All Forum Posts by: V.G Jason

 Well, let's look at the actual numbers.

9509 Briarcreek Drive, Oklahoma City, OK 73162

$225,000.00 purchase price

$225,000.00 appraisal at time of purchase

$58,936.60 total investor cash required to close (borrowed at 8%)

$1,765.00 monthly rent

8% management, another 8% total vacancy and maintenance, and with 15 properties this is a real vacancy and maintenance cost

$369.12 monthly taxes and insurance

$1,113.48 net operating income

5.94% cap rate

2.875% 30-year fixed mortgage

$395.68 monthly interest

$304.45 monthly principal

$413.35 net monthly cashflow

8.07% return on investor capital only counting cashflow

14.02% return on investor capital also including debt paydown

25.01% return on investor capital also including just 3% annual price growth.

I am clearly making far more that I pay investors in terms of the growth of my net worth, and with capital raised as savings accounts the interest capitalizes and is not a drain on my cashflow. When withdrawals occur, I raise more capital to replace it. I have no particular need to ever refinance this property, just keep acquiring more deals.

 Hmmm, The loan amount is $75,000, you put $25,000 down, so your purchase price is $100,000, If I am understanding your scenario correctly. 

If the new appraised value is $125,000, You gained $25,000 in equity. If you were to refinance at 75% LTV you would net $18,750, subtracting the original $75,000 by the new loan amount, $93,750. That's assuming the max LTV is still at 75% for refinances, early this year you could do a bank statement at 85% LTV.

IO options make sense for the market we are currently in, since you are only paying interest on the loan, your monthly payment will be lower than if you got a 30 yr fixed DSCR loan. This is assuming you do not qualify for conventional financing of course.

Qualifying for a conventional investment property loan would make the most sense. 

Not a lawyer or CPA. I would look into a Series LLC. I am not sure if your state offers them, however, it is essentially what you are looking for just in a cleaner package. We are in Texas and they are becoming more and more popular here. There is a Primary LLC which remains hollow and holds no assets, then each property gets it's own series, i.e. BP LLC would be the parent and BP LLC - Series 1 would be another LLC that holds a single property. Each series acts as its own LLC for legal purposes. You can get really far in the weeds on these and they are slightly confusing, our lawyers laid it our for us really well and that was the best direction for us to jump in. We also have a management company that manages only our properties, that is also setup as a different series under the same parent. Again, not sure if your state offers this option, but if they do, I would recommend you speak to your lawyer about it and see if its a good fit.

@V.G Jason in all discussions I've had with lawyers they suggest that single-member LLCs effectively provide no protection. But you should spend the $ and talk to lawyers to form your own opinion. The WY LLC will provide anonymity if you set it up correctly, purchase properties with the correct vesting and obtain financing solely through the LLC.

The multi-layer administrative process is hard to maintain long term for majority of common people, hence why you see so much push back against this approach.

@V.G Jason you didn’t mention if these are single member LLCs or multi-member where members are not related parties. It’s worth inquiring about these differences w.r.t protection if your approach is single-member.

The lawyers are happy to receive  your money.

1. NonQm /hard money/ DSCR loans require paperwork and a human to guarantee. So you have to be a cash only or bitcoin buyer where your attorney has access to transfer and take the cash. To apply for a loan you have to talk to them, email paperwork, and be notarized. If you do this the note is a public record and its only a phone call to get your name.

2. How do you intend to open a bank account in a LLC? You go in person and they ask for your ID, which they keep a record plus the LLC papers. OOPS that doesn't work. You need to fly the the Caymans and open it there but a title company might not accept the foreign transfer. The Patriot Act  <lookup Patriot Act>    When you file all the many IRS taxes with your CPA (each LLC needs one) you cannot put your meals, travel, phone, office expenses as you might be audited and have to show all the receipts, then it shows your name...

3. Don't tell anyone don't expect your heirs to inherit as it's all secret and convoluted don't post on a public forum where your ISP is tracked don't bring your phone ever into the attorney office leave is miles away. Don't trust anything.

I could go on and on. 

All businesses have risks. Keep property in great condition, respond to complaints, get the highest insurance, be fair...

I have a WY LLC as I lived there.

Your layered plan only works if: 

1. you never get a loan (conversations, emails, paper documentation, insurance records can all be subpoenaed and the signature is you unless you give up all control to an attorney at $400 and hour to do everything) 

2. You have a staff accountant who sets up many offshore bank accounts and you never use a credit card and never write off any personal expenses.

3. You tell no one not even your children

4. You are not worried about triggering the IRS

Make sure to check the statutes of the states where you are going to operate. Some states have liability on the "owner" even if they use a "manager."  In this case, having multiple entities might just create two defendants (and two pools of insurance). 

Only fans? Yeh, that's ending up in a porno shoot. You made the right choice.

Hi V.G,

What you are describing by using 2 LLCs is a common method in asset protection and functions fairly well. The idea is to separate the liability of interacting (for example in contracts and Leases) from the liability of owning an asset. What you would do to maintain the anonymity of your Operating Company is have a private contract between your Holding Company and the Operating Company that authorizes it to enter into Leases, contracts, advertise the property, and other actions on behalf of the Holding Company. This would allow the Operating Company to perform these interactions without the Holding Company needing to sign anything that other people would see.