www.PlantoProfitRE.com.

Early registration pricing is good through Sept 9th. This is Day One of a two day program. The second day is Saturday Oct 12th.

 I agree. If as a borrower you can't bring money to the deal then you need to have a really good deal and also a very good idea of exactly what the rehab is going to be, who's going to do the work, what's it going to cost. It would be a good idea to show who your team members are. That's not just your contractors but also the title company, your insurance company, heck even whoever is going to clean it when you're done. The more you can show that you've thought this through the more comfortable the lender is going to be.

My understanding is that it is permissable to have two self-directed accounts that would normally be prohibited from each other (for example my IRA and my spouse's IRA) as long as the funds are invested at the same time. So for example doing a private money loan using $75,000 from one account and $25,000 from the other could be done if the note were structured with those amounts. I believe this would mean that if in the future additional funds were needed for the loan it would NOT be permissable to add funds from a third account (for example, SD 401k) but that it would be OK to still add funds from the original accounts. In this example of adding further funds would that have to maintain the 75/25 split that was in the original investment?