OK… I am pretty much to the point where I have everything set up, to invest. :exclaim.Currenlty I own a multi family dwelling, which I bought a year ago… I have used the exeperience for the past year to learn about tenants, and landlording… My credit is great,I currenlty have my LLC set up now for a year, I have a line of credit, my LLC has another line , and I am continuesly building that credit for my LLC. I have also spoken to a private lender that is willing to loan me up to 1mill as need for investment… My idea is to locate properties via f/c, distress, rehab however whatever. My idea is to use the private lender to purchase properties cash, whose terms are 13% and 1pt. what I am thinking is when I find a property with considerable equity, I will purchase cash and turn around and refi and take some cash out for income and operating capital…
I have heard that the best way to do this is to close the deal in a land trust or LLC inititally, which if I do this it should be easier to deal with the lenders and they should be able to use appraise value rather than purchase price when refinancing to take cash out. Is this a common practice, is this legal does this make sense. what else do I or should I know or do, which lenders can I generally go to refinance under my LLC with good terms. Can you experience investor please add your helpful advice for success. I feel If I can take this route initially I can build some capital, intern is a short time be able to just in to this full full full time… am I on the right track… your helpful advice is more than welcome…
Are you planning to hold them as rentals or flip them?
If you are going to hold as rentals, then you need to run realistic numbers and make sure it’s a profitable rental. Equity doesn’t mean it’ll automatically rent at a profit.
Thanks for the reply
I am looking to hold a few long term, 1yr +, the ones that can be flipped I will do that, My main questions is with the purchasing in the llc. or Land trust… and how will lenders allow me to refi an not have a seasoning issue… what is the best way to go about that and avoid the seasoning issue…
I will not want to take out a bunch a cash only to the point where is makes sense with payment and and market rent…
Just work with a good mortgage broker. The seasoning thing won’t be an issue. There are programs out there. You probably will pay a little higher interest for them.
The wholesale lenders we use as mortgage brokers do not allow for financing by businesses. Loans and vesting of title must both be in the individual name. (with exception to a few lenders). There are a few lenders that offer no seasoning refinances. 1 @ 90, a couple @ 80, and a handful @ 75. Other lenders have a 3, 6, or 12 month policy.
You won’t want to purchase using your llc unless you plan to use local banks that offer more commercial loan to refi.
The wholesale lenders will require you to quit claim from business to personal anyway.
I’d recommend speaking to a nationwide mortgage planning consultant that specializes in investment loan such as these.