All Forum Posts by: Tristan Cottarel

@Andrew Postell

Thanks again for your response. I appreciate the input. My brother and I have discussed all these options in length and are comfortable with giving away some ownership for various reasons. We have also been "planting seeds" for some time now and have a few individuals ready to invest.

Regarding my original question of collecting money once we agree on terms with an investor, do you have any insight on this? We've gotten this far and then kind of paused and thought "huh, now how do we do this?". Is it as simple as walking into a local bank branch and setting up an escrow account? We have strong enough prior relationships with most of these investors that we probably could just have them write us a check, but we'd like to go about it professionally.

@Andrew Postell

Thanks for your response.

Type of Property: Duplex

Closing: 30 days

Exit Strategy: Hold for 3-5 years and then refi or sell.

LLC and Members: Our plan was to take out a residential loan in our own names. Then after closing we would deed it to the LLC. The potential investor(s) would be non-managing members in the LLC with a % ownership stake.

Syndication: I've done fairly extensive research on syndication and from what I understand this would not be considered syndication. Correct me if I am wrong.

Please let me know if there's more info I can provide. I hope this helps. Thanks again!!

Hi BP,

My brother and I just made our first offer on a property we have been looking at.

Though we have the cash needed, we are also considering bringing in equity investor(s).

Now that we're at this point, we realize we don't know how we would go about actually collecting the money from them. I read that most syndication deals use escrow accounts, but am wondering if this is also typical for smaller deals. If so, how can I set up an escrow account for this purpose? Clearly most financial institutions offer escrow services as part of their mortgage services, but can these institutions also just set up an independent escrow account? I Googled around a bit and everything just directs me to mortgage related information.

If it is relevant, we plan to deed the property to an LLC after closing. We have not yet created this LLC, because its structure would be dependent upon how many partners we have/how much money we raise.

Any insight is appreciated!

@Andrew Postell

Thank you again for the response, and I apologize for the gaps between my own responses.

Follow up question:

If I take out a loan in our name and then deed it to an LLC, am I then still personally responsible for the loan, or does that responsibility get passed on to the LLC? You mentioned this discrepancy between owning the property and being responsible for the loan.

I am asking in regards to the following context:

If I purchase a property in my own name and then deed it to an LLC that has an additional member with ownership, does responsibility for the loan get passed on to them? If so, is there some way to protect this member in the event of a default? From what I understand, most lenders do not view junior liens favorably, and since they hold the first lien it wouldn't help much anyways.

Thank you in advance. I really really appreciate all your responses–huge help!

So a residential mortgage cannot be taken out by an LLC, even if it is personal guaranteed. Is that correct?

So rectifying the scenario would be as simple as deeding it back into your name? And this can be done unproblematically in a 30 day window?

@Andrew Postell Thanks so much for your response

Hi all,

I'm a bit confused here because I've heard all sorts of things.

Most books I've read tell me to purchase rental properties with an LLC. I spoke to a mortgage broker who said an LLC can not get a mortgage, it would need to be a commercial loan. Researching the topic further based on that statement, I understand a new LLC with no financial history will struggle to qualify for a mortgage without a personal guarantee (although I also spoke with an attorney who said that shouldn't be a problem as long as the property I am purchasing has income history). Just spoke with another mortgage broker who said the way people do it is: purchase the property under your name, then "quit claim and deed it to the LLC". Apparently they don't do LLC mortgages with personal guarantees. First thing I think of is due on sale clause. Would that be relevant in this situation?

How does it work???

I have browsed around BP but can't seem to find something that addresses this directly.

Hi,

I'm a college student who has been looking into getting into real estate investing for a while now; I feel drawn to buy and hold/BRRR, specifically. I just transferred to Cal Poly SLO from the Bay Area; now that I've quit the job I had in community college and there's less pressure to get perfect grades, I have a lot more free time, and I look forward to seizing my time here to finally take some action.

San Luis Obispo, like the Bay Area, is expensive, so starting out locally isn't ideal.

I'm unfamiliar with the area and am wondering if anyone can speak to semi-nearby (1-3 hour radius) areas that are more affordable but still 'desirable' and worth looking into. Glancing over Zillow it looks as though virtually all of the listings in nearby areas are pre-foreclosure, which isn't too reassuring. Any thoughts?

Thanks!

Hey all,

Found three properties side by side the other day that looked vacant. Looked them up on my county assessor's website, and all three have the same mailing address. I looked up two adjacent properties as well, and they were also both owned by one (different) person.

I see this as two different opportunities:

1) Investors with excess inventory, potentially willing to sell to me (then to be wholesaled/flipped)

2) Two individuals that I could add to my buyer's list

Would it be inappropriate/unprofessional to direct mail them and inquire about both? Or should I stick with one option and format my letter accordingly? Does anyone have any experience with/thoughts about building a connection with an investor (addition to buyer's list) this way?

Thank you.

Thanks for the input guys. Turns out it's a foreclosure, somehow didn't notice that initially. I assume this means they likely are motivated? How much does this change things?

Hi All,

Newbie that just did a rough analysis of a property I might be interested in. It's been on the market for over 200 days, and looks like it could be a tackle-able flip.

Since my local market is inflated, the property is about an hour drive away, and to be prudent I would want to do a walkthrough with a contractor to get an accurate bid on repair costs. (Or should I not be paying someone to estimate repair costs for me at all?)

My question is, since the property is a bit farther away, and I would be spending several hundred to determine repair costs, is it worth mentioning (prior to visiting the property) to the selling agent that I am not ready to pay close to asking and imply that I want to "play ball"? i.e., gauge the seller's motivation, and, if the seller seems unmotivated based on the initial conversation with the agent, just not even bother and save myself the time and money?

Thoughts? Thank you!