I’m in Milwaukee, Wi and I think the to time to buy is now. Any ideas on how I should approach a local retail bank or find a wholesale mortgage company? I used to buy foreclosed properties fix and flip. Now, I want to create a long term cash flow but don’t want to ruin my credit with high debt mortgages. Thanks for any suggestions.
An LLC is an entity but one that most banks and lenders will look at as a high risk borrower. They require a personal guarantuer so you might only be able to protect the asset in an llc. As a non owner occupied property the lender will give a reduced ltv at a slightly higher rate. That property at 75% rental income will qualify the next, and so on. This will work for 5 properties and then 1 must be sold before financing another. In time the LLC will have a performance record that might qualify it as a borrower but will still require a personal guarantuer. The mortgages wont ruin your credit, the late or missing of payments will do that. Timely payment will only improve your credit. As your portfolio grows, so does your cash flow and net worth. The key is to get positive cash flow numbers at 75% of the rent. Make sure you buy properties that will cap rate in your favor.
August 9th, 2010 at 12:26 pm
An LLC is an entity but one that most banks and lenders will look at as a high risk borrower. They require a personal guarantuer so you might only be able to protect the asset in an llc. As a non owner occupied property the lender will give a reduced ltv at a slightly higher rate. That property at 75% rental income will qualify the next, and so on. This will work for 5 properties and then 1 must be sold before financing another. In time the LLC will have a performance record that might qualify it as a borrower but will still require a personal guarantuer. The mortgages wont ruin your credit, the late or missing of payments will do that. Timely payment will only improve your credit. As your portfolio grows, so does your cash flow and net worth. The key is to get positive cash flow numbers at 75% of the rent. Make sure you buy properties that will cap rate in your favor.
References :